Q1 2025 Valens Semiconductor Ltd Earnings Call
Brian Dobson, Kevin Cassidy, Suji DeSilva
Yoni: Good morning. My name is Yoni, and I will be your conference operator today. At this time, I would like to welcome everyone to Valens Semiconductors' first quarter 2025 earnings conference calling webcast.
Speaker Change: 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.
Speaker Change: I will now turn the call over to Michal Benari, Investor Relations for Valens Semiconductor. Please go ahead.
Speaker Change: Thank you, and welcome everyone to Valens Semiconductor's first quarter, 2025, Earning School. With me today are Gideon Benari, Chief Executive Officer, and Guy Nathanzon, Chief Financial
Speaker Change: As a reminder, today's earning coal 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.
Speaker Change: Please refer to our annual report on 420S filed with the SEC on February 26, 2025, for a discussion of the factors that could cause actual results to defer 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.
Speaker Change: We will be discussing certain non-GAF measures on this call, which we believe are relevant in assessing the financial performance of the business and you can find reconciliation of these metrics within our earnings release. With that, I will now turn the call over to Gideon.
Gideon Bensley: Thank you Michal, hello everyone and thank you for joining us.
Gideon Bensley: Valens kicked off 2025 on a high note, delivering solid performance across key metrics, re-reported revenues of $16.8 million, which exceeded the top end of our guidance.
Gideon Bensley: Gagross margin for the first quarter came in at 62.9% above the guidance and adjusted the EBDAQ loss was $4.3 million within the guidance range.
Gideon Bensley: Beyond the numbers, I'd like to highlight some of our key achievements in Q1 that reinforced my confidence in our growth potential for the near future, and I would start with our cross industry business unit, or CAB, which consists of a variety of industry's professional audio video industrial machine vision and medical.
Gideon Bensley: In Prohiby, last quarter, inventory digestion continues to impact ourselves, but as expected we are emerging from the bottom of the cycle.
Gideon Bensley: As such, we are seeing an increasing interest in our solutions which are currently being integrated into products that are set to hit the market by the middle of 2026.
Gideon Bensley: The interest of our pro-V solutions was most apparent during a couple of industry events.
Gideon Bensley: First, in February , we were at IC, the industry's most renowned international conference for innovations in video conferencing, education, digital signage, entertainment, and more.
Gideon Bensley: We also announced the integration of these chipsets into next-gen products from top manufacturers and showcasing products from customers such as Senhaizer and Logitech.
Gideon Bensley: These partnerships reflect click industry trends, more rooms, more displays, more video equipment, all creating more opportunities for Valens.
Gideon Bensley: 2nd Infocom China in April , we were honoured with a best-of-show editor's choice award in the best technology application category
Gideon Bensley: This award will, for our innovation in USB 3 extension, we saw a BS63020 chip and is further testament to the superiority of our technology.
Gideon Bensley: As mentioned in previous course, we are seeing growing the adoption of a BS 6-3-12V chipset for the extension of USB.
Gideon Bensley: They are now over 70 products that have hit the market with our chicken size.
Gideon Bensley: Examples of presently released 6320 based products include Whole Technology Discovery, Street Series, Image Genie, U of Revolverlake, and Pro, IPAD Extenders, all of which hit the market over the last couple of months.
Gideon Bensley: Staying with our across industry business units, I would like to discuss another industry. Machine vision, where once again, a recent international conference shines the spotlight of our technology with very positive customer feedback.
Gideon Bensley: In March, at the Embedded World Event, in November , we showcase our innovative connectivity solutions, the V8 7000 and VS 63012D.
Gideon Bensley: Initially developed for the automotive and prohibitive industries, these chipsets are already proven and mass-produced and are now being repurposed to extend common use machine vision protocols.
Gideon Bensley: At the conference, we met with the living players in the industry, follow-up whom were impressed by our technology.
Gideon Bensley: There is no substitute for seeing live demonstrations of our chipsets, and this, we known in the three events was an excellent opportunity to further broaden our customer base.
Gideon Bensley: Our project with clearly machine vision sales continues to progress and we are confident that our A-Fine based solution will soon begin to wedge this industry open.
Gideon Bensley: One machine vision partnership I would like to mention, which we now just proud of the show, is with Arbor Robotics and Sherry Embedded Solutions.
This collaboration integrates August-Advanced Wist Perception Engine
Gideon Bensley: Valens VH7000 chipset and cherry, rock chip-based hardware module. The collaboration delivers unprecedented design flexibility, cost efficiency, and performance for mobile machine manufacturers
Speaker Change: Valens chips its offer a number of important advantages in this industry.
