Q1 2024 Valens Semiconductor Ltd Earnings Call
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Speaker Change: Good morning, My name is and I will be your conference operator today at this time I would like to welcome everyone to Valencia semiconductors first call.
Speaker Change: Our 'twenty 'twenty four earnings conference call and webcast.
Speaker Change: All participant lines have been placed in a listen only mode opening remarks by Berlin semiconductor management will be followed by a question and answer session.
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Yoni: Good morning. My name is Yoni, and I will be your conference operator. At this time, I would like to welcome everyone to Valens Semiconductor's first quarter 2024 earnings conference call-in webinar. All participant lines have been placed in a listen-only mode. Opening remarks by Valens Semiconductor Management will be followed by a question and answer session. I will now turn the call over to Lisa Fortuna, Investor Relations, for Valens Semiconductor. Please go ahead.
Speaker Change: I will now turn the call over to Lisa Fortuna Investor relation for Valletta semiconductor. Please go ahead.
Lisa Fortuna: Thank you and welcome everyone to Valens Semiconductor's First Quarter 2024 Earnings Call. With me today are Gideon Benze, Chief Executive Officer, and Guy Nathanzon, Chief Financial Officer.
Lisa Fortuna: Thank you and welcome everyone to go on Semiconductor's first quarter 2024 earnings call with me today are Gideon benzene, Chief Executive Officer, and Guy and the Gundam Chief Financial Officer.
Lisa Fortuna: Earlier today, we issued a press release that is available on the investor relations section of our website under investors.valens.com. 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 with the SEC on February 28, 2024 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.
Lisa Fortuna: Earlier today, we issued a press release that is available on the Investor Relations section of our website under investors thought bill on Dot com.
Lisa Fortuna: As a reminder, today's earnings call May include forward, looking statements and projections, which do not guarantee future events or performance.
Lisa Fortuna: These statements are subject to the Safe Harbor language in today's press release.
Lisa Fortuna: Please refer to our annual report on form 20-F filed with the SEC on February 28, 2024 for a discussion of the factors that could cause actual results to differ materially from those expressed or implied.
Lisa Fortuna: We do not undertake any duty to revise or update such statements to reflect new information subsequent events or changes in strategy.
Lisa Fortuna: 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.
Lisa Fortuna: We will be discussing certain non-GET 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. In the coming weeks, we will be attending the Oppenheimer 9th Annual Emerging Growth Conference and the Oppenheimer 25th Annual Israeli Conference in Tel Aviv, Israel. If you are interested in meeting with us, please email us at investors at valens.com. With that, I'll now turn the call over to Gideon.
Lisa Fortuna: In the coming weeks, we will be attending the Oppenheimer 19th annual emerging growth conference and the Oppenheimer 26th annual Israeli conference in Tel Aviv, Israel, if you're interested in meeting with US Please email us at investors Epsilon Dot com.
Lisa Fortuna: With that I'll now turn the call over to Jim.
Gideon Y. Ben: Hello everyone, and thank you for joining Valens Semiconductor's 1st Quarter 2024 Earnings Call. On our last call, we discussed the macroeconomic headwinds that would impact our business in 2024, and the first quarter operating environment was in line with our expectations. While we were pleased to report some upsides relative to our previously reported guidance, we continued to be impacted by ongoing slow inventory digestion in the audio-video market and in the automotive segment. Additionally, persistently high interest rates fueled by creeping inflation continued to impact our business landscape.
Jim: Hello, everyone and thank you for joining Valletta semiconductors fourth quarter 2024 earnings call.
Jim: On our last call we discussed the macroeconomic headwinds.
Jim: In solar business in 2024, and the first quarter operating environment was in line with our expectations. While we're pleased to report some upside relative to what.
Jim: Our previously reported guidance, we continue to be impacted by ongoing slow inventory digestion in the audio video market I mean, the automotive segment. Additionally, persistently high interest rates.
Jim: Tripping inflation continued to impact our business landscape. Despite this environment politically conduct or remainder of the call.
Gideon Y. Ben: Despite this environment, Valens Semiconductor remains determined to expanding our collaborations and partnerships across the diverse verticals we serve, and we made good progress in this regard during this quarter. Later in the call, Guy will dive into the details, but for now, I want to cover Valens Fairspot's performance at a high level. We are pleased to report that our revenue exceeded the top end of our guidance at $11.6 million. Gap gross margin for the first quarter came in at 59%, and adjusted EBITDA loss was $7.1 million, better than our guided range.
Jim: So expanding our collaborations and partnerships across the rest of Africa, we saw.
Jim: And we made good progress in this regard you already this quarter.
Jim: And later in the call Guy would've died because.
Jim: For now I want to cover first quarter performance.
Jim: High level, we are pleased to report.
Jim: Exceeded the top end of our guidance $11 6 million.
Jim: GAAP gross margin for the first quarter came in at 59% and adjusted EBITDA loss was $7 $1 million.
Jim: Looking at our guided range Walenta semiconductors robust balance sheet with Harvard and $39 8 million.
Gideon Y. Ben: Valens Semiconductor's robust balance sheet, with $139.8 million of cash and cash equivalents, allows us to continue investing in innovations and pursue long-term growth opportunities. We are looking to weather these headwinds. Now let me turn to our performance and the trends we are seeing in the market we serve, starting with audio video. As we discussed last quarter, our ongoing investment in expanding our presence within multiple verticals of our audio-video market enables us to capitalize on positive long-term trends, thanks to the opportunities presented by the latest product additions to our portfolio, in particular the VA6320 and the VA7000 chip.
Jim: Cash and cash it could be one it allows us to continue investing in innovation.
Jim: Chris you want long term growth opportunities.
