• Revenue: $16 million, exceeding guidance of $14.7 million to $15.4 million.
• Acroname Revenue Contribution: $1.6 million, above guidance of $1.2 million to $1.4 million.
• GAAP Gross Margin: 56.4%, above guided range of 52% to 53%.
• Adjusted EBITDA Loss: $5.1 million, better than guidance of $6.8 million to $6.3 million loss.
• Cash and Cash Equivalents: $133.1 million, with no debt.
• Audio-Video Segment Revenue: $9.4 million, approximately 60% of total revenue.
• Automotive Segment Revenue: $6.6 million, approximately 40% of total revenue.
• GAAP Net Loss: $10.4 million.
• Non-GAAP Loss Per Share: $0.03.
• Inventory: $11.7 million as of September 30, 2024.

• Warning! GuruFocus has detected 3 Warning Signs with VLN.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Valens Semiconductor Ltd (NYSE:VLN) reported revenues of $16 million for the third quarter, exceeding the top end of their guidance.
• The company achieved three new automotive design wins with leading European OEMs, indicating strong market acceptance.
• Valens Semiconductor Ltd (NYSE:VLN) successfully entered the industrial machine vision market, showcasing innovative solutions at the VISION trade show.
• The VS6320 chipset has seen rapid adoption, attracting over 50 customers in the audio-video applications market.
• The company maintains a strong balance sheet with $133.1 million in cash and cash equivalents, positioning it well for future investments and strategic M&A.

Negative Points

• Inventory digestion continues to impact the industry, although Valens Semiconductor Ltd (NYSE:VLN) believes it is emerging from the bottom of the cycle.
• The company's GAAP net loss for the third quarter was $10.4 million, an increase from the previous quarter.
• Gross margin decreased to 56.4% from 61.4% in the second quarter, influenced by product mix shifts and lower fixed cost absorption.
• Operating expenses increased to $21.3 million in the third quarter, partly due to a $2.2 million expense from a batch production incident.
• The transition in leadership within the audio-video business unit may pose challenges during the organizational change.

Q & A Highlights

Q: With inventories being worked down, do you feel you're at a point where you can shift to demand to consumption again starting in 2025, or are there still pockets of inventory to be worked down? A: Yes, the visibility is improving. The sales cycle has shrunk, and the time to order chips is not as long as during COVID. We have some visibility of recovering the market, and we will elaborate more at our Investor Day next week.

Q: How is the integration of the Acroname acquisition going, and what is the initial traction in the industrial machine vision market? A: The integration is going well with no surprises. Acroname's sales are mostly ad hoc, with customers making orders directly online. The sales cycle is different from the semiconductor industry, and everything seems transparent as expected.

Q: Are the three OEM programs you discussed EV-only, or do they span across EV, hybrid, and traditional combustion platforms? A: There is no difference in ADAS between EV and non-EV vehicles for us. Our technology applies to both, and the electromagnetic influence of EV cars is not significantly different. The ADAS systems are designed to protect all types of vehicles equally.

Q: What is the expectation for gross margin trends going into 2025? Is it mix-driven, or are there other factors? A: We do not provide specific guidance for future gross margins. Typically, our gross margins are impacted by the revenue ratio between audio-video and automotive segments, as well as the level of revenues due to fixed costs.

Q: Did you have any customers that were more than 10% of revenue during the quarter, and do you expect this to change with new designs in your pipeline? A: No, we did not have any customers that were more than 10% of revenue. In the long term, we do not foresee being dependent on a single customer, as our customer base is broad-based across both automotive and audio-video sectors.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.