Gideon Bensley: Sir Valens chips support the high solution video, increasing the precision of automated machine vision solution. Second, the Valens chips are standardized facilitating the implementation of small phone tactile camera modules.
Dermek on Hour of the Chiefs
Valet Solutions are the most in my region.
Speaker Change: Kiran was the head of VD exterior head to say, and I called.
Speaker Change: The decision of a lesbian 7,000, Michal A-Fight Connectivity, Interror of Folio opens the opportunity for a platform and a quote.
Speaker Change: The co-founder and CEO of Our Robotics Agreed and I quote again, Our Robotics Perception Engine demands high quality video data and that's exactly what Valens Semiconductor's solution provides while allowing us to discuss the processing units from the cells and the floats.
Speaker Change: Next week, at Automated Trust, we will be showcasing our machine vision solutions.
Speaker Change: with partners that are adding APA technology to their platforms such as these three embedded enthromos. In addition, our APA chipset has been shortlisted for the show's innovation awards. We are very proud of this industry's recognition.
Speaker Change: In all, we continue to support our customers in bringing solutions to the market base on our V-7000 and V-660320 chipsets and we are confident that the machine vision industry will become even more significant source of revenues for us before long.
Speaker Change: We expect initial revenue from the end of 2026 with significant potential growth during the following years.
I would like to turn now to the automotive industry.
Speaker Change: As a reminder, our opportunity in automotive is dominated by the V8-7000 sheep set the first in the industry to comply with the MEP API stand-up for high-speed sensor connectivity.
Speaker Change: Late last year, we announced three assignments with City, European, OEM solutions, gaining a strong and food food for A5 within the OEM community.
Speaker Change: The momentum from EPA continued to build in Q1245 as we announced two significant milestones.
Speaker Change: The substance that mobilized a global leader in data systems selected our chips for the Incar, cells of the compute-connectivity infrastructure for mobilized ICU-6 high-production programs, underway with a group of global automotive brands.
Speaker Change: That is to say, the design wins. We are now sluts here.
Speaker Change: came down through a strong collaboration with one of the most central automotive P1 in the industry.
Speaker Change: Mobilize. More importantly, in announcing this partnership we are signaling to the OEM community that A-Fine is the decking of the key industry player like Mobilize and that they will be working with us to bring this solution to other OEMs around the world.
Speaker Change: Kevin's worked at Executive Vice-Presenter of the Engineering and Computer Services.
Speaker Change: Quote, MEP-A5, believers, officials, and robots, high-performance carbon dioxide connectivity and we look forward to working with Valens to broaden the MEP-A5 ecosystem and deliver this technology to more market-leading automakers and Quote.
Speaker Change: The second significant milestone that we announced is the successful interoperability with seven vendors of A5 silicone. Notice interoperability is the hallmark of any true standout, so having multiple suppliers for MPA5 can only broaden the A5 pipe or the A5 is I like to call it.
Speaker Change: I will make special mention to one of these A4 Vendor Omni Vision, a global supplier of
Speaker Change: of Automotive, Wei M, which is integrated in A5 directly inside the sensor.
Speaker Change: After Sony, only vision is the second major company to announce its type of integration which is only possible because A5 is a standout.
Speaker Change: Herein was the senior director of the Zionist only vision said, quote, Integrating MEP A-Fight Directly Into Our Essentials provides significant value for only M customers and toddlers and quote.
Speaker Change: I would like to take a moment to discuss the growth of MPA in China.
Speaker Change: We are hearing that the Chinese automotive ecosystem is rapidly adopting the AFA standout. From the variety of local AFA City convenes to tier 2 and tier 1 supplier designing around this specification to significant interest from OEM in this technology.
Speaker Change: Of course, Chinese are nice any other country in the world. There are fast to adopt new technologies, but there are also a series of regulations that we are required to adhere to when attempting to penetrate this market.
to address some of these challenges.
Speaker Change: We have partners with the local Chinese sphere ESWing Computing to present Chinese automakers the opportunity to solve locally manufactured production-ready MEPA file chipset for both sensor and display connectivity.
Speaker Change: This scholarship allows us to access the large and gross MIPA5 business opportunities that exist in the Chinese markets.
Speaker Change: Additionally, with regard to our activities in China, we were proud to display our APEC technology at the Auto Shanghai Conference at the end of April .