Jim: Looking to weather these headwinds.
Gideon Y. Ben: We estimate that these verticals, which include videoconferencing, industrial, and machine vision, could represent a total addressable market of approximately $1 billion per annum. We are currently in the process of outlining this opportunity in a modified strategic multi-year plan, which we expect to communicate to the market in the coming months. Within the videoconferencing vertical, a recent Frost & Sullivan report states that the over $3 billion global videoconferencing device market targeted by our customer is undergoing fundamental shifts. Despite current market conditions, video communication is becoming essential to new office and conference room settings. Creating Greater Market Adoption
Jim: Now, let me turn to work performed and the trends we're seeing in the market we serve.
Jim: Stopping with audio video.
Jim: As we discussed last quarter, our ongoing investment in expanding our preference would be moved to the right because of our own people you market enables us to capitalize on positive long term trends. Thanks to the opportunities presented by the latest additions to our portfolio.
Jim: This particular there'd be a six to 327.
Jim: 7000 chipset.
Jim: If you make in Pittsburgh, because which include video conferencing industrial in machine vision could represent a total addressable market.
Jim: And at least $1 billion annually. We are currently in the process.
Jim: Outlining this opportunity in a multiplex for calix won't be your plan, which we expect to communicate to the market in the coming months.
Jim: We seem to be quite a courtesy call. It a recent.
Jim: The report states, there's over $3 billion global videoconferencing device market.
Jim: Our customer is undergoing fundamental change despite.
Jim: Despite current market conditions video communications is becoming essential to the new office and conference room settings.
Jim: Creating greater market adoption.
Gideon Y. Ben: To this point, the CEO of Logitech, one of Valens' customers, recently stated that the time for video conferencing is enormous. He also said, if you look out 10 years, it makes perfect sense that all conference rooms will be video enabled. We obviously agree with this market leader assessment.
Jim: These points the feel of a fluffy thing wonderful customer has recently stated in video conferencing is enormous. He also said if you look at 10 years. It makes perfect sense. It's all conference rooms will be video enabled we obviously agree.
Jim: This market leader assessment.
Gideon Y. Ben: This is consistent with what we have heard from additional customers who say the key growth drivers of this market are hybrid work and modernization of meeting rooms. There is growing demand for multi-camera rooms with higher attached rates of accessories and rapid innovation of AI in camera technology that enhances the meeting experience. Of course, many of these Pro EV devices require high-performance extension.
Jim: This is consistent with what we have heard from additional customers, who say the key growth driver of this market are hybrid work and what their organization of meeting rooms. There is growing demand for multi cameras with higher attach rates of accessories and rapid utilization of AI you can cover it.
Jim: It enhances the meeting experience.
Jim: Of course, many of these devices that require high performance expansion Vanessa.
Gideon Y. Ben: Valens solutions are ideal for delivering a seamless plug-and-play user experience for hybrid environments and multi-camera rooms. If the global video conferencing device market continues to grow, so will the need for our robust connectivity solutions. An example of how we plan on capturing the value of the increasing global video conferencing market is our VS6320, a first-of-its-kind USB 3.2 high-performance extension solution. The VS6320 is a game-changer in the market, solving connectivity problems that exist for current technologies with the combination of multi-gigabit bandwidth and low-width USB extension, enabling new use cases. We are very proud and have great expectations for this new, welcomed member of our chip family.
Jim: Beautiful delivering seamless plug and play user experience for hybrid it environment and multi camera rooms.
Jim: Mobile videoconferencing device market continues to grow so Wednesday may four our robust connectivity solutions.
Jim: For example.
Jim: While we plan on capturing the value of the increasingly global video conferencing market is that fair.
Jim: 'twenty if there are some big Sky U S. B 3.2 high performance extensions to loosen.
Jim: The V F 'twenty.
Jim: 'twenty is a game changer in the market solving connectivity problems that exist for carbon technologies with a combination of multi gigabit bandwidth and lower choice be expansion, enabling new use cases.
Speaker Change: Very proud and had great expectations from this new wave comes member tortured family.
Gideon Y. Ben: We introduced the VS6320 in Q4 2023, and since then, it has been designed into over 30 products, and the interest from additional customers continues to build for this chipset. We anticipate multiple announcements and product launches as early as the Infocom International Trade Show this June. We are excited to see the initial backlog and expect sales to further ramp up during the second half of 2024. The VSS320 also has applications above and beyond video conferencing, and we expect to see the chipset begin powering innovation in multiple markets. Moving on, as you are no doubt aware, there is a rise in the use of AI across industries.
Speaker Change: We introduced the vehicle history 20 in Q4, 2023 and feel that it was already designed into almost 30 product and the interest from additional customers continues to build for their stewardship, we anticipate multiple announcements and product launches.
Speaker Change: Earlier, the input from International Trade show. This journey, we're excited to see the initial backlog and expect sales to further ramp up during the second half of 'twenty 'twenty four.
Speaker Change: There'll be a success with 20 or so long as applications beyond video conferencing, and we expect to see the chipset to begin empowering innovation and looked at the markets.
Speaker Change: Moving on.
Speaker Change: As you are all no doubt aware there is a rise in the use of AI across industries.
Gideon Y. Ben: For many applications, especially those requiring high-resolution real-time video and data aggregated from multiple cameras, a high-performance connectivity solution is often required. Valens connectivity solutions have the potential to play a pivotal role in facilitating the adoption of artificial intelligence across multiple industries. An example of this is our collaboration with Taiwan-based AI image processing company iCatch Technology, which aims to introduce a multi-camera solution based on their SoC and Valens VA7000 chipset for the video conferencing and machine vision market.
