Q4 2025 Valens Semiconductor Ltd Earnings Call

February 25, 2026

Operator: Good morning. My name is Hila, and I will be your conference operator today. At this time, I would like to welcome everyone to Valens Semiconductor's Q4 and full year 2025 Earnings Conference Call and Webcast. 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 Michal Ben Ari, investor relations for Valens Semiconductor. Please go ahead.

Speaker #2: 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 Michal Ben Ari, Investor Relations for Valens Semiconductor.

Speaker #2: Please go ahead. Thank you. And welcome, everyone, to Valens Semiconductor's fourth quarter and full year 2025 earnings call. With me today are Yoram Senenger, Chief Executive Officer, and Guy Nathanzon, Chief Financial Officer.

Michal Ben Ari: Thank you. Welcome everyone to Valens Semiconductor's Q4 and full year 2025 Earnings Call. With me today are Yoram Salinger, Chief Executive Officer, and Guy Nathanzon, Chief Financial Officer. 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 with the SEC on 25 February 2026, for our discussions 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.

Speaker #2: 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.

Speaker #2: 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 25, 2026, for a discussion of the factors that could cause actual results to differ materially from those expressed or implied.

Michal Ben Ari: Please refer to our annual report on Form 20-F with the SEC on 25 February 2026, for our discussions of the factors that could cause actual results to differ materially from those expressed or implied. We do not undertake any duty to revise or update such statements to reflect new information, subsequent events, or changes in strategy. We will be discussing certain non-GAAP measures on this call, which we believe are relevant in assessing the financial performance of this business. You can find reconciliations of these metrics within our earnings release. With that, I will now turn the call over to Yoram.

Speaker #2: We do not undertake any duty to revise or update such statements to reflect new information subsequent events or changes in strategy. We will be discussing certain non-GAAP measures on this call, which we believe are relevant in assessing the financial performance of this business, and you can find reconciliations of these metrics within our earnings release.

Michal Ben Ari: We will be discussing certain non-GAAP measures on this call, which we believe are relevant in assessing the financial performance of this business. You can find reconciliations of these metrics within our earnings release. With that, I will now turn the call over to Yoram.

Speaker #2: With that, I will now turn the call over to Yoram. Thank you, Mikey. Hello, everyone, and thank you for joining us. I'd like to begin this call by introducing myself to you all.

Yoram Salinger: Thank you, Mikey. Hello, everyone, thank you for joining us. I'd like to begin this call by introducing myself to you all. My name is Yoram. I come to Valens with over 25 years of leadership experience in global high-tech companies. My background is in building and scaling technology companies through key growth phases, that's exactly what I intend to do here at Valens. I'm really excited to have joined this company. I've only been here a few months, but it's already clear to me that Valens has exceptional technology, a strong executive team, dedicated and professional employees, and very compelling opportunity ahead. Before I dive into Q4 numbers and our annual overview, I want to take this opportunity, my first Valens earnings report, to present you with my initial thoughts about the company and to set expectations around Valens' growth in the years ahead.

Speaker #2: My name is Yoram. I come to Valens with over 25 years of leadership experience in global high-tech companies. My background is in building and scaling technology companies from key growth phases and that's exactly what I intend to do here at Valens.

Speaker #2: I'm really excited to have joined this company. I've only been here a few months, but it's already clear to me that Valens has exceptional technology, a strong executive team, dedicated and professional employees, and very compelling opportunity ahead.

Speaker #2: Before I dive into Q4 numbers and our annual overview, I want to take this opportunity—my first Valens earnings report—to present you with my initial thoughts about the company, and to set expectations around Valens' growth in the years ahead.

Speaker #2: This company has delivered some remarkable achievements over the years. We created the HD-based T standard and founded the HD-based T alliance, which boasts over 200 members' companies.

Yoram Salinger: This company has delivered some remarkable achievements over the years. We created the HDBaseT standard and founded the HDBaseT Alliance, which boasts over 200 members companies. We sell to nearly all the leading players across the audio/video industry, supporting their innovations across various verticals they serve. In the automotive market, we are a longtime supplier of chips for Mercedes-Benz, powering the state-of-the-art MBUX infotainment system. We were a key contributor to the MIPI A-PHY standard. We've become a pillar within the growing A-PHY ecosystem, achieving 4 design wins for the next-generation ADAS systems. We feel confident that both the audio-video and automotive industries represent significant long-term growth pillars for the company. The first number I want to share with you is a new growth projection. We expect that in 2026, our revenues will reach between $75 and $77 million.

Speaker #2: We sell to nearly all the leading players across the audio-video industry, supporting their innovations across various verticals, they serve. In the automotive market, we are a long-time supplier of chips for Mercedes-Benz, powering the state-of-the-art MBUX infotainment system.

Speaker #2: We were a key contributor to the MEPE A5 standard, and we've become a pillar within the growing A5 ecosystem achieving full design wins for the next generation ADAS systems.

Speaker #2: Before confident that both the audio-video and automotive industries represent significant long-term growth pillars for the company, and the first number I want to share with you is the new growth projection.

Speaker #2: We expect that in 2026, our revenues will reach between 75 and 77 million dollars. The midpoint reflects growth approximately 8% over last year. While we expect to maintain growth in 2026, the pace and extent of the growth may be affected by microeconomic conditions and the pace of adoptions of new technologies.

Yoram Salinger: The midpoint reflects growth approximately 8% over last year. While we expect to maintain growth in 2026, the pace and extent of the growth may be affected by macroeconomic conditions and the pace of adoptions of new technologies, which could continue to reduce visibility and increase uncertainty. Given the current environment and reduced visibility beyond the near term, we will provide single-year growth projections going forward. My outlook for Valens and my strategy for achieving our growth target is as follows: From now on, we are concentrating our resources on our core businesses, audio video and automotive. Those are the markets where Valens brings unmatched technology leadership and where we see sustained, profitable growth opportunities. That said, we remain proactive, focusing on seizing large revenue-generating opportunities that arise in additional verticals that require high-performance connectivity solutions in challenging environments.

Speaker #2: Which could continue to reduce visibility and increase uncertainty. Given the current environment and reduced visibility beyond the near term, we will provide single-year growth projections going forward.

Speaker #2: My outlook for Valens and my strategy for achieving our growth target is as follows: from now on, we are concentrating our resources on our core businesses: audio-video and automotive.

Speaker #2: Those are the markets where Valens brings unmatched technology leadership and where we see sustained profitable growth opportunities. That said, we remain proactive, focusing on seizing large revenue-generating opportunities that arise in additional verticals that require high-performance connectivity solutions in challenging environments.

Speaker #2: But our priority will be to ensure disciplined execution, profitability, and innovation within our core markets. With that, as a starting point, I'd like now to dive into our Q4 and 2025 full-year performance.

Yoram Salinger: Our priority will be to ensure disciplined execution, profitability, and innovation within our core markets. With that as a starting point, I'd like now to dive into our Q4 and 2025 full year performance. We are pleased to report a strong Q4, well above our initial expectations. We delivered revenues of $19.4 million, exceeding our guidance range of $18.2 to 18.9 million. As customer demand exceeded expectations in the audio-video market, this marked the seventh consecutive quarter of growth for our company. GAAP gross margin for Q4 2025 came in at 60.5%, better than the guidance, and Adjusted EBITDA loss was $4.3 million within the guidance range.