Speaker Change: At our booth, we unveiled a number of A5 demonstration with major players in the automotive industry. Fred, we had Qualcomm's Snapdragon-Ride Corp evaluation platform with A5 connectivity.
Speaker Change: 2nd reaction is the one supplies the size, its feet with a-fights around the system. So we had a Ryzen Robotics Jones platform with a-fights, and finally an angels reference design with Sigma Star based on a-fights.
Speaker Change: It's clear that the momentum around A5 continues to build, we continue to participate in several evaluation processes at various stages with multiple OEMs. With that, I will turn the course to Guile to discuss our financial performance in more details.
Guy Nathanzon: Thank you, Gideon. A start with a fresh quarter of 2025 results and then provide our outlook for the second quarter.
Guy Nathanzon: which achieved quarterly revenue of $16.8 million, which exceeded our guidance of between $16.3 million to $16.6 million.
Guy Nathanzon: This compares to revenue of $16.7 million in Q4, $20.24 and $11.6 million in Q1, $20.24 [inaudible]
Guy Nathanzon: The cross industry business, or CAB, accounted for $11.7 million, or approximately 70% of total revenue.
Guy Nathanzon: while Automotive Contributed $5.1 million or approximately 30% of Total Revenue Discoater.
Guy Nathanzon: This compares to Q4 2024 revenue of $11.7 million from CAB and $5 million from Automotive which presented 70% and 30% of total revenue respectively.
Guy Nathanzon: It also compares to Q1 2020 for revenue of $7.2 million from the C.A.G. and $4.4 million from Automotive, representing 60% and 40% of total revenue respectively.
Guy Nathanzon: In Q1 2025, Gross Profit was $10.6 million, compared to $10.1 million in the fourth quarter of 2024, and compared to $6.8 million in the first quarter of 2024.
Guy Nathanzon: Q1 2025 Gross Margin was 62.9%, compared to our guidance of between 60.8% and 61.3%.
Guy Nathanzon: This compares to a Q4 2024 growth margin of 60.4% and Q1 2024 of 59%.
Guy Nathanzon: On a segment basis, P1 2025 was margin from the cross-industrial business was 69.1% and rough margin from automotive was 48.4%
Guy Nathanzon: This compares to a Q4 2024 growth margin of 64.7% and 50.5% respectively, and a Q1 2024 growth margin of
77.2% and 29.1% respectively.
Guy Nathanzon: The increase in gross margin of the cross industry business, CAB, compared to Q42024, was reduced to an inventory adjustment in Q42024.
Guy Nathanzon: The increase in Q1 2025 automatic growth margin compared to Q1 2024 was due to an optimization of our product cost.
Guy Nathanzon: Non-GAP gross margin in Q1 was 66.7% which compared to a 64.5% in Q4 2024 and 62% in Q1 2024.
Guy Nathanzon: Operating expenses, Q1 2025, totaled $20 million, compared to $18.5 million at the end of Q4 2024 and $18.1 million in Q1 2024.
Guy Nathanzon: With us in development expenses, the Q1 totaled $10.6 million, compared to $10.1 million in Q4 2024 and $10.1 million in Q1 2024.
Guy Nathanzon: SGN expenses, Q1, were $9.3 million, compared to $8.3 million in Q4 2024, and $8 million in Q1 2024.
Guy Nathanzon: gas net loss in Q1 was $8.3 million, compared to a net loss of $7.3 million in Q4 2024 and a net loss of $10 million in Q1 2024.
Guy Nathanzon: Adjusted to be 9Q1 with a loss of $4.3 million within the guidance range of a loss between $4.5 million and $4.2 million.
Guy Nathanzon: This compares to an adjusted EBITDA loss of $3.7 million in Q4 2024 and an adjusted EBITDA loss of $7.1 million in Q1 2024.
Guy Nathanzon: Gap Los per share of Q1 was 8 cents compared to a Gap Los per share of 7 cents for Q4 2024 and a Gap Los per share of 10 cents for Q1 2024.
Guy Nathanzon: Non-Get Closer Share in Q1 2025 was three cents, compared to a loss per share of two cents in Q42024 and a loss per share of seven cents in Q12024.
Guy Nathanzon: The difference between gap and non-GAAP loss per share was due to a stop-based compensation and depreciation and amortization expenses.
Guy Nathanzon: This compares to 131 million dollars at the end of Q4 2024 and 139.8 million dollars at the end of Q1 2024.
During the quarter, we spent $9.6 million on both claims.