Speaker Change: Applications, especially those requiring high residual sharing real time video and data aggregated for multiple cameras and high performance connectivity solution is often required volare connectivity solutions have the potential to play a pivotal role in facilitating the adoption of artificial intelligence across multiple industries.
Speaker Change: Yes.
Speaker Change: An example of this is our collaboration we stay one based AI image processing company I get technology, which aims to introduce and want to camera solution based on their seat and Wolanski 87000 chipset for the video conferencing and machine vision markets.
Gideon Y. Ben: With our VA-7000 chipsets, we enable a robust high bandwidth, zero latency connectivity infrastructure, enabling real-time video processing and decision making that is required for enhanced AI applications today. iQIYI also plans to launch an AI-enhanced multi-channel surround-view monitoring system for the automotive industry using our A5-based VA-7000, which further underscores the versatility and impact of our high-performance technology across different sectors, Overall, our automotive business is stable. As you know, our first generation VA6000 chipsets are used in Mercedes-Benz infotainment and telematics systems.
Speaker Change: We sold 7000 chipsets, we've enabled and robust high bandwidth zero latency connectivity infrastructure, enabling real time video processing and decision, making that is required for enhanced AI applications to date.
Speaker Change: It takes our whole plan to knowledge and AI enhanced multi channel.
Speaker Change: Are all of your monitoring system for the automobile industry using our AI based games have been thousands, which further underscores the versatility and impact of our high performance technology across different sectors moving.
Speaker Change: Moving to automotive.
Speaker Change: Overall, our automotive business is stable if you know our first generation V. 6000, chipsets are usually the Mercedes Benz infotainment and telematics system. Joining 23 was our first full year of spending into a broad range of conservative model, including their EV models.
Gideon Y. Ben: 2023 was our first full year of selling into a broad range of Mercedes-Benz models, including their EV models. Between the fourth quarter of 2023 and the first quarter of 2024, we saw a reduction in revenues in our automotive business due to inventory digestion. With our Asynetric VA7000 MIPI A5 based chipset, we continue to make encouraging progress in various evaluation processes. Last month, we announced a significant milestone in our collaboration with Sony Semiconductor Solutions Corporation as we jointly completed EMC and interoperability testing of a multi-vendor A5 link. Ideally, this will lead to a mature Sony A5 integrated image sensor that is compatible with our BA7000 deserializer chip.
Speaker Change: Between the fourth quarter of 2023, and the first quarter of 'twenty 'twenty four we saw a reduction in revenues in our automotive business due to inventory digestion.
Speaker Change: And we felt were optimistic it could be a 7000, maybe a tiny base chipset, we continue to make encouraging progress in a volume evaluation processes last month, we analysis significant milestone in our collaboration with Sony Semiconductor Solutions Corporation, as we jointly completed AMC and interoperability testing.
Speaker Change: Okay multi vendor a filing.
Speaker Change: This will lead to a mature Sony a fully integrated image tear film that is compatible with over 7000, they still realize though chip in.
Gideon Y. Ben: In addition to deepening the collaboration between Valens and Sony, one of the top three automotive sensor suppliers in the world, we are announcing that we are developing an 8-megapixel A5 camera module for the AIDA system that will be prepared in the coming months. At CES earlier this year, we continued to see strong interest in our innovative technology from the automotive market. During the quarter, we invested in following up on new and interesting opportunities, which resulted from our demonstrations at the show.
Speaker Change: In addition to deepening the collaboration between Atlanta, and it's only one of the top three automotive suppliers in the world. We are announcing that we are developing and eight megapixel camera module.
Speaker Change: The total prepared in the coming months.
Speaker Change: At CES earlier this year.
Speaker Change: Here, we continue to see strong interest in our innovation and technology for the automotive market during the quarter, we invested in following up on new and interesting opportunities, which resulted from all of the most patients at the show.
Gideon Y. Ben: Nowhere was this more apparent than in our EMC shootout where our VA7000A5 chipset outperformed competing proprietary extension solutions; our chipset was able to withstand around 20 times more noise than the competition. As the industry evolves and OEMs are pushing to integrate more sensors at higher resolutions with increased bandwidth requirements, the fragility of the links requires high-performance connectivity.
Speaker Change: Nowhere was this more of a bar or anything in our ESG shootout, where our B 7800 chipset outperformed competing proprietary extension solutions.
Speaker Change: Our team was able to withstand a wrong 20 times more than competition.
Speaker Change: As the industry is evolving and the Oems are pushing to integrate more central it's higher resolution with increased bandwidth requirements different GDP of the links require high performance connectivity.
Gideon Y. Ben: Keeping a resilient link between a camera and an SoC is crucial for guaranteeing ATAS performance and passenger safety. This NIPI AFI ecosystem will further strengthen this quotient through our partnership with Black Sesame Technologies to enable the integration of AFI connectivity into their autonomous driving platforms and later into their cross-domain computing platform. Leveraging the VA7000 chipset, Black Sesame Technologies will offer and support the AFI connectivity stand-up for its automotive OEM and tier 1 customers. Blake Sesami Technology is a leading automotive-grade computing SoC and SoC-based intelligent vehicle solution provider.
Speaker Change: Keeping a resilient links between Colorado and the SLC is crucial for guaranteeing a desperate for months and passenger safety.
Speaker Change: This needs to be a ecosystem was further strengthened this quarter by our process shipped with Blackstone suddenly technologies to enable the integration of connectivity into their autonomous driving platforms and later into their cross domain computing platform leveraging the Vida 7000 chipset.
Speaker Change: <unk> technologies will offer and support the ACI connectivity thumbs up or we took the multiple OEM and tier one customers.
Speaker Change: He is a leading automotive grade computing as Youll see in Arizona based intelligent vehicle solution provider.