Speaker #2: We are pleased to report a strong fourth quarter well above our initial expectations. We delivered revenues of 19.4 million dollars, exceeding our guidance range of 18.2 to 18.9 million dollars.

Speaker #2: As customer demand exceeded expectations in the audio-video market, this marked the seventh consecutive quarter of growth for our company. GAAP gross margin for Q4 2025 came in at 60.5%, better than the guidance, and adjusted EBITDA loss was $4.3 million, within the guidance range.

Speaker #2: Our full-year revenues for 2025 were 70.6 million dollars, also exceeding our guidance range of 69.4 to 70.1 million dollars. GAAP gross margin for the full year 2025 came in at 62.4%, and adjusted EBITDA loss was 16.9 million dollars, both above our guidance.

Yoram Salinger: Our full year revenues for 2025 were $70.6 million, also exceeding our guidance range of $69.4 to 70.1 million. GAAP gross margin for the full year 2025 came in at 62.4%. Adjusted EBITDA loss was $16.9 million, both above our guidance. Looking ahead to Q1 2026, we expect revenue to be in the range of $16.3 to 16.7 million. Beyond the numbers, I want to begin our quarterly discussion with a review of one of our core growth engines, audio video. Valens is offering two unique and cutting-edge chipsets that fill market gaps for this industry, the VS3000 and the VS6320. Let's start with the VS3000, the only chip on the market that can extend uncompressed HDMI 2.0 over widely used category cables.

Speaker #2: Looking ahead to Q1 2026, we expect revenue to be in the range of 16.3 to 16.7 million dollars. Beyond the numbers, I want to begin our quarterly discussion with a review of one of our core growth engines, audio-video.

Speaker #2: Valens is offering two unique and cutting-edge chipsets that fill market gaps for this industry: the VS3000 and the VS6320. Let's start with the VS3000.

Speaker #2: The only chip on the market that can extend uncompressed HDMI 2.0 over widely used category cables. Our chip is the solution of choice for products that need to reliably send high-resolution video over long distances.

Yoram Salinger: Our chip is the solution of choice for products that need to reliably send high-resolution video over long distances. Think projectors, think lecture halls and auditoriums, think boardrooms, warehouses, sports bars, and casinos. Anything that requires multiple display and high-quality video, our VS3000 is basically the most suitable option. In 2025, our VS3000 finally transitioning from high-end only to more mainstream products. Major companies brought state-of-the-art VS3000 market, including leaders Crestron, Extron, Kramer, and Atlona. This translated into bounce back year, marking a nearly 100% increase in VS3000 sales from 2024. This is great news for Valens, as the VS3000 is the most advanced HDBaseT chip we offer and is a pillar of our growth opportunity in our core audio video market.

Speaker #2: Think projectors. Think lecture halls and auditoriums. Think boardrooms, warehouses, sports bars, casinos—anything that requires multiple displays and high-quality video. Our VS3000 is basically the most suitable option.

Speaker #2: In 2025, our VS3000 finally transitions from high-end only to more mainstream products. Major companies bought state-of-the-art VS3000 markets, including leaders Crestron, Extron, Kramer, and Atlona, this translated into bounce-back year marking a nearly 100% increase in VS3000 sales from 2024.

Speaker #2: This is great news for Valens, as the VS3000 is the most advanced HD-based T chip. We offer and is a pillar of our growth opportunity in our core audio-video market.

Speaker #2: As 4K video becomes more mainstream and as lower-quality solutions become less viable for professional deployment, we expect VS3000 sales to continue to ramp up as we move further into 2026 and beyond.

Yoram Salinger: As 4K video becomes more mainstream and as lower quality solutions become less viable for professional deployment, we expect VS3000 sales to continue to ramp up as we move further into 2026 and beyond. The second cutting-edge chip I want to discuss in relation to the audio video market is our newest, the VS6320. As a reminder, this is the first and only high-performance USB 3.2 extension solution built on a dedicated chip. While USB 2.0 has long been sufficient for extending basic peripherals such as keyboards, mice, audio devices, and early generation cameras, USB 3.2 is increasingly being used in this market to enable a new generation of products, high-resolution USB cameras, interactive displays, and more.... Applications include digital signage and in airports, interactive kiosks in museums, video walls in retail stores, telemedicine setups in hospitals, or high-end conference rooms.

Speaker #2: The second cutting-edge chip I want to discuss in relation to the audio-video market is our newest VS6320. As a reminder, this is the first and only high-performance USB 3.2 extension solution built on a dedicated chip.

Speaker #2: While USB 2.0 has long been sufficient for extending basic peripherals such as keyboards, mice, audio devices, and early-generation cameras, USB 3.2 is increasingly being used in this market to enable a new generation of products.

Speaker #2: High-resolution USB cameras interactive displays and more. Applications include digital signage and in-air ports, interactive kiosks in museums, video walls in retail stores, telemedicine setups, in hospitals, or high-end conference rooms.

Speaker #2: Released in 2024, sales of the VS6320 grew nearly 25% during 2025. Last year, many market leaders released products based on this chipset, including whole technologies, InnoGenie, and Pro-ITAV.

Yoram Salinger: Released in 2024, sales of the VS6320 grew nearly 25% during 2025. Last year, many market leaders released products based on this chipset, including Hall Technologies, INOGENI, and ProITAV. In January 2026, one of the world's top 3 Pro AV manufacturers, whose name I cannot reveal at this time, released to market a new series of USB3 extenders, targeting meeting rooms based on this chip. We expect the VS6320 to be another growth engine for us in 2026 and beyond, as the market continues to break past the limitations of USB 2. Now, I'd like to turn to our other core business, automotive. Our opportunity in automotive is dominated by the VA7000 chipset, which offers high-performance connectivity for cameras and radars used in autonomous driving.

Speaker #2: In January 2026, one of the world’s top three Pro-EV manufacturers, whose name I cannot reveal at this time, released to market a new series of USB 3 extenders targeting meeting rooms based on this chip.

Speaker #2: We expect the VS6320 to be another growth engine for us in 2026 and beyond, as the market continues to break past the limitations of USB 2.

Speaker #2: Now, I'd like to turn to our other core business, automotive. Our opportunity in automotive is dominated by the VA7000 chipset, which offers high-performance connectivity for cameras and radars.

Speaker #2: Used in autonomous driving. It is the first chipset on the market to comply with the MEPA5 standard for high-speed sensor connectivity. Needless to say, when we're talking about ADAS and autonomous systems, errors could lead to catastrophic consequences.