Guy Nathanzon: At the end of the first quarter was $19.8 million, compared to $133.6 million at the end of Q4 2024 and $153.3 million at the end of Q1 2024.
Our inventory as a March 35, 2025, was $10.9 million.
Guy Nathanzon: A slight increase from $10.2 million on December 35, 2024 and down from $12.5 million on March 31, 2024.
Guy Nathanzon: Now, I would like to provide our guidance for the second quarter of 2025. We expect Q2 revenue to be in the range of $16.5 to $16.8 million.
Guy Nathanzon: We expect gross margins for Q2 of 2025 to be in the range of 63% to 64% and we expect adjusted the bidellos in Q2 2025 to be in the range of $4.9 to $4.4 million loss.
Guy Nathanzon: Before turning the call back to Gideon, I want to refer to the new tariffs. While Semiconductors are currently exempt from these tariffs, it is still too early to estimate the direct impact on our operations and the impact on our customers and market demands.
Guy Nathanzon: We are closing monitoring the situation and we will provide updates to the investment community as we get more information.
Guy Nathanzon: Now turn the call back to be done for his closing remarks before operating the call for Q&A.
Thank you, Brian .
Guy Nathanzon: We believe that Valens Semiconductor is well positioned for a return to growth in our target markets, leveraging our industry-leading technology and robust balance.
Guy Nathanzon: We remain committed to executing our long-term strategy to drive reduced growth and profitability.
Guy Nathanzon: Before opening the call for questions, I want to express my gratitude to the entire Valens global team for their ongoing commitment and dedication. With that, I will open the call to answer your questions, operator.
Thank you.
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.
Speaker Change: If you're using speaker equipment, kindly lift the handset before pressing the numbers. Please ask your question in a loud and clear voice. Your questions will be pulled in the order they are received. Please stand by while we pull for your questions.
Rick Schaefer: The first question is from Rick Schaeffer of Oppenheimer. Please go ahead.
Bye-bye. Bye.
Speaker Change: Hi, this is Wei Mok on the line for Rick, and thanks for taking a question. Firstly, congrats on the mobile island. I was wondering how does this
Rick Schaefer: partnership, change the dynamic in which you pursue future OEM wins with A5. Since mobile is already collaborating across several OEMs, does that by virtue of me you will be working closely with those OEMs?
Speaker Change: Hi Rick, thank you for your question and I'm happy to answer about actually it's almost an invited question for me. The mobile line collaboration is a collaboration which is purely of quality.
What Valens Semiconductor provided here?
Speaker Change: and the bandwits of cameras that are coming into the C.O. and of Robilai, a need that of course is more resolution, is more bandwidth, more exposed to a noise that can ruin the whole system. And we prove that by this elevation, by this increase in bandwidth, we can do things which others can't.
Speaker Change: and this is the nature of the deal. About what will influence other deals?
Speaker Change: It's time to tell, but the essence is that mobile eye is moving up, is elevating their capabilities.
Speaker Change: and requires better cameras which provide more data and we are there for them. So we believe it's even those systems that initially they are installed or have their own design
Speaker Change: Those customers would like to elevate in some stage and then we would be there. I guess if you ask a mobile I they would as they said in the in the press release they see our solution as a solution that is.
Speaker Change: taking, helping them take the connection between the camera and the ECU up.
Speaker Change: I hope I answered exactly what you, but if it's not the answer let me know.
Speaker Change: No, yeah, I was just wondering, yes, because mobile eyes are already working with other large OEMs, are you working directly closer to those OEMs or will you still be pursuing OEM design
Speaker Change: Well, of course, we are, you know, this market, the market everyone speaks to everyone.
Speaker Change: and are knowing each other. OEM is always aware who is the till-two, the till-two, the till-one, and sometimes even the whole negotiation.
Speaker Change: So, actually, all the answers are right. There are some time to pick the OEM, several to one, sometimes to both. But in all cases, the OEM is fully aware and involved with the decision, it will be the service.
Speaker Change: Okay, got it, that's clear. Thank you. And as for my follow-up, it's on Paris. I really appreciate the color that you're not seeing any direct impacts. So, what gives you this level of visibility? And while there is no direct impacts, are you seeing any second or third order effects? So, any indirect impacts to your business from Paris?
Speaker Change: Prestigius has the circles around and the circles around and that's the, the whole, the whole idea for business model is to create the presence, to start with the strong will, with those let's give us the,
Speaker Change: Quilibility and to move on and when we will have a news to announce believe me we will not wait a minute.
All right. Thank you.