Gideon Y. Ben: According to their co-founder and president, Blake Sesami, they decided to move forward with these implementations because of the significant interest they see for MIPI API connectivity both within China and around the globe. Of course, we also continue to work closely with Intel Foundry Services on developing the next generation of our A5 compliant chipsets for the automotive sector. We announced our strategic collaboration with IFS earlier in the first quarter and are proud to be partnering with one of the most important innovators in the industry.
Speaker Change: This was a cofounder and president Blackstone suddenly decided to move forward with these implementations because of the significant interests. They see for me be API connectivity, both within China and around the globe.
Speaker Change: Of course, we also continue to work closely with into the foundry services, while developing the next generation of our ACI compliant chipsets for the automotive sector, we announced our strategic collaboration with <unk> earlier in the first quarter and are proud to be partnering with one of the most important innovators in the.
Speaker Change: The industry.
Gideon Y. Ben: During the first quarter, we also announced our latest chipset innovation, the VA-700R, engineered to address critical visibility challenges faced by truckers on highways. This groundbreaking solution offers a combination of bandwidth and link distances, enhancing both surround-view and rear-view visibility. Our VA-700R chipsets can serve as the fundamental connectivity infrastructure, empowering automotive OEMs and Tier 1 suppliers to forge future innovations. The VA-700R sets the stage for a new era of advancement in the trucking industry to assist drivers in navigating challenging conditions, including significantly compromised visibility. With the robust capabilities of our chipset, tracking safety and operational efficiency are significantly enhanced.
Speaker Change: During the first quarter, we also announced our latest chipset innovation. The various 700, our engineers to address critical visibility challenges faced by truckers on highways. This groundbreaking solution offers a combination of bandwidth and lead distances and housing both surround view.
Speaker Change: Rev Youll visibility.
Speaker Change: Our VA several hundred our chipsets to serve as the fundamental connectivity infrastructure, inspiring automotive Oems and tier one suppliers to forge future innovations DVA 700, or fix the space for a new era of advancements in the trucking industry to assist driver you may begin.
Speaker Change: In challenging conditions, including significantly compromised visibility.
Speaker Change: With the robust capabilities of our chipsets tracking safety and operational efficiency.
Speaker Change: It'll be significantly enhanced.
Gideon Y. Ben: We believe that our technological innovation, combined with our ability to identify opportunities within the industry, could position us to take advantage of the total addressable market in this particular automotive segment and could reach about $4.5 billion per annum by 2029. While the automotive market continues to suffer from slower decision-making processes, in light of the macroeconomic environment, we remain confident in the ability of our technology to play a leading role in the in-vehicle connectivity solutions market. With that, I will turn the call over to Guy to discuss our financial performance in more detail. Thank you, Gideon.
Speaker Change: We believe this innovation combined with our ability to identify opportunities within the industry could position us to take advantage of her total addressable market in particular with the module segment. It could reach about $4 5 billion dollar for annual 2019.
Speaker Change: Well I know, it's a multi market continues to suffer from slower decision, making process in light of the macroeconomic environment. We remain confident in the ability of our technology to play a leading role in the in vehicle connectivity solution markets was there.
Speaker Change: Oh, It does of course come back to discuss our financial performance in more detail.
Guy Nathanzon: I will start with our first quarter 2024 results and then provide our outlook for the second quarter. We achieved quarterly revenue of $11.6 million, above the high end of the guidance range compared to $23.9 million in the first quarter of 2020. First quarter 2024, gross profit was $6.8 million, compared to $15.8 million in Q1, 2021. Fred Poser's 2024 gross margin was 59.0%, compared to 66.1% in Q1 2020.
Speaker Change: It would be done I will start with our first quarter of 2024 results and then provide our outlook for the second quarter.
Speaker Change: Starting with our first quarter of 2024 results.
Speaker Change: We achieved quarterly revenue of 11 6 million above the high end of the guidance range compared to $23 $9 million in the first quarter of 2023.
Speaker Change: First quarter of 'twenty 'twenty, four gross profit was $6 $8 million compared to $215.8 million in Q1 2023.
Speaker Change: First quarter of 2024 gross margin was 59 zero percent compared to 66, 1% in Q1 2023.
Guy Nathanzon: Non-GAP gross margin reached 62.0% compared to 67.2% in Q1 2022. The change compared to Q1 of last year reflects lower total revenue, which resulted in lower fixed cost absorption, evaluation of certain costs of inventory, and a larger share of automotive revenue compared to audio-video, which has a much higher gross margin.
Speaker Change: non-GAAP gross margin reached 62.0% compared to 67, 2% in Q1 2023.
Speaker Change: The change compared to Q1 of last year reflects lower total revenue, which resulted in lower fixed cost absorption.
Speaker Change: Valuation of certain cost of inventory and a larger share of automotive revenue compares to audio video, which has much higher gross margin.
Speaker Change: Operating expenses in Q1 of 'twenty 'twenty, four totaled $18 1 million compared to $22 $9 million in Q1 2023.
Guy Nathanzon: Operating expenses in Q1 2024 totaled $18.1 million, compared to $22.9 million in Q1 2026. Research and development expenses accounted for 56% of the Q1 2024 operating expenses, coming in at $10.1 million, compared to 61% of the Q1 2023 operating expenses, or $14.0 million in Q1 2023. SG&A expenses were $8.0 million, compared to $8.9 million in Q1 2020. Turning to net loss and adjusted EBITDA. Q1 2024's gap net loss was $10.0 million versus a $5.4 million net loss recorded in Q1 2023, and adjusted EBITDA in Q1 2024 was a loss of $7.1 million compared to a loss of $2.9 million in Q1 2023.
