Exceeds first quarter revenue guidance and raises second quarter guidance in anticipation of improved customer demand
VLN), a leader in high-performance connectivity, today reported financial results for the first quarter ended March 31, 2024.
"We were pleased to report some upside relative to our first quarter revenue guidance even though our business, like most in our industry, also continued to be impacted by macroeconomic headwinds and ongoing slow inventory digestion in the audio-video and automotive markets." said Gideon Ben-Zvi, CEO of Valens Semiconductor. "Nonetheless, we made good progress this quarter in expanding our collaborations and partnerships across the diverse verticals we serve as well as advancing our industry-leading high-performance connectivity solutions and bolstering the visibility of our superior technology.
"This quarter, we saw significant interest ramping up for our high-performance USB 3.0 extension solution, the VS6320. Since its launch in Q4 of last year, the chip has been designed into more than 30 products, and we anticipate multiple announcements and product launches as early as the InfoComm International trade show in June. We are excited to see the initial backlog and we expect sales to further ramp up during the second half of 2024.
"Our ongoing investment in expanding our presence within multiple verticals of the audio-video market enables us to capitalize on positive long-term trends, thanks to the latest additions to our portfolio, namely the VS6320 and the VA7000 chipsets. We believe that these verticals, which include video conferencing, industrial, and machine vision, combined may represent a total addressable market of approximately $1 billion per annum. Additionally, we continue to identify growth areas within multiple sectors of the automotive industry, and believe these opportunities, coupled with our technological innovations, may represent a total addressable market of $4.5 billion per annum by 2029.
"With our unparalleled innovative connectivity solutions and highly sophisticated chipsets, we believe Valens Semiconductor is strategically positioned to capture future opportunities that will continue to make a meaningful impact across a diverse set of growing industries. Finally, our strong balance sheet provides us with flexibility to continue to invest and innovate in pursuit of our long-term growth objectives," concluded Ben-Zvi.
Key Financial Highlights
- First quarter 2024 revenues reached $11.6 million, compared to $23.9 million in the first quarter of 2023
- GAAP gross margin was 59.0% for the first quarter 2024 (non-GAAP gross margin was 62.0%). This compared to GAAP gross margin 66.1% for the first quarter 2023 (and non-GAAP gross margin of 67.2%). The year-over-year change was due to lower total revenues, which resulted in lower fixed cost absorption, evaluation of certain cost of inventory and a larger share of automotive revenues compared to audio-video, which has much higher gross margin
- GAAP Net Loss was $(10.0) million in the first quarter 2024, compared to a GAAP Net Loss of $(5.4) million in the first quarter 2023
- Adjusted EBITDA Loss in the first quarter 2024 was $(7.1) million, compared to Adjusted EBITDA loss of $(2.9) million in in the first quarter 2023 - Robust balance sheet of $139.8 million in cash, cash equivalents and short-term deposits, and no debt, as of March 31, 2024, compared to $142.0 at the end of December 2023
- Inventory balance of $12.5 million on March 31, 2024, down from $13.8 million on December 31, 2023
Financial Outlook
Disclaimer: Valens Semiconductor does not provide GAAP net profit (loss) guidance as certain elements of net profit (loss), including share-based compensation expenses and warrant valuations, are not predictable due to the high variability and difficulty of making accurate forecasts. Adjusted EBITDA is a non-GAAP measure. See the tables below for additional information regarding this and other non-GAAP metrics used in this release.
"The macroeconomic landscape continues to be challenging with ongoing short lead times, causing uncertain order activity and inventory consumption by our customers," said Guy Nathanzon, CFO of Valens Semiconductor. "Due to slightly improved customer demand, second quarter revenues are now expected to range between $12.5 million and $13.0 million, higher than the initial expectations we provided last quarter. Gross margin is expected to range between 52.0% and 52.5%, and adjusted EBITDA loss is expected to be in the range of $(8.3) million and $(8.0) million.
"When the semiconductor industry improves, we will be prepared to advance our growth strategy with an even wider range of solutions and we remain optimistic about Valens Semiconductor's medium- and longer-term growth potential," concluded Nathanzon.
Conference Call Information
Valens - Financials - Quarterly Results. The live webcast can also be accessed by clicking here. A replay of the conference call will be available on Valens Semiconductor's website shortly after the call concludes.