Speaker Change: The next question is from Quinn Bolton of Needham & Company. Please go ahead.
Thank you.
Speaker Change: that hopefully pushes customers to adopt your solution. Can you give us a sense? Is there a camera resolution where the incumbent technology that mobile I use is?
Speaker Change: with a large semiconductor competitor. Max is out. Are we talking 8 megapixel resolutions? Does it have to be something higher? Or just any kind of metrics around the resolution where the MIPI standard may really start to show dramatic...
BIO benefits relative to the Texas Instruments FPD link technology.
Speaker Change: Thank you very much the question and I would be happy to answer without drilling too much into technology because the answer is quite a technique and I would try to leave it in a way which is not to technique I hope I would succeed.
Speaker Change: Together create the bandwidth. The higher the bandwidth, the more exposed it is to noise. And this is something which is quite not intuitive.
Speaker Change: We move to twice the bandwidth, but the fragility and the exposure to noise is not wise, it's not linear, it's far more meaning.
Speaker Change: that if a car that is moving to a higher, higher bandwidth will be driving near a cello antenna on a bridge or near a truck or whatever.
Speaker Change: The result can be lost frames and lost frames meaning that missing the red light or missing the passenger or missing something Now, the calculation of what the bandwidth is, whether it's 8 megapixel camera or 4 megapixel camera, 30 or 60 or 24 frames per second or 10 to 14 whatever number of pixel each of them has its calculation and they can play with it
Speaker Change: The Supreme System that analyzes it, but you know, you need a certain amount of information to analyze it. I want to go with something very detailed, if I may.
Speaker Change: Breaking distance is 150 meters, but there is a very small foot of a child just out of the sidewalk in 100 meters.
Speaker Change: A second resolution or set up bandwidth would not see the foot of the child, and this is exactly how to prevent casualty or accident by going upwards on resolution. I hope it was not too technical and I gave the answer.
Speaker Change: No, that was very helpful. I wanted to follow up, you mentioned the...
Speaker Change: How you're progressing in terms of conversations with Chinese auto OEMs, when could you start to see, you know,
Speaker Change: and adoption of your solution in the China market. And, you know, to extent you're working with that local partner, does that have any impact on profitability or margins for your solution since you're working with that partner on the go-to-market?
Speaker Change: Strategy. Yeah, there are several sections in this question, I will try to not to miss any of them. First, China become the place of innovation.
Speaker Change: A lot of those chips would be acquired by purchase from us, so we help the ecosystem and we happy to see how the ecosystem is vibrant and how the ecosystem is active.
Speaker Change: We need to require different business models. Business models without getting too detailed,
Speaker Change: I would say Mechanics in order to penetrate into the market. And we are adopting them. We don't try to...
Speaker Change: I believe that we are very well aware and accepted in China as a superior technology, I believe that there is...
Speaker Change: Most of, if not all, of the Chinese manufacturer, know about AFI and it's an option, know about the balance, it's an option and we are working very hard in order to create news for us and for the markets.
Speaker Change: Creating a last quick one for Guy, you guys gave 20-25 guidance, I think, originally back at the analyst day, a late last year, I think you reiterated on your last conference call. I didn't see any comment about 20-25 guidance, so not sure if you're willing to reiterate that this morning or whether you're pulling that guidance, given some of the tariff uncertainty, but just any comment on the 20-25 annual guidance.
Speaker Change: And yes, we closely tracking the situation and the impact of the terrorists and if there is any change we will let you know but this stage we keep everything that is.
Perfect. Thank you. Thank you.
Thank you.
Operator: The next question is from Suji DeSilva of Roth Capital. Please go ahead.
Speaker Change: Hi, Gideon. Hi, Guy. Congrats on the steady results here. Switching over to the CIB segment as you talk about the mid-26 ramp.
Speaker Change: of somewhere in the newer products. You can talk about which end markets might lead that professionally via industrial machine vision or medical. And then which products would lead the ramp. Is it VA 7000 or VS 6 320 or will be both together?
Speaker Change: Okay, there are, you know, we're active in several markets in the CAB. There is a traditional privy, the market which suffered from an inventory digestion and we look that there is recovery in the market. There is the market, which is...
V7000 Series for Automotive, both of them.
Speaker Change: Find the way to extension and connecting cameras in the industrial world to the computing power that calculates and helps monitoring the industrial process.
Speaker Change: The answer is that in the industrial machine vision supported both the chips from automotive and automotive video with very few changes in modification been found the chips that are suitable for this market which were very happy about this reuse.