Speaker Change: Research and development expenses accounted for 56% of the Q1 2020 for operating expenses coming in at $10 $1 million compared to 61% of the Q1 2023 operating expenses or 14.0 million daus.
Speaker Change: In Q1 2023.
Speaker Change: SG&A expenses were $8.0 million compares to $8 $9 million in Q1 2023.
Speaker Change: Turning to net loss and adjusted EBITDA.
Speaker Change: Q1, 'twenty 'twenty four GAAP net loss was $10 million.
Speaker Change: Versus a $5 4 million or net loss recorded in Q1 of 2023 and adjusted EBITDA. In Q1, 2024 was a loss of $7.1 million compared to a loss of $2 9 million in Q1 2023.
Speaker Change: <unk>.
Guy Nathanzon: Debt loss per share for Q1 2024 was $0.10 compared to $0.05 for Q1 2023; non-gap loss per share in Q1 2024 was $0.06 compared to $0.03 in Q1 last year. The main difference between GAP and non-GAP loss per share was due to stock-based compensation and depreciation.
Speaker Change: GAAP loss per share for Q1, 2024 was 10 cents compared to two five cents for Q1 2023.
Speaker Change: non-GAAP loss per share in Q1, 'twenty 'twenty four six.
Speaker Change: Six cents compared to three <unk>.
Speaker Change: Q1 last year.
Speaker Change: The main difference between GAAP and non-GAAP loss per share was due to stock based compensation and depreciation.
Speaker Change: Turning towards the balance sheet.
Speaker Change: We ended Q1 2024 with a strong balance sheet with cash cash equivalents and short term deposits totaling $139 8 million and no debt.
Guy Nathanzon: [inaudible] We ended Q1 2024 with a strong balance sheet, with cash, cash equivalents, and short-term deposits totaling $139.8 million and no debt. This compares to $142.0 million at the end of Q4 2023. Our working capital at the end of the quarter was $153.3 million compared to $158.8 million at the end of Q4 2020. Our inventory as of March 31st, 2024 was $12.5 million, down versus $13.8 million at the end of Q4 2023. We continue to carefully manage our inventories and have effectively reduced them over the last four quarters.
Speaker Change: This compares to $142.0 million at.
Speaker Change: At the end of Q4 2023.
Speaker Change: Our working capital at the end of quarter was $153 $3 million.
Speaker Change: Compared to $158 $8 million at the end of Q4 2023.
Speaker Change: Our inventory as of March 31st 2024, well $12.5 million.
Speaker Change: Down versus $13 $8 million at the end of Q4 2023, we continue to carefully manage our inventories and then effectively reduce them over the last four quarters.
Guy Nathanzon: Now I would like to provide our guidance for the second quarter. When we reported our full year 2023 results at the end of February, we guided that second quarter revenue would be relatively flat compared to the first quarter. Due to slightly improved customer demand compared to the original forecast, we currently expect second quarter revenue to be in the range of $12.5 to $13 million. We expect Q2 growth margins to be in the range of 52.0% to 52.5%. Adjusted EBITDA loss in the second quarter is expected to be in the range of negative $8.3 to $8 million.
Speaker Change: Now I would like to provide our guidance for the second quarter.
Speaker Change: When we reported our full year 2023 result at the end of February we guided that second quarter revenue would be relatively flat compared to the first quarter.
Speaker Change: Due to slightly improved customer demand compared to the original forecast. We currently expect second quarter revenue to be in the range of 12 $5 million to $13 million. We expect Q2 gross margins to be in the range of.
Speaker Change: 52.0% to 52, 5%.
Speaker Change: Adjusted EBITDA loss in the second quarter is expected to be in the range of negative eight $3 million to $8 million.
Guy Nathanzon: Visibility continues to be limited, so we are providing guidance beyond the second quarter at this time. However, for the medium and longer term, we remain confident in our growth potential and will be ready to continue to execute our growth strategy with an even broader portfolio designed to penetrate untapped markets and verticals and enable the evolution of AI-based applications when the industry recovers. I'll now turn the call back to Gideon for his closing remarks before opening the call for Q&A. Thank you, Guy.
Speaker Change: Visibility continues to be limited, so we aren't providing guidance beyond the second quarter at this time however.
Speaker Change: However for the medium and longer term, we remain confident in our growth potential and we'd be ready to continue to execute our growth strategy with an even broader portfolio designed penetrate untapped markets and verticals and enabled the evolution of AI based applications.
Speaker Change: When the industry recovers.
Speaker Change: Now ill turn the call back to give him for his closing remarks before opening the call for Q&A.
Gideon Y. Ben: As we look at the balance of 2024, Valens Semiconductor will remain committed to executing our strategy and capitalizing on the promising opportunities within our target market. Our innovative connectivity solutions and highly sophisticated chipsets position us to capture future opportunities that will continue to make a meaningful impact across diverse sets of growing industries. Our strong balance sheet provides us with the flexibility to continue to invest and innovate and, importantly, to navigate dynamic market conditions.
Speaker Change: Thank you Brian as we look at the balance of 2020 for Valero semiconductor, we remain committed to executing our strategy and capitalizing on the promising opportunities within our target markets.
Brian: Innovative connectivity solutions and highly sophisticated chipsets position us to capture future opportunities that will continue to make a meaningful impact across a diverse set of growing industries. Our strong balance sheet provides us with the flexibility to continue to invest and innovate.
Speaker Change: And importantly to navigate this dynamic market conditions before opening the call for questions I want to express my gratitude to our exceptional team, whose hard work and dedication are the driving force behind <unk> semiconductor with that I will now open the call for your questions.