Yoram Salinger: It is the first chipset on the market to comply with the MIPI A-PHY standard for high-speed sensor connectivity. Needless to say, when we're talking about ADAS and autonomous systems, errors could lead to catastrophic consequences for drivers, passengers, and pedestrians alike. Our VA7000 offer best-in-class noise immunity, reaching error rates that are orders of magnitude lower than what our competition can support. MIPI A-PHY has achieved important milestone over recent months. We secured a new design win for the VA7000 chipset, which will be integrated into an ADAS system of a premium global automotive OEM, serving the Chinese market. The deal brings Valens to four VA7000 A-PHY design wins globally, and reinforces the connectivity standard as a forerunner for next generation ADAS and autonomous systems. We also announced our partnerships around our VA7000 A-PHY chipset.

Speaker #2: For drivers, passengers, and pedestrians alike. Which is why our VA7000 offer best-in-class noise immunity reaching error rates that are orders of magnitude lower than what our competition can support.

Speaker #2: MEPA5 has achieved important milestones over recent months. We secured a new design win for the VA7000 chipset, which will be integrated into an ADAS system of a premium global automotive OEM serving the Chinese market.

Speaker #2: The deal brings Valens to four VA7000 A5 design wins globally and reinforces the connectivity standard as a forerunner for next-generation ADAS and autonomous systems.

Speaker #2: We also announced our partnerships around our VA7000 A5 chipset. Mobileye, a global leader in ADAS systems, selected our chips for the sensor to compute connectivity infrastructure underpinning their most advanced ADAS product.

Yoram Salinger: Mobileye, a global leader in ADAS systems, selected our chips for the sensor to compute connectivity infrastructure underpinning their most advanced ADAS product. We successfully completed interoperability testing with 7 vendors of A-PHY silicon. We supported Japanese company, Sakae Riken, as they unveiled a 7,000-based e-mirror with an order of magnitude more imaging data than other solutions on the market. In Q1 2026, a major Korean supplier, MCNEX, launched the industry-first automotive-grade QHD front and rear cameras over low-cost channels based on our chipsets. MIPI A-PHY reached other milestones as well. A different silicon vendor announced its own A-PHY design win with a major Chinese OEM. Sony Semiconductor Solutions introduced to the market the first sensor in the world, which integrated A-PHY extension, and the A-PHY ecosystem continued to grow, with new products and integrations being developed by major players such as OmniVision, Panasonic, and Qualcomm.

Speaker #2: We successfully completed interoperability testing with seven vendors of A5 silicon. We supported Japanese company Sakai Riken as they unveiled a 7,000-based e-mirror with an order of magnitude more imaging data than other solutions on the market.

Speaker #2: And in Q1 2026, a major Korean supplier, MCNex, launched the industry-first automotive-grade QHD front and rear cameras over low-cost channels based on our chipset.

Speaker #2: MEPA5 reached other milestones as well. A different silicon vendor announced its own A5 design win with a major Chinese OEM. Sony Semiconductor Solutions introduced to the market the first sensor in the world which integrated A5 extension.

Speaker #2: And the A5 ecosystem continued to grow. With new products and integrations, being developed by major players such as Omnivision, Panasonic, and Qualcomm. The industry is buying into A5 standard.

Yoram Salinger: The industry is buying into A-PHY standard, and Valens is recognized as the go-to leader within the ecosystem, positioning us well for the future design wins. Of course, our first generation of automotive chipsets, the VA6000, has been in mass production since 2021 with Mercedes-Benz. The contract generated revenues of $18.4 million during 2025, a 12% drop from 2024 revenues, derived from the decline in the number of product units sold by us for installations in Mercedes-Benz Cloud, coupled with an erosion in the average selling price. I would like to conclude by mentioning the difficult but necessary decision to reduce our workforce. In late January, we announced that we will be reducing our workforce by approximately 10% across various departments, which is expected to save around $5 million annually in operating expenses.

Speaker #2: And Valens is recognized as the go-to leader within the ecosystem positioning us well for the future design wins. Of course, our first-generation automotive chipset, the VA6000, has been in mass production since 2021.

Speaker #2: With Mercedes-Benz. The contract generated revenues of $18.4 million during 2025, a 12% drop from 2024 revenues. This was derived from the decline in the number of product units sold by us for installations in Mercedes-Benz Cloud, coupled with an erosion in the average selling price.

Speaker #2: I would like to conclude by mentioning the difficult but necessary decision to reduce our workforce. In late January, we announced that we will be reducing our workforce by approximately 10% across various departments.

Speaker #2: Which is expected to save around 5 million dollars annually in operating expenses. The reduction was targeted and disciplined designed to optimize our cost structure streamline operation and sharpen execution across the company.

Yoram Salinger: The reduction was targeted and disciplined, designed to optimize our cost structure, streamline operation, and sharpen execution across the company. This was not a decision I took lightly. Valens Semiconductor Ltd. was built by exceptional people, and I'm grateful for the contributions of those who are leaving the company. At the same time, this step allows us to continue to invest in our core business segments with clarity, urgency, and confidence, while maintaining the flexibility to capitalize on the right opportunities as they arise. With that, Guy, please go ahead and discuss our financial performance in more detail.

Speaker #2: This was not a decision I took lightly. Valens was built by exceptional people and I'm grateful for the contributions of those who are leaving the company.

Speaker #2: At the same time, this step allows us to continue to invest in our core business segments with clarity, urgency, and confidence while maintaining the flexibility to capitalize on the right opportunities as they arise.

Speaker #2: With that, Guy, please go ahead and discuss our financial performance in more detail. Thank you, Johan. I'll start with our fourth quarter and full year 2025 results and then provide our outlook for the first quarter and full year of 2026.

Guy Nathanzon: Thank you, Yoram. I'll start with our Q4 and full year 2025 results, and then provide our outlook for the Q1 and full year of 2026. We generated quarterly revenue of $19.4 million, which exceeded our guidance range of $18.2 to 18.9 million. This compared to revenue of $17.3 million in Q3 2025, and $16.7 million in Q4 2024. The Cross-Industry Business, or CIB, accounted for $13.9 million or approximately 70% of total revenues, while Automotive contributed $5.5 million or approximately 30% of total revenues this quarter. This compares to Q3 2025 revenues of $13.2 million from CIB and $4.1 million from Automotive, which represented approximately 75% and 25% of total revenues, respectively.

Speaker #2: We generated quarterly revenue of 19.4 million dollars which exceeded our guidance range of 18.2 to 18.9 million dollars. This compares to revenues of 17.3 million dollars in Q3 2025 and 16.7 million dollars in Q4 2024.

Speaker #2: The cross-industry business, or CIB, accounted for 13.9 million dollars or approximately 70% of total revenues. While automotive contributed 5.5 million dollars or approximately 30% of total revenues this quarter.

Speaker #2: This compares to Q3 2025 revenues of 13.2 million dollars from CIB and 4.1 million dollars from automotive. Which represented approximately 75% and 25% of total revenues respectively.

Speaker #2: In Q4 2024, revenues from CIB were 11.7 million dollars and 5 million dollars were from automotive or approximately 70% and 30% of total revenues respectively.

Guy Nathanzon: In Q4 2024, revenues from CIB were $11.7 million, and $5 million were from Automotive, or approximately 70% and 30% of total revenues, respectively. Q4 2025 gross profit was $11.7 million, compared to $10.9 million in Q3 2025, and compared to $10.1 million in Q4 2024. Q4 2025 gross margin was 60.5%, compared to our guidance range of 58% to 60%. This compares to a Q3 2025 gross margin of 63% and 60.4% in Q4 2024. On a segment basis, Q4 2025 gross margin for the CIB was 66.4%, and gross margin from Automotive was 45.9%. This compares to Q3 2025 gross margin of 69.1% and 43.2%, respectively.