Forward-Looking Statements
About Valens Semiconductor
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VALENS SEMICONDUCTOR LTD. | ||||
SUMMARY OF FINANCIAL RESULTS | ||||
(U.S. Dollars in thousands, except per share amounts) | ||||
Three Months Ended March 31, | ||||
2024 | 2023 | |||
Revenues | 11,559 | 23,880 | ||
Gross Profit | 6,815 | 15,793 | ||
Gross Margin | 59.0 % | 66.1 % | ||
Net Loss | (10,042) | (5,377) | ||
Working Capital[1] | 153,272 | 161,371 | ||
Cash, Cash Equivalents and Short-Term Deposits[2] | 139,787 | 139,703 | ||
Net Cash Used in Operating Activities | (1,390) | (8,669) | ||
Non-GAAP Financial Data | ||||
Non-GAAP Gross Margin[3] | 62.0 % | 67.2 % | ||
Adjusted EBITDA Loss[4] | (7,069) | (2,858) | ||
Non-GAAP Loss Per Share[5] (in U.S. Dollars) | $(0.06) | $(0.03) | ||
1. Working Capital is calculated as Total Current Assets, less Total Current Liabilities, as of the last day of the period. | ||||
2. As of the last day of the period. 3. Non-GAAP Gross Margin is defined as: GAAP Gross Profit excluding share-based compensation and depreciation expenses, divided by revenue. For the three months ended March 31, 2024, and 2023, share-based compensation and depreciation expenses were $347 thousand and $245 thousand, respectively. 4. Adjusted EBITDA is defined as Net profit (loss) before financial income (expense), net, income taxes, equity in earnings of investee, and depreciation and amortization, further adjusted to exclude share-based compensation and change in fair value of Forfeiture Shares, which may vary from period-to-period. We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers calculate Adjusted EBITDA in the same manner. Adjusted EBITDA should not be considered as an alternative to Net loss or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity. Please refer to the appendix at the end of this press release for a reconciliation to the most directly comparable measure in accordance with GAAP. 5. See reconciliation of GAAP to non-GAAP financial measures. | ||||
VALENS SEMICONDUCTOR LTD. | |||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||
(U.S. Dollars in thousands, except share and per share amounts) | |||||
Three Months Ended March 31, | |||||
2024 | 2023 | ||||
REVENUES | 11,559 | 23,880 | |||
COST OF REVENUES | (4,744) | (8,087) | |||
GROSS PROFIT |
6,815 |
15,793 | |||
OPERATING EXPENSES: | |||||
Research and development expenses | (10,145) | (13,960) | |||
Sales and marketing expenses | (4,388) | (5,060) | |||
General and administrative expenses | (3,571) | (3,832) | |||
TOTAL OPERATING EXPENSES |
(18,104) |
(22,852) | |||
OPERATING LOSS |
(11,289) |
(7,059) | |||
Change in fair value of Forfeiture Shares |
25 |
1,507 | |||
Financial income, net |
1,234 |
191 | |||
LOSS BEFORE INCOME TAXES | (10,030) | (5,361) | |||
INCOME TAXES | (17) | (19) | |||
LOSS AFTER INCOME TAXES | (10,047) | (5,380) | |||
Equity in earnings of investee | 5 | 3 | |||
NET LOSS | (10,042) | (5,377) | |||
EARNINGS PER SHARE DATA:
BASIC AND DILUTED NET LOSS PER ORDINARY SHARE [6] (in U.S. Dollars) | $(0.10) | $(0.05) | |||
WEIGHTED AVERAGE NUMBER OF SHARES USED IN CALCULATION OF NET LOSS PER ORDINARY SHARE | 104,047,426 | 101,076,390 | |||
6. See footnote 5. | |||||
VALENS SEMICONDUCTOR LTD. | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(U.S. Dollars in thousands) | ||||||
ASSETS | March 31, 2024 | December 31, 2023 | ||||
| CURRENT ASSETS Cash and cash equivalents | 35,100 | 17,261 | ||||
Short-term deposits | 104,687 | 124,759 | ||||
Trade accounts receivable | 9,907 | 14,642 | ||||
Inventories | 12,489 | 13,836 | ||||
Prepaid expenses and other current assets | 3,982 | 4,196 | ||||
TOTAL CURRENT ASSETS | 166,165 | 174,694 | ||||
LONG-TERM ASSETS: | ||||||
Property and equipment, net | 2,740 | 2,954 | ||||
Operating lease right-of-use assets | 1,749 | 2,202 | ||||
Other assets | 623 | 708 | ||||
TOTAL LONG-TERM ASSETS | 5,112 | 5,864 | ||||
TOTAL ASSETS | 171,277 | 180,558 | ||||
LIABILITIES AND EQUITY
CURRENT LIABILITIES | 12,893 | 15,931 | ||||
LONG-TERM LIABILITIES | ||||||
Forfeiture Shares | 13 | 38 | ||||
Operating leases liabilities | 140 | 190 | ||||
Other long-term liabilities | 79 | 95 | ||||
TOTAL LONG-TERM LIABILITIES | 232 | 323 | ||||
TOTAL LIABILITIES | 13,125 | 16,254 | ||||
TOTAL SHAREHOLDERS' EQUITY | 158,152 | 164,304 | ||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 171,277 | 180,558 | ||||
VALENS SEMICONDUCTOR LTD. | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(U.S. Dollars in thousands) | |||
Three Months Ended March 31, | |||
2024 | 2023 | ||
CASH FLOW FROM OPERATING ACTIVITIES | |||
Net loss for the period | (10,042) | (5,377) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Income and expense items not involving cash flows: | |||
Depreciation | 456 | 379 | |
Stock-based compensation | 3,764 | 3,822 | |
Exchange rate differences | 525 | 1,252 | |
Interest on short-term deposits | 275 | (566) | |
Change in fair value of forfeiture shares | (25) | (1,507) | |
Reduction in the carrying amount of ROU assets | 484 | 464 | |