Gideon Y. Ben: Before opening the call for questions, I want to express my gratitude to our exceptional team whose hard work and dedication are the driving force behind Valens Semiconductor. With that, I will now open the call to your questions.
Speaker Change: Operator.
Speaker Change: Thank you.
Operator: Ladies and gentlemen, at this time, we will begin the question and answer session. If you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you are using speaker equipment, kindly lift the handset before pressing the numbers.
Speaker Change: Ladies and gentlemen at this time, we will begin the question and answer session. If you have a question. Please press star one if you wish to cancel your request. Please press star two if you are using speaker equipment time to lift the handset before pressing the numbers. Please ask your question in a loud and clear voice questions would be called in the order. They are received.
Operator: Please ask your question in a loud and clear voice. The questions will be polled in the order they are received. Please stand by while we poll for your questions. The first question is from Suji DeSilva of Roth Capital. Please go ahead.
Speaker Change: Please standby, while we poll for your questions.
Speaker Change: Okay.
Speaker Change: The first question is from <unk> Silva of Roth Capital. Please go ahead.
Suji DeSilva: Hi Gideon, hi Guy. My first question is about the AV market for conferencing. I want to know what may be some early signs of traction.
Roth capital: Hi, Guy.
Roth capital: First question's on the a V conference a V a market for conferencing I Wonder I know what maybe some early signs of the traction you might be getting into this very large market opportunity I dunno.
Silva: Conference has penetrated something along those lines are key customer programs. So we can understand sort of how this might track I know you have a multiyear plan coming up I just wanted to get some ideas.
Suji DeSilva: You might see Gideon into this very large market opportunity. I don't know, you know, conferences penetrated, something along those lines, or key customer programs so we can understand sort of how this might track. I know you have a multi-year plan coming up; I just wanted to get some ideas.
Speaker Change: Thank you <unk> and that said you wanted to ask my second question now or you want with depressed me answer than you are.
Suji DeSilva: Thank you, Suji, and that said, do you want to ask me the second question now, or do you want me to first answer, and then you...
Suji DeSilva: My second question, sure. It's on the automotive, whether the Chinese market for black sesame will, how that market opportunity differs from dynamics versus the global market.
Speaker Change: My second question sure it's on automotive, whether the China market with Blackstone.
Speaker Change: That market opportunity.
Speaker Change: From a dynamics versus the global market. Okay, great. Thank you for both questions and I'm. Thank you and welcome back to our.
Gideon Y. Ben: Okay, great. Thank you for both questions, and welcome back to our quarterly meeting. I'll start with the first question. The AV market, which we have been playing in for many years, we are now playing in, I would say, the high-end market. And the two new members of our studentships, the two new members of the family, the VA6320, which is a USB 3 extension, and the VA7000, which was taken from the automotive market, have opened up markets for us which are a lot bigger. You know, I call it, in our call. I said, from being the king of the puddle, we're going to be princes in a very big lake.
Speaker Change: Quarterly meeting.
Speaker Change: Meeting and I'll start with the first question.
Speaker Change: The AZ market.
Speaker Change: Which we were playing in many years and we are playing in I would say that the high end markets.
Speaker Change: And the two new members of our a student of chips to team members in the family did we at 63, 'twenty, which is the U S. B three extension and the V. Eight seven thousands which was taken from automotive.
Speaker Change: Open for us markets, which are a little bit here, you know I call. It the <unk>.
Speaker Change: What I said from being the king of the pattern, we're going to be it brings in a very big Lake and we're very enthusiastic to be there and let me be elaborated a lot more think about your room and everyone is on the on the on the conference room that they havent television in front of them and sometimes a camera.
Gideon Y. Ben: And we're very enthusiastic to be there, and let me elaborate a lot more. Think about your room and everyone in the conference room having a television in front of them, and sometimes the camera is still on the laptop, sometimes the camera is on the TV. And if you want another friend to come and join you and to speak to other two, three friends, this is called the other room.
Speaker Change: Stop status standards of cameras on the T V.
Speaker Change: Want to know what's going to come and join you in to speak to other to reframe. This what's called the huddle room, and we're thinking about 100 million rooms in the world. After waiting for a solution. We have a unique solution here and not only unique solution is a solution that had really high technological barriers like I'd say its one of the chips. We're the most proud of.
Gideon Y. Ben: And we're speaking about 100 million rooms in the world that are waiting for a solution. We have a unique solution here, and not only a unique solution, it's a solution that has a really high technological barrier. Like it's one of the chips we're most proud of our ability to bring to the market. As for the VA7000, we are going back to the high-end conference room and the tendency to have more than one camera.
Speaker Change: Our ability to bring to the market.
Speaker Change: The Avi 7000, where go back to the high end corner for this room and the tendency to have more than one camera because today what happens when you have active in school they'll just stay at home and you'll see them.
Gideon Y. Ben: Because today, what happens when you have a team call, those who stay at home, you see them with all the glory and big faces on the screen, and those who bother to come to work, you see them with the smallest arms because they are all in the conference room, very remote.
Speaker Change: With all of their glory and big faces of the screening.
Speaker Change: But to come to work you see them as small as honest because they're all in the conference room very remote and what they wanted to do is just kind of democratization of physical conference room by having using artificial intelligence and that you'll see every one independently whatever your tone or multiple and this is done.
Gideon Y. Ben: And what we want to do is a kind of democratization of the conference room by using artificial intelligence so that you see everyone independently, whether he's at home or not at home. And this is done by multiple cameras, and at the end of the day, you need these multiple cameras to be efficient with high bandwidth, no compression, no latency because you have to synchronize between voice and people and so forth. It cannot be done with latency and at frame rate.