Speaker #2: Q4 2025 gross profit was 11.7 million dollars compared to 10.9 million dollars in the third quarter of 2025. And compared to 10.1 million dollars in the fourth quarter of 2024.

Speaker #2: Q4 2025 gross margin was 60.5% compared to our guidance range of 58% to 60%. This compares to a Q3 2025 gross margin of 63% and 60.4% in Q4 2024.

Speaker #2: On a segment basis, Q4 2025 gross margin for the CIB was 66.4%, and gross margin from Automotive was 45.9%. This compares to Q3 2025 gross margin of 69.1% and 43.2%, respectively.

Speaker #2: And for Q4 2024, gross margin of 64.7% and 50.5% respectively. The decrease in gross margin of the CIB compared to Q3 2025 was due to a change in a product mix.

Guy Nathanzon: For Q4 2024, gross margin of 64.7% and 50.5%, respectively. The decrease in gross margin of the CIB compared to Q3 2025 was due to a change in a product mix. The increase in Q4 2025 in Automotive gross margin compared to Q3 2025 was due to cost optimization. Non-GAAP gross margin in Q4 was 63.9%, which compares to 66.7% in Q3 2025, and 64.5% in Q4 2024. Operating expense in Q4 2025 totaled $20.9 million, compared to $19 million in Q3 2025, and $18.5 million in Q4 2024. R&D expense in Q4 totaled $11.1 million, compared to $10.8 million in Q3 2025, and $10.1 million in Q4 2024.

Speaker #2: The increase in Q4 2025 in automotive gross margin compared to Q3 2025 was due to cost optimization. Non-GAAP gross margin in Q4 was 63.9% which compares to 66.7% in Q3 2025 and 64.5% in Q4 2024.

Speaker #2: Operating expense in Q4 2025 totaled 20.9 million dollars compared to 19 million dollars in Q3 2025 and 18.5 million dollars in Q4 2024. Research and development expense in Q4 totaled 11.1 million dollars compared to 10.8 million dollars in Q3 2025 and 10.1 million dollars in Q4 2024.

Speaker #2: SG&A expenses in Q4 were $10.1 million, compared to $7.4 million in Q3 2025 and $8.3 million in Q4 2024. The increase compared to Q3 2025 is mainly due to lower income from a certain batch production incident in an amount of $1 million, and higher payroll expense.

Guy Nathanzon: SG&A expenses in Q4 were $10.1 million, compared to $7.4 million in Q3 2025, and $8.3 million in Q4 2024. The increase compared to Q3 2025 is mainly due to lower income from a certain batch production incident in an amount of $1 million and higher payroll expense. Change in earnout liability in Q4 was an income of $0.3 million, compared to an expense of $0.7 million in Q3 2025, and an expense of $0.1 million in Q4 2024. The change compared to Q3 2025 is mainly due to reassessment of the earnout amount to be paid to Acroname shareholder.

Speaker #2: Change in air not liability in Q4 was an income of 0.3 million dollars compared to an expense of 0.7 million dollars in Q3 2025 and an expense of 0.1 million dollars in Q4 2024.

Speaker #2: The change compared to Q3 2025 is mainly due to reassessment of the air not amount to be paid to acronym shareholder. GAAP net loss in Q4 was 8.8 million dollars compared to a net loss of 7.3 million dollars in Q3 2025 and a net loss of 7.3 million dollars in Q4 2024.

Guy Nathanzon: GAAP net loss in Q4 was $8.8 million, compared to a net loss of $7.3 million in Q3 2025, and a net loss of $7.3 million in Q4 2024. Adjusted EBITDA in Q4 was a loss of $4.3 million, within the guidance range of a loss between $4.6 million to $4.2 million. This compares to an Adjusted EBITDA loss of $4.3 million in Q3 2025, and an Adjusted EBITDA loss of $3.7 million in Q4 2024. GAAP loss per share for Q4 was $0.09, compared to a GAAP loss per share of $0.07 for Q3 2025, and a GAAP loss per share of $0.07 for Q4 2024.

Speaker #2: Adjusted EBITDA in Q4 was a loss of 4.3 million dollars within the guidance range of a loss between 4.6 million dollars to 4.2 million dollars.

Speaker #2: This compares to an adjusted EBITDA loss of 4.3 million dollars in Q3 2025 and an adjusted EBITDA loss of 3.7 million dollars in Q4 2024.

Speaker #2: GAAP loss per share for Q4 was 9 cents compared to a GAAP loss per share of 7 cents for Q3 2025 and a GAAP loss per share of 7 cents for Q4 2024.

Speaker #2: Non-GAAP loss per share in Q4 2025 was 4 cents compared to a loss per share of 4 cents in Q3 2025 and a loss per share of 2 cents in Q4 2024.

Guy Nathanzon: Non-GAAP loss per share in Q4 2025 was $0.04, compared to a loss per share of $0.04 in Q3 2025, and a loss per share of $0.02 in Q4 2024. The difference between GAAP and non-GAAP loss per share was mainly due to a stock-based compensation, change in earnout liability, depreciation and amortization expense, and certain batch production incidents income. I will now turn to the full year 2025 results. Total revenues for the year 2025 were $70.6 million, exceeding our guidance of between $69.4 million to $70.1 million. This compares to full year revenue from 2024 of $57.9 million. Revenues from the Cross-Industry Business were $51.6 million, representing 73% of the total revenues, compared to $36.3 million in 2024.

Speaker #2: The difference between GAAP and non-GAAP loss per share was mainly due to a stock-based compensation change in air, not liability depreciation and amortization expense, in certain batch production incidents income.

Speaker #2: I will now turn to the full year 2025 results. Total revenues for the year 2025 were 70.6 million dollars exceeding our guidance of between 69.4 million dollars to 70.1 million dollars.

Speaker #2: This compares to full year revenues from 2024 of 57.9 million dollars. Revenues from the cross-industry business were 51.6 million dollars representing 73% of the total revenues compared to 36.3 million dollars in 2024.

Speaker #2: This increase was due to the recovery in the market of the audio-video. Automotive business revenue was 19 million dollars representing 27% of total revenues down 12% from 21.6 million dollars in 2024 due to gradual price erosion and a reduction in the number of units sold to Mercedes-Benz.

Guy Nathanzon: This increase was due to the recovery in the market of the Audio Video. Automotive business revenue was $19 million, representing 27% of total revenues, down 12% from $21.6 million in 2024, to gradual price erosion and a reduction in the number of units sold to Mercedes-Benz. GAAP gross margin was 62.4% for the full year 2025, compared to 59.2% in 2024. On a segment basis, 2025 gross margin from the Cross-Industry Business was 68.1%, and gross margin from Automotive was 47%. This compares to gross margin of 71% and 39.5%, respectively, in 2024. The increase in 2025 Automotive gross margin was due to an optimization of our product cost.