Equity in earnings of investee, net of dividend received | 5 | 3 | |
Changes in operating assets and liabilities: | |||
Trade accounts receivable | 4,735 | (1,399) | |
Prepaid expenses and other current assets | 207 | (639) | |
Inventories | 1,347 | 250 | |
Long-term assets | 74 | 42 | |
Current Liabilities | (2,761) | (5,058) | |
Change in operating lease liabilities | (418) | (402) | |
Other long-term liabilities | (16) | 67 | |
Net cash used in operating activities | (1,390) | (8,669) | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Investment in short-term deposits | (37,840) | (40,725) | |
Maturities of short-term deposits | 56,979 | 44,144 | |
Purchase of property and equipment | (30) | (142) | |
Net cash provided by investing activities | 19,109 | 3,277 | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Exercise of stock options | 126 | 928 | |
Net cash provided by financing activities | 126 | 928 | |
Effect of exchange rate changes on cash and cash equivalents | (5) | (71) | |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 17,839 | (4,535) | |
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | 17,261 | 20,024 | |
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 35,100 | 15,489 | |
SUPPLEMENT DISCLOSURE OF CASH FLOW INFORMATION | |||
Cash paid for taxes | 35 | 56 | |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | |||
Trade accounts payable on account of property and equipment | 212 | 460 | |
Operating lease liabilities arising from obtaining operating right-of-use assets | 31 | 278 | |
VALENS SEMICONDUCTOR LTD. | ||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||
(U.S. Dollars in thousands) | ||||
The following table provides a reconciliation of Net loss to Adjusted EBITDA, a non-GAAP measure. Adjusted EBITDA is defined as Net profit (loss) before financial income (expense), net, income taxes, equity in earnings of investee and depreciation and amortization, further adjusted to exclude share-based compensation and change in fair value of Forfeiture Shares, which may vary from period-to-period. We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers calculate Adjusted EBITDA in the same manner. Adjusted EBITDA should not be considered as an alternative to Net loss or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity. | ||||
Although we provide guidance for Adjusted EBITDA, we are not able to provide guidance for projected Net profit (loss), the most directly comparable GAAP measures. Certain elements of Net profit (loss), including share-based compensation expenses and warrant valuations, are not predictable due to the high variability and difficulty of making accurate forecasts. As a result, it is impractical for us to provide guidance on Net profit (loss) or to reconcile our Adjusted EBITDA guidance without unreasonable efforts. Consequently, no disclosure of projected Net profit (loss) is included. For the same reasons, we are unable to address the probable significance of the unavailable information. | ||||
Three Months Ended March 31, | ||||
2024 | 2023 | |||
Net Loss | (10,042) | (5,377) | ||
Adjusted to exclude the following: | ||||
Change in fair value of Forfeiture Shares | (25) | (1,507) | ||
Financial income, net | (1,234) | (191) | ||
Income taxes | 17 | 19 | ||
Equity in earnings of investee | (5) | (3) | ||
Depreciation | 456 | 379 | ||
Stock-based compensation expenses | 3,764 | 3,822 | ||
Adjusted EBITDA Loss | (7,069) | (2,858) | ||
VALENS SEMICONDUCTOR LTD. | |||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | |||||
(U.S. Dollars in thousands, except per share amounts) | |||||
The following tables provide a calculation of the GAAP Loss per share and reconciliation to Non-GAAP Loss per share. | |||||
Three Months Ended March 31, | |||||
GAAP Loss per Share | 2024 | 2023 | |||
GAAP Net Loss used for computing Loss per Share | (10,042) | (5,377) | |||
Earnings Per Share Data: | |||||
GAAP Loss per Share (in U.S. Dollars) | $(0.10) | $(0.05) | |||
Weighted average number of shares used in calculation of net loss per share | 104,047,426 | 101,076,390 | |||
Three Months Ended March 31, | |||||
Non-GAAP Loss per Share[7] | 2024 | 2023 | |||
GAAP Net Loss | (10,042) | (5,377) | |||
Adjusted to exclude the following: | |||||
Stock based compensation | 3,764 | 3,822 | |||
Depreciation | 456 | 379 | |||
Change in fair value of Forfeiture Shares | (25) | (1,507) | |||
Total Non-GAAP Loss used for computing Loss per Share | (5,847) | (2,683) | |||
Earnings Per Share Data: | |||||
Non-GAAP Loss per Share (in U.S. Dollars) | $(0.06) | $(0.03) | |||
Weighted average number of shares used in calculation of net loss per share | 104,047,426 | 101,076,390 | |||
7. The company calculates its non-GAAP Loss per Share as GAAP Net Loss adjusted to exclude the following: Stock based compensation, depreciation, and the change in fair value of Forfeiture Share divided by the weighted average number of shares used in calculation of net loss per share. | |||||
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