Speaker Change: Bye bye multiple cameras and at the end of the day you meet the multiple camera to meet appreciate it.
Speaker Change: With high bandwidth no compression no latency, because you have to synchronize between voice and people and so forth. It cannot be done it was that we stay tenancy in and we've been frame rate and this is exactly where opportunity is so actually we're going from a market, which we are very happy to be in a niche, but through a market, which is a blue ocean for us.
Gideon Y. Ben: And this is exactly where our opportunity is. So actually, we're going from a market where we are very happy to be in a niche, but to a market which is a really blue ocean for us, and we're very excited about it. That's the first question. Tell me if it's okay, then we can move to the second one.
Suji DeSilva: Yes, that's good. Thank you. And about the second one, the Chinese market and Black Sesame.
Speaker Change: We're very excited about it.
Speaker Change: That's the first question tell me if it's okay, you didn't know him onto the second one.
Speaker Change: Yes, that's it.
Speaker Change: That's good thank you and the second one would be our aim HN is a M and different needs of end market and makes sense to me.
Speaker Change: Sure you know with one of the world's a trade war and we're all aware that there's a lot of the Chinese companies try to create some kinds of independence.
Gideon Y. Ben: Chuck, we're all aware of the trade war. And we're all aware that a lot of Chinese companies try to create some kind of independence. And Black Summit is one of those companies who tried to have a solution. And not just try to have a solution for the ADAS.
Speaker Change: And the next time it was one of the oldest company who tried to have a solution and I'll try to have a solution.
Speaker Change: And aid us and in Asia.
Gideon Y. Ben: And ADAS is a very big depender on great quality data. You have to aggregate a lot of information from different cameras and radars and fuse them to make fusion at the same time. And companies like Blexus, I mean, they're not the only ones, understand the dependency on this need. And just I will be a little bit technical, but just for a second, the more the resolution is higher, the more fragile the line is to distortions of the electromagnetic field and so forth. And the modern cars that are coming just this year are starting from a higher point because they are modern.
Jeff: Hey, Jeff.
Speaker Change: A very big panga in great quality of data because.
Speaker Change: You have to aggregate a lot of information from different camera and radar and fuse them experience at the same time.
Speaker Change: And the companies like indexes I mean, they are not the only one understand the dependency in D. C. In in this need and just be a little bit technical but just for a second is more of a resolution is higher the more fragile is aligned to where these doses of <unk>.
Speaker Change: Vectra magnetic consumables and the more of the Aircard, we're coming to just this year are starting from a higher point because they are because I'm older. It's part of you know the last entry will cause a more advisory service and they always in these companies would start with Stefan resolution they don't compromise and it won't have a sensor that can see.
Gideon Y. Ben: It's part of, you know, the last entry will come with a more advanced system. And they always, and these companies will start with full resolution; they don't compromise. And we'll have a sensor that can see more cases of potential accidents. And I'll be again, a little bit technical. What distance do you need to see a small foot of a small child that you can recognize?
Speaker Change: More cases of potential.
Speaker Change: A professional accident and I'll I'll be again, a little bit technical.
Speaker Change: What would be since you need to see a smaller part of a small child. Then you can recognize it depends on the level of bandwidth.
Gideon Y. Ben: It depends on the level of bandwidth of the resolution you have in the camera. You might see it with an eight-megapixel camera and not see it with a four-megapixel camera. And this has a direct connection to what's the bandwidth of the camera. The same with the number of bits per pixel. Will you see through a fog with eight bits per pixel? Will you see the difference between red and green light?
Speaker Change: It really looks like you have in the camera you might see at week eight.
Speaker Change: Eight megapixel camera systems, four megapixel camera and this has.
Speaker Change: The rest of the connection to whats the bandwidth of the camera the same with the number of leads per pixel will you see some way forward, we say H b.
Speaker Change: Do you see the difference between Red and Green Light would you easily see was 12.
Gideon Y. Ben: What you can easily see with 12 bits per pixel. This is a lot of data. This data is very fragile. It is, the fragility is not linear. When you move from four gigabits to eight gigabits, it's more than double the fragility. It's a lot; it's far more fragile. And those companies who are coming now understand it, and they require a very, very stable link. And this is where we are. I hope I answered both, Suji? Yes, you did, Gideon.
Speaker Change: A bigger piece of this is a lot of data is very fragile.
Speaker Change: The fact that it is not linear like when you move from full gigabit wave you can be it can more than double this agility. It's a lot it's far more for unity and those companies were accounting now understand it and they require a very very stable linked and this is where we are.
Speaker Change: Hope I answer both.
Suji DeSilva: Yes, you did, Gideon. Thank you very much. Thank you.
Speaker Change: Yes, you did did you and thank you very much. Thank you.
Speaker Change: Okay.
Brian H. Dobson: The next question is from... Brian Dobson of Sheridan Capital Markets. Please go ahead.
Speaker Change: The next question is from Brad.
Speaker Change: Brian Dobson of Sheridan capital markets.
Brian H. Dobson: These go ahead.
Speaker Change: Alright, thanks, so much for taking.
Brian H. Dobson: Hi, thanks so much for taking my questions. I guess, just to lead off, I wanted to follow up on some of the important inroads you made with large educational groups in Florida.
Brian H. Dobson: My questions I guess.
Brian H. Dobson: To lead off I wanted to follow up on.
Brian H. Dobson: Paul.
Brian H. Dobson: Yes.
Brian H. Dobson: Large educational.
Brian H. Dobson: Great.
Brian H. Dobson: Florida.
Brian H. Dobson: More of the education market to you.
Brian H. Dobson: Feedback from others call it large school districts.
Brian H. Dobson: Yes.