Speaker #2: GAAP gross margin was 62.4% for the full year 2025 compared to 59.2% in 2024. On a segment basis, 2025 gross margin from the cross-industry business was 68.1% and gross margin from automotive was 47%.

Speaker #2: This compares to gross margin of 71% and 39.5% respectively in 2024. The increase in 2025 automotive gross margin was due to an optimization of our product cost.

Speaker #2: The decrease in gross margin of the CAB was due to a product mixed shift. Non-GAAP gross margin was 66.1% for the full year 2025 compared to 62.9% in 2024.

Guy Nathanzon: The decrease in gross margin of the CIB was due to a product mix shift. Non-GAAP gross margin was 66.1% for the full year 2025, compared to 62.9% in 2024. Full year 2025 operating expenses were higher, reaching $78.1 million compared to $75.6 million in 2024. The primary increase in operating expenses was related to R&D expenses, which increased by $2.2 million, mainly due to increased payroll expenses that were driven by two factors: the US dollar, Israeli shekel currency influence, and the additional headcount in 2025 due to the acquisition of Acroname in May 2024. GAAP net loss for the full year 2025 decreased to $31.6 million from $36.6 million in 2024.

Speaker #2: Full year 2025 operating expense were higher reaching 78.1 million dollars compared to 75.6 million dollars in 2024. The primary increase in operating expense was related to R&D expense which increased by 2.2 million dollars mainly due to increased payroll expense that was driven by two factors: the US dollar-Israeli shekel currency influence and the additional headcount in 2025 due to the acquisition of acronym in May 2024.

Speaker #2: GAAP net loss for the full year 2025 decreased to $31.6 million from $36.6 million in 2024. Adjusted EBITDA loss for the full year 2025 was $16.9 million, a decrease compared to $21.1 million in 2024.

Guy Nathanzon: Adjusted EBITDA loss for the full year 2025 was $16.9 million, a decrease compared to $21.1 million in 2024. GAAP net loss per share for 2025 was $0.31, a decrease compared to $0.35 in 2024. Non-GAAP loss per share for 2025 was $0.14, a decrease compared to $0.15 in 2024. Turning to the balance sheet. We ended Q4 with cash equivalents, and short-term deposits totaling $92.6 million and no debt. This compares to $93.5 million at the end of Q3 2025, and $131 million at the end of 2024. The decrease in cash from the previous year is attributed to large part of our share repurchase program, which totaled $24 million in 2025.

Speaker #2: GAAP net loss per share for 2025 was 31 cents a decrease compared to 35 cents in 2024. Non-GAAP loss per share for 2025 was 14 cents a decrease compared to 15 cents in 2024.

Speaker #2: Turning to the balance sheet. We ended Q4 with cash-cash equivalent and short-term deposits totaling 92.6 million dollars and no debt. This compares to 93.5 million dollars at the end of Q3 2025 and 131 million dollars at the end of 2024.

Speaker #2: The decrease in cash from the previous year is attributed to large part of our share repurchase program which totaled 24 million dollars in 2025.

Speaker #2: This means that the company consumed 14.4 million dollars in ongoing operations during 2025. Our working capital at the end of Q4 was 95.7 million dollars compared to 98.9 million dollars at the end of Q3 2025 and 133.6 million dollars at the end of 2024.

Guy Nathanzon: This means that the company consumed $14.4 million in ongoing operations during 2025. Our working capital at the end of Q4 was $95.7 million, compared to $98.9 million at the end of Q3 2025, and $133.6 million at the end of 2024. Our inventory as of 31 December 2025, was $10.1 million, a decrease from $11 million on 30 September 2025, and $10.2 million on 31 December 2024. Now, I would like to provide our guidance for Q1 and full year of 2026. We expect Q1 revenues to be in the range of $16.3 to 16.7 million.

Speaker #2: Our inventory as of December 31, 2025, was $10.1 million, a decrease from $11 million on September 30, 2025, and $10.2 million on December 31, 2024.

Speaker #2: Now I would like to provide our guidance for the first quarter and full year of 2026. We expect Q1 revenues to be in the range of 16.3 to 16.7 million dollars.

Speaker #2: We expect gross margin for Q1 to be in the range of 57% to 59% and we expect adjusted EBITDA loss in Q1 to be in the range of 7.9 to 7.5 million dollars loss.

Guy Nathanzon: We expect gross margin for Q1 to be in the range of 57% to 59%, and we expect Adjusted EBITDA loss in Q1 to be in the range of $7.9 to 7.5 million loss. For the full year 2026, we expect revenues to be in the range of $75 to 77 million. The midpoint reflects growth of approximately 8% compared to the annual revenues of 2025. I'll now turn the call back to Yoram for his closing remarks before opening the call for Q&A.

Speaker #2: For the full year 2026, we expect revenues to be in the range of 75 to 77 million dollars the midpoint reflects growth of approximately 8% compared to the annual revenues of 2025.

Speaker #2: I'll now turn the call back to Yoram for his closing remarks before opening the call for Q&A.

Speaker #1: Thank you, Guy. We believe that Valens is in a strong position. We have healthy balance sheets. We are market leaders in audio-video and we are well positioned to take a leadership position in automotive as well.

Yoram Salinger: Thank you, Guy. We believe that Valens is in a strong position. We have healthy balance sheet, we are market leaders in audio/video, and we are well positioned to take a leadership position in automotive as well. We are reusing our newest chipsets to open up new growth opportunities while focusing now more than ever on our core businesses. We expect good things ahead in 2026 and beyond. With that, I'll now open the call to answer your questions. Operator?

Speaker #1: We are reusing our newest chipsets to open up new growth opportunities while focusing now more than ever on our core businesses. We expect good things ahead in 2026 and beyond.

Speaker #1: With that, I'll now open the call to answer your questions. Operator?

Speaker #3: Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. If you have a question, you wish to cancel your request, please press star two.

Guy Nathanzon: Thank you. Ladies and gentlemen, at this time, we'll 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.

Operator: Thank you. Ladies and gentlemen, at this time, we'll 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. Please stand by while we pull for your questions. The first question is from Suji de Silva of ROTH Capital Partners. Please go ahead.

Speaker #3: Please stand by while we pull for your questions. The first question is from Suji de Silva of Roots Capital. Please go ahead.

Operator: ... Please stand by while we pull for your questions. The first question is from Suji de Silva of ROTH Capital Partners. Please go ahead.

Speaker #4: Hi, Yoram. Hi, Guy. And congrats on the progress here. The fourth quarter—just to review that—what were the drivers of the upside in the fourth quarter versus the prior guidance?

Sujeeva De Silva: Hi, Yoram. Hi, Guy. Congrats on the progress here. The Q4 guide, just to review that, what were the drivers of the upside on the Q4 versus the prior guidance?

Suji DeSilva: Hi, Yoram. Hi, Guy. Congrats on the progress here. The Q4 guide, just to review that, what were the drivers of the upside on the Q4 versus the prior guidance?

Speaker #2: So thank you. Q4 is by end-of-year budget to be consumed within Q4. This is what drove our customers to increase their orders with us, and this is what kind of drove the Q4 results.