[inaudible]
Speaker Change: Okay, all right, thanks, Gideon. Any other questions? Really is up? I'm so good. On the, um...
Speaker Change: on the financial model. What do you think the break-even revenue is? Kind of revisiting which talk about the analyst day, perhaps, and then what do you think expected C.I.B. auto mix would be at that point?
Aha well
Speaker Change: It's a question of thinking timing. We see the progress in all the three sections of CAB and automotive and audio video. Of course, automotive is everyone knows the slowest in the market.
Speaker Change: We thought the CAB would be a slower than A.V., we were not sure it is, it was just CAB, there was a lot of enthusiasm in the market and we hope it is...
Speaker Change: Definitely faster than all the automotive, the question whether it's slower than all the video, or not, we are in the stage of.
Not a certain set in the third, but erm…
Speaker Change: Maybe not very far away from there, but it's very hard to give you access to what would be the mix and what would be the mix in the stand, but probably Guy should elaborate here more than I do, like you know, I do do. So I will give you again the data we've provided during the analyst days, first of all.
Speaker Change: and we expect to be a EBITDA positive at any run rate of revenue of $120 million roughly a year.
Speaker Change: We did not say when we expected to happen. We said about the Gideons for 25 and we said where is our goal for a 2029, which is anywhere between 220 to 300 million dollars but 2029.
Speaker Change: But the CAB, anywhere between $0.90 to $100 million for a venue.
and we expect to see on Automotive 65 210.
Speaker Change: a machine engine industrial 35 to 50 and a for potential acquisition $30 to $40 million altogether and a $220 to $300 million for every new body sphere.
Speaker Change: 27, late 26, 27 and beyond. I think that these are the inputs we gave during the last day. I think that that probably can help you do the calculation on the specific question you have asked.
Okay, thanks. Very helpful. Guy, Gideon, thank you.
Thank you.
Speaker Change: The next question is from Robert Lynch of Stonegate Capital Partners. Please go ahead.
Speaker Change: Hi, getting hi, Guy. This is Robert Wenchown for Dave Storms. I just have a couple questions here. The first one is just around margins and I apologize if this is repetitive.
Speaker Change: But if you could just provide more color on what specific initiatives allowed for a decreasing cost and do you find these margin levels to be sustainable?
Going forward here.
Speaker Change: So unfortunately, I don't have too much to say about what we said.
We do an ongoing effort.
and activities in order to improve the margin all the time.
Speaker Change: In addition, typically we have also the element of the product mix which also has some impact on the growth margins. So these are the typical elements that influence the growth margin of the company.
Speaker Change: Okay, understood that I really appreciate the color there, and just had one more around working
Speaker Change: Given the slight volatility here in the supply chain, excuse me, how are you approaching working capital management to balance inventory levels, as well as liquidity, and the flexibility needed to meet custard demand amid these macro headwinds? Anything there?
Speaker Change: What are the two parts of the question I'll take the first one? Because of an answer, very strong balance sheet our policy is zero risk in being a very good supplier to our customer.
Speaker Change: And because we know that the suggestion was very stable, we rather have a bigger buffer and continue to be a company that each of our customers will complement us and this is part of the company's pride.
Speaker Change: and I think this is one of the better use of capital and this is the...
Speaker Change: Part of the question, I guess I would take the second part. So I think that eventually a lead time got back to normal levels of the pre-COVID and that means a both lead time that Valens provides to its customers.
Speaker Change: and the same end opposite, Valens gets from its suppliers.
Speaker Change: So we're trying to manage the inventory in a most efficient way that we could, adjusting the lead time and keeping some buffers in order to make sure that we can always supply on time and this is the way we maintain the inventories.
Rick Schaefer: Okay, great. Thank you, Gideon. Thank you, Guy. That's all for me. Congrats on Q1 and good looking Q2. Thank you. Thank you.
Speaker Change: If there are any additional questions, please press star one. If you wish to cancel your request, please press star two. Please stand by while we pull for more questions.
Speaker Change: There are no further questions at this time. Mr. Benzvi, would you like to make your concluding statement?
Mr. Bensvie: Yes, please, thank you. I would like to thank you all for joining us for the questions.
Mr. Bensvie: and for the discussion. And joining us today for our fresh water 2020 5N call. And for your continued support and interest in Valens Semiconductor, hope to meet you again in our next training call. And thank you, Goodbye.
Mr. Bensvie: Thank you. This concludes the Valens Semiconductor Results Conference call. Thank you for participation. You may go ahead and disconnect.