Brian H. Dobson: Yeah. First, nice to see you again, Brian. And thank you for your question. Educational markets are active in this market, and this market has a lot of the tendency of what's called B2G, business-to-government. Business-to-government has a tendency for the kind of sales we do, which sometimes depends on... [inaudible] and Gideon Ben, Dror Heldenberg, Yael Haine, Gideon Ben, Dror Heldenberg, Yael Haine, Gideon. We are strong believers in the upside we have in this market. And by the way, I would add something.
Speaker Change: Nice to see you again, Brian and thank you for your question.
Brian H. Dobson: Educational market opportunity in this market and this market has a lot of tendency of call. It <unk> business to government bidders to government is a it has a tendency of the kind of sell we do which sometimes is defense and and and in.
Brian H. Dobson: Depend in actually in government decision sometime it takes longer but on the other side when it when you frame it for us.
Brian H. Dobson: So where we are and I'm going to Miss the market side of things go faster.
Brian H. Dobson: Foster or actually slower than what we anticipated at the beginning but we are we predicted but be a market of education is a very important market for us and hybrid education is into state is here to stay and it will have more and more installation and this wasn't waiver I believe also the right partner for this market.
Brian H. Dobson: So, yes, and it is a market that.
Brian H. Dobson: <unk> municipal government that is here to stay and.
Brian H. Dobson: We're a strong believer in the upside we have in this market.
Brian H. Dobson: And by the way.
Brian H. Dobson: And we're starting to just the market was the $6.
Brian H. Dobson: But we see great potential with the 63 20 <unk>.
Brian H. Dobson: The difference in Colorado, which is industry 26000 will be in the resolution of your ability to talk to zoom and the ability to not have the pixel.
Brian H. Dobson: And does that sort of.
Brian H. Dobson: The colors and.
Brian H. Dobson: It is a very very important more so I think it's a day I believe it will also give us the most in this market.
Brian H. Dobson: The significant increase of the quality, because we enable the Colorado and it is a.
Brian H. Dobson: Which is installed in a distance from the computer that California is protected.
Speaker Change: Yeah very good thank.
Gideon Y. Ben: Yeah, very good. And then do you think you could provide us with some feedback you're hearing from, call it, key stakeholders in the trucking industry in regard to your backup vision technology? Okay, thanks.
Speaker Change: Thank you could provide us with some feedback you're hearing from call. It key stakeholders in the trucking industry.
Speaker Change: In regard to your backup vision technology.
Brian H. Dobson: Okay, thanks for this question. About the tracking industry, there are several answers. First, there is an answer about what's going on today, and it's now in test, on the field, and the feedback we get is that the drivers are very happy. But what we think is more interesting is our full solution for surround view. And this is a very big step forward that I believe will give us more opportunities in the market, more dollars per vehicle in this market, and a far deeper solution, because today we're speaking about the reverse camera.
Speaker Change: Okay. Thanks for this question about the trucking industry there are several answers.
Speaker Change: There was an article about what's going on today and it's now in test on field and the feedback we get their drivers are very happy.
Speaker Change: But what we think is.
Speaker Change: More interesting is our full solution for surround view and this is a very big step forward and I believe will give us.
Speaker Change: And more.
Speaker Change: Give us some opportunities in the market more dollars per vehicle in this market and far depot solution.
Speaker Change: And because today, we are speaking about reverse camera in the in the future we will be able to answer all the learnings to both of the driver having a driver for big truck when it might be a blind spot in the angle, whereas connected to track to the trainer and there could be several areas of our blind spots.
Brian H. Dobson: In the future, we will be able to see all the blind spots that the driver has, and the driver of a big truck, when he turns, might have blind spots at the angle where it connects the track to the trailer, and there could be several areas of blind spots.
Speaker Change: And we believe that we are thinking it is.
Gideon Y. Ben: And we believe that we are taking it even to the next need of this market. We believe in this market. We also try to make some movement in this market that will yield a result in the future. And the truck industry is like the automotive industry. It has the, I would say, the geological speed of the automotive industry.
Speaker Change: Even to the next day needs of this market. We believe in this market we also.
Speaker Change: <unk> tried to do some movement.
Speaker Change: In this market.
Speaker Change: We will we use that as a result in the future.
Speaker Change: And truck industry like automotive it has.
Speaker Change: I would say the geological speeds of automotive industry.
Speaker Change: Yeah.
Speaker Change: Yeah.
Brian H. Dobson: Excellent; thanks very much for that additional color.
Speaker Change: Okay. Thanks, very much for the additional color.
Speaker Change: If there are any additional questions. Please press star one if you wish to cancel your request. Please press star two please standby, while we poll for more questions.
Operator: If there are any additional questions, please press star 1. If you wish to cancel your request, please press star 2.
Operator: Please stand by while we poll for more questions. There are no further questions at this time. Mr. Bensvee, would you like to make your concluding statement? Yes, I will. And I would like to thank you all for joining us today for our Q1 2024 call and for the continued support and interest in Valens Semiconductor. And I hope to see you on our next early call soon. Thank you very much, everyone. Thank you. This concludes Valens Semiconductor's first quarter 2024 results conference call. Thank you for your participation. You may go ahead and disconnect. Thanks for watching!
Operator: [inaudible]
Richard Ewing Schafer: There are no further questions at this time, Mr. Bernstein would you like to make your concluding statement, yes, I will and I would like to thank you all for joining US today for Q1, 2024 cold and photo continues to for continued support and interest.
Bernstein: Nevertheless, semiconductor and hope to see you in our next earning call soon thank you very much everyone.
Speaker Change: Thank you. This concludes the lengths semiconductor first quarter 2024 results conference call. Thank you for your participation you May go ahead and disconnect.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [noise] [noise].