Yoram Salinger: Thank you for. Q4 is by end of year budget to be consumed within the Q4. This is what drove our customers to increase their orders with us. This is what kind of drove the Q4 results.

Speaker #4: Okay. Helpful. And then as we look ahead to '26 and the full year revenue guide, any thoughts on how that might break out between the AV business and the auto business or maybe you can talk qualitatively about what you expect from the auto business in the coming year with the wins that the three wins OEM wins you have out there?

Sujeeva De Silva: Okay, helpful. As we look ahead to 2026 and the full year revenue guide, any thoughts on how that might break out between the AV business and the auto business? Or maybe you can talk qualitatively about what you expect from the auto business in the coming year with the wins that the three wins, OEM wins you have out there.

Suji DeSilva: Okay, helpful. As we look ahead to 2026 and the full year revenue guide, any thoughts on how that might break out between the AV business and the auto business? Or maybe you can talk qualitatively about what you expect from the auto business in the coming year with the wins that the three wins, OEM wins you have out there.

Speaker #2: So I think when you refer to the wins, you mean the four wins that we have with the.

Yoram Salinger: I think when you refer to the wins, you mean the four wins that we have with the.

Speaker #4: The four, not three. Sorry, four. Yes.

Sujeeva De Silva: The four, not three. Sorry.

Suji DeSilva: The four, not three. Sorry.

Yoram Salinger: Right.

Sujeeva De Silva: Four, yes.

Suji DeSilva: Four, yes.

Speaker #2: Yeah, so basically, we're not splitting our guidance between the different business units, so we're not going to go into that today. But having more design wins in automotive is obviously something that we're striving towards, and maintaining our very strong position within the audio-video business is something that we'll be focusing on in 2026.

Yoram Salinger: Yeah. Basically, we're not splitting our guidance between the different business units. We're not gonna go into that today. You know, having more design wins in automotive is obviously something that we're striving towards, and maintaining our very strong position within the audio/video business is something that we'll be focusing on in 2026 and beyond.

Speaker #2: And beyond.

Speaker #4: Okay. And then my last question. Yoram, can you talk maybe about how you would leverage the channel and partnership success in the ecosystem that Valens has had to try to drive further growth and maybe touch on the incremental areas like medical instruments and industrial factory automation as how you'll ramp those?

Sujeeva De Silva: Okay, my last question. Yoram, can you talk maybe about how you would leverage the channel and partnership success in the ecosystem that Valens has had to try to drive further growth, maybe touch on the incremental areas like medical instruments and industrial factory automation as how you'll ramp those. Thanks.

Suji DeSilva: Okay, my last question. Yoram, can you talk maybe about how you would leverage the channel and partnership success in the ecosystem that Valens has had to try to drive further growth, maybe touch on the incremental areas like medical instruments and industrial factory automation as how you'll ramp those. Thanks.

Speaker #4: Thanks.

Speaker #2: So Valens has been known for years for establishing the HD-based standard and the HD-based alliance. I think that encapsulating 200 leaders in the audio-video market is an amazing tool for us to drive our products into the market for the years to come.

Yoram Salinger: You know, Valens has been known for years for establishing the HDBaseT standard and the HDBaseT Alliance. I think that, you know, encapsulating 200 leaders in the audio/video market is an amazing tool for us to drive our products into the market for the years to come. We will be focusing on that and enhancing our relations close, you know, closer relations with the channel. When we speak about the automotive, I think there are two distinct partners that we need to focus on. One is Mobileye, and Mobileye is a very strong and close partner for Valens. The other one is the announcement of the Sony sensor kind of supporting A-PHY.

Speaker #2: So we will be focusing on that and enhancing our relations closer relations with the channel. When we speak about when we speak about the automotive, I think there are two distinct partners that we need to focus on.

Yoram Salinger: When we speak about the automotive, I think there are two distinct partners that we need to focus on. One is Mobileye, and Mobileye is a very strong and close partner for Valens. The other one is the announcement of the Sony sensor kind of supporting A-PHY. Those two are marking the road for us for looking for more partnerships in order to drive our success in the automotive ADAS business. Was there other parts to this question that I missed?

Speaker #2: One is Mobileye, and Mobileye is a very strong and close partner for Valens. And the other one is the announcement of the Sony sensor kind of supporting AFI, those two are marking the road for us for looking for more partnerships in order to drive our success in the automotive ADAS business.

Yoram Salinger: Those two are marking the road for us for looking for more partnerships in order to drive our success in the automotive ADAS business. Was there other parts to this question that I missed?

Speaker #2: Was there other parts to the question that I missed?

Sujeeva De Silva: just the medical, the newer areas, medical, industrial. Any thoughts on driving the growth there?

Speaker #4: Just the medical, the newer areas, medical, industrial, any thoughts on driving the growth there?

Suji DeSilva: just the medical, the newer areas, medical, industrial. Any thoughts on driving the growth there?

Speaker #2: So I think that Valens is relevant for any market that is looking for high performance connectivity solutions. In challenging environments. So this is kind of a larger category.

Yoram Salinger: I think that Valens is relevant for any market that is looking for high performance connectivity solutions in challenging environments. This is kind of a larger category. We announced some deals in both industrial and medical over the past year. We will continue pursuing larger opportunities in those markets. You know, the emphasis is that we've got two very strong anchors that we're going to be extremely focused on, and this is why we kind of outlined the two, other than, you know, the automotive and Pro AV. We would obviously chase large opportunities in industrial and medical.

Speaker #2: We announced some deals in the both industrial and medical over the past year. We will continue pursuing larger opportunities in those markets, but the emphasis is that we've got two very strong anchors that we're going to be extremely focused on, and this is why we kind of outlined the two.

Speaker #2: Other than the automotive and pro AV, but we would obviously chase larger opportunities in industrial and medical.

Speaker #4: All the detail there, Yoram. Thanks.

Sujeeva De Silva: All the detail there, Yoram. Thanks.

Suji DeSilva: All the detail there, Yoram. Thanks.

Speaker #3: The next question is from Queen Bolton of Needleman Company. Please go ahead.

Operator: The next question is from Quinn Bolton of Mirae Asset Securities. Please go ahead.

Operator: The next 3question is from Quinn Bolton of Mirae Asset Securities. Please go ahead.

Speaker #4: Hi, Yoram. Welcome to Valens. I guess I wanted to follow up on Suji's sort of last question there. It was a little confusing to me where it sounds like you're trying to refocus Valens' efforts on your two core markets of pro AV or the AV market in general, as well as automotive.

Quinn Bolton: Hi, Yoram. Welcome to Valens. I guess I wanted to follow up on Suji's just our last question there. It was a little confusing to me, where it sounds like you're trying to refocus Valens' efforts on your two core markets of Pro AV or the AV market in general, as well as automotive. It isn't entirely clear, are you de-emphasizing the machine vision and medical opportunities? Will you be more selective with opportunities you pursue in those markets, or are you still focused on the machine vision and medical markets, leveraging the technologies you've developed in the AV and automotive market?

Speaker #4: And so it isn't entirely clear. Are you de-emphasizing the machine vision and medical opportunities? Will you be more selective with opportunities you pursue in those markets, or are you still focused on the machine vision and medical markets leveraging the technologies you've developed in the AV and automotive market?

Speaker #2: So that's actually a very good question, and I'm happy to clarify our position. So being in the AV market for so long, having so many achievements, so many large and good customers is something that the company shouldn't look in a light way.

Yoram Salinger: That's actually a very good question, and I'm happy to clarify our position. You know, being in the AV market for so long, having so many achievements, so many large and good customers, is something that a company shouldn't look in a light way. By saying that, we're just kind of stating pretty much the obvious, that we're going to focus on that. You know, a company like, having the Mercedes-Benz deal for I think like 6 year now, and having 4 design wins in the ADAS market, is something of significance for us. We're going to focus on the automotive, trying to leverage our partnerships in order to win more deals in the automotive. I think in your question, you pretty much outlined our position.

Speaker #2: So by saying that, we're just kind of stating pretty much the obvious that we're going to focus on that. A company like ours having the Mercedes-Benz deal for, I think, like six years now, and having four design wins in the ADAS market, is something of significance for us.

Speaker #2: We're going to focus on the automotive, trying to leverage our partnerships in order to win more deals in automotive. I think in your question, you pretty much outlined our position.

Speaker #2: We are still looking at the medical and industrial, that being said, we are looking to find anchor deals like sizable deals that could make an impact on the industry, making our name as the newcomers into this industry we need to see some large anchor deals in order for us to become a player that could play this game the entire game of those two relatively new markets for the company.

Yoram Salinger: We are still looking at the medical and industrial. That being said, we are looking to find anchor deals, like sizable deals that could make an impact on the industry, making our name as the newcomers into this industry. We need to see some large anchor deals in order for us to become a player that could play this game, the entire game of those two relatively new markets for the company.

Speaker #4: Understood. Thank you for the clarification. And then I just wanted to come back to the AV market. You highlighted both the VS3000 and the VS6320, and in your prepared comments, you mentioned both of those devices are expected to continue to grow year on year in 2026.

Quinn Bolton: Understood. Thank you for the clarification. Just wanted to come back to the AV market. You highlighted both the VS3000 and the VS6320, and in your prepared comments, you mentioned both of those devices are expected to continue to grow year-over-year in 2026. Are there legacy businesses that you would expect to decline, or the VS3000 and VS6320, the vast majority of the AV business? Just wanted to make sure, you know, if there are some headwinds that we identify those.

Speaker #4: Are there legacy businesses that you would expect to decline, or the VS3000 and VS6320, the vast majority of the AV business? Just wanted to make sure if there are some headwinds that we identify those.

Speaker #2: So just to be clear on that, we're not segmenting our revenues based on our chipset families. The VS3000 and the VS6320 are the newest generation of our product.

Yoram Salinger: Just to be clear on that, we're not segmenting our revenues based on our chipset families. You know, the VS3000 and the VS6320 are the newest generation of our product. It takes time for products to kind of ramp up into its entire capacity or, you know, market adoption. Market adoption in the chipset industry takes time, right? Because we are introducing chips that are being introduced to our customers, which are building their products and then launch to the market. It takes time for those to gain the momentum and actually be influential on the total result.

Speaker #2: It takes time for products to kind of ramp up into its entire capacity or market adoption. Market adoption in the chipset industry takes time, right?

Speaker #2: Because we are introducing chips that are being introduced to our customers which are building their products and then launch to the market. It takes time for those to gain the momentum and actually be influential on the total result.

Speaker #2: Therefore, I highlighted those as growing factors in our business, not to say anything or don't conclude anything about other family of chips that we are we have in the market.

Yoram Salinger: Therefore, I highlighted those as growing factors in our business, not to say anything or don't conclude anything about other family of chips that we have in the market.

Speaker #4: Got it. And then just last question for me. You'd mentioned that sort of year-end budget flush drove some of the upside in the fourth quarter.

Quinn Bolton: Got it. Just last question for me. You'd mentioned that sort of year-end budget flush drove some of the upside in Q4. When I look at the Q1 guidance, it's down slightly on a year-over-year basis after some pretty healthy year-over-year growth in the past 3 quarters. Just wondering, is the Q1 guidance sort of reflecting? Do you think this year-end budget flush, you know, created a little bit of an inventory, you know, accumulation in Q4 that you sort of worked through in Q1? Is that the reason for sort of the down year-over-year guidance for Q1, or are there other factors, macro, or just the rate of new product adoption that you'd mentioned in the script that accounts for this sort of year-over-year decline in Q1?

Speaker #4: When I look at the March quarter guidance, it's down slightly on a year-over-year basis after some pretty healthy year-on-year growth in the past three quarters.

Speaker #4: Just wondering is the first quarter guidance sort of reflecting do you think this year-end budget flush created a little bit of an inventory accumulation in Q4 that you sort of work through in Q1?

Speaker #4: And is that the reason for sort of the down year-on-year guidance for March, or are there other factors macro or just the rate of new product adoption that you'd mentioned in the script that accounts for this sort of year-on-year decline in the first quarter?

Speaker #2: So our guidance for the year represents growth yet another growth year for the company. The guidance is 75 million 75 to 77 million dollars for the year.

Yoram Salinger: you know, our guidance for the year represents growth, yet another growth year for the company. The guidance is $75 million, $75 to 77 million for the year. You know, macroeconomics and instability and tariffs are things that are influencing, you know, our business like pretty much everybody else. We see Q1 to be a little bit slower than the rest of the year, but we're still, as we said, confident that this is gonna be yet another growth year for the company. Q1 would be slower after, you know, after a very strong Q4. Usually, what happens is that our customers would utilize what they've acquired from us, as the year advance, it's gonna ramp up.

Speaker #2: Macroeconomics and unstability and tariffs are things that are influencing our business, like pretty much everybody else. So we see Q1 to be a little bit slower than the rest of the year.

Speaker #2: But we're still, as we said, we're still confident that this is going to be yet another growth year for the company. Q1 would be slower after a very strong Q4.

Speaker #2: Usually, what happens is that our customers would utilize what they've acquired from us, and then as the year advanced, it's going to ramp up.

Speaker #4: Understood. Thank you.

Quinn Bolton: Understood. Thank you.

Speaker #3: The next question is from Rick Schaffer of Oppenheimer. Please go ahead.

Operator: The next question is from Rick Schafer of Oppenheimer. Please go ahead.

Speaker #5: Hi. This is Way on the line for Rick. Wanted to welcome URM and thanks for taking the question. So my first question is on the strategic vision of the company.

Rayna Kumar: Hi, this is Ray on the line for Rick. Wanted to welcome you, Yoram, and thanks for taking the question. My first question is on the strategic vision of the company, and I appreciate the commentary and the preparatory marks and on the questions for about focusing on core businesses like audio, video, and auto. As you step into the CEO role and evaluate the company's position, where do you see the key strengths? Like, where are the biggest opportunities to sustain growth? I just wanted to ask and if you could help us better understand the long-term strategic vision and the competitive position of the company, that'd be great. Thanks.

Wei Mok: Hi, this is Ray on the line for Rick. Wanted to welcome you, Yoram, and thanks for taking the question. My first question is on the strategic vision of the company, and I appreciate the commentary and the preparatory marks and on the questions for about focusing on core businesses like audio, video, and auto. As you step into the CEO role and evaluate the company's position, where do you see the key strengths? Like, where are the biggest opportunities to sustain growth? I just wanted to ask and if you could help us better understand the long-term strategic vision and the competitive position of the company, that'd be great. Thanks.

Speaker #5: And I appreciate the commentary, and the prepared remarks, and on the questions for about focusing on core businesses like audio, video, and auto. But as you step into the CEO role and evaluate the company's position, where do you see the key strengths?

Speaker #5: Where are the biggest opportunities to sustain growth? I just wanted to ask, and if you could help us better understand the long-term strategic vision and the competitive position of the company, that'd be great.

Speaker #5: Thanks.

Speaker #2: So it's actually your questions kind of driving me to the core competency of this company, right? And we are a high-performance connectivity solution in challenging environments, right?

Yoram Salinger: I, you know, it's actually your question kind of driving me to the core competency of this company, right? We are a high, high-performance connectivity solution in challenging environments, right. This is what, you know, we are extremely strong when it comes to noise immunity and extenders. We're probably the leading technology in the world. I think that the reason we are focusing on the two core businesses of the company is because we see great growth opportunity within those two markets. I think that in order for us to be appreciating the opportunity, we're pretty much stating that those markets are not declining and it's not something that we're gonna kind of shift our eyes from the ball, so to speak.

Speaker #2: This is what we are extremely strong when it comes to noise immunity. And extenders, we're probably the leading technology in the world. I think that the reason we're focusing on the two core businesses of the company is because we see great growth opportunity within those two markets.

Speaker #2: And I think that in order for us to be appreciating the opportunity, we're pretty much stating that those markets are not declining, and it's not something that we're going to kind of shift our eyes from the ball, so to speak.

Speaker #2: That being said, we would definitely seize opportunities within other markets in order to explore other opportunities in adjacent markets. And I've been asked the direct question about medical or industrial.

Yoram Salinger: That being said, we would definitely seize opportunities within other markets in order to explore other opportunities in adjacent markets. You know, I've been asked the direct question about medical or industrial. Yeah, we are pursuing some large opportunities with global players in both of those markets. We hope that those markets would materialize for us in order to drive the growth of the company for the years to come. I think that it's important for me and essential for me coming into this job to reemphasize the strength of this company in the markets that we operate for years now.

Speaker #2: Yeah, we are pursuing some large opportunities with global players in both of those markets. And we hope that those markets will materialize for us in order to drive the growth of the company for the years to come.

Speaker #2: But I think that it's important for me and essential for me coming into this job to re-emphasize the strengths of this company in the markets that we operate for years now.

Speaker #5: We'd appreciate it. Thank you. For my second question, it is on the fourth A5 design win. Is there anything you can share with us on timing or the size of this win?

Rayna Kumar: Great, appreciate it. Thank you. My second question is on the fourth A5 design win. Is there anything you can share with us on timing or the size of this win? Does this win for the Chinese market provide a bigger revenue opportunity than the other earlier three wins? Any additional details would be great. Thank you.

Wei Mok: Great, appreciate it. Thank you. My second question is on the fourth A5 design win. Is there anything you can share with us on timing or the size of this win? Does this win for the Chinese market provide a bigger revenue opportunity than the other earlier three wins? Any additional details would be great. Thank you.

Speaker #5: Does this win for the Chinese market provide a bigger revenue opportunity than the other earlier three wins? Any additional details would be great. Thank you.

Speaker #2: Well, thanks for the question. So we are not able to disclose the name obviously, the sizes of those deals. As those deals have been done with OEMs and partners that we have to be conscious of privacy.

Yoram Salinger: Well, thanks for the question. We are not able to disclose the name, obviously, the sizes of those deals, as those deals have been done with OEMs and partners that we have to be conscious of privacy. Sorry for that, but that's the nature of this business. That being said, we could say that we assume that the start of revenue generation for those deals is gonna be somewhere in the second half of 2027, and we need to put kind of an asterisk on that because we know that, you know, automotive projects tend to be delayed somewhat at times.

Speaker #2: So sorry for that, but that's the nature of this business. That being said, we could say that we assume that the start of revenue generation for those deals is going to be somewhere in the second half of 2027.

Speaker #2: And we need to put kind of an asterisk on that, because we know that automotive projects tend to be delayed somewhat at times. And the other thing that needs to be kind of acknowledged is that the ramping up of model years is taking some more years for this to get to its full capacity.

Yoram Salinger: The other thing needs to be kind of acknowledged is that the ramping up of models, model years is taking some more years for this to get to its full capacity. At that point, the only thing I could say, we're extremely proud to have those four design wins. We're extremely happy to have one in China, which is obviously signaling, you know, a lot in what's happening in the automotive business. What we are focusing on is actually achieving more design wins. When you actually achieve those design wins, it takes time, but when it materialize, it could be big business for us. You know, the best example for us is obviously our long-lasting relations with Mercedes.

Speaker #2: So at that point, the only thing I could say we're extremely proud to have those four design wins. We're extremely happy to have one in China, which is obviously signaling a lot in what's happening in the automotive business.

Speaker #2: And what we're focusing on is actually achieving more design wins. Because when you actually achieve those design wins, it takes time. But when it materializes, it could be big business for us.

Speaker #2: And the best example for us is obviously our long-lasting relations with Mercedes.

Speaker #5: Great, thank you. And maybe lastly, I wanted to ask about the cost cuts. One of the first actions taken was the $5 million cost reduction.

Rayna Kumar: Great. Thank you. Maybe lastly, I wanted to ask about the cost cuts. One of the first actions taken was the $5 million cost reduction. I was wondering if you can expand on that a little bit. Will the cuts be equally between the I think it was previously called the CIB, or Cross-Industry Business, and the auto business? I believe previously you talked about the top-line revenues of around $100 million, $110 million in order to get to a bit of break even. Has the target or timing of this break even changed? Thanks.

Wei Mok: Great. Thank you. Maybe lastly, I wanted to ask about the cost cuts. One of the first actions taken was the $5 million cost reduction. I was wondering if you can expand on that a little bit. Will the cuts be equally between the I think it was previously called the CIB, or Cross-Industry Business, and the auto business? I believe previously you talked about the top-line revenues of around $100 million, $110 million in order to get to a bit of break even. Has the target or timing of this break even changed? Thanks.

Speaker #5: I was wondering if you can expand on that a little bit. Were the cuts be equally between the I think it was previously called the CIB or Cross-Industrial Business and the auto business?

Speaker #5: And I believe previously you talked about the top-line revenues of around 110 million in order to get to EBITDA breakeven. Has the target or timing of this break even changed?

Speaker #5: Thanks.

[Company Representative] (Valens Semiconductor): ll, the cuts were all over the company in order to reduce the OpEx and increase efficiency. This is the first part of the question. With respect to the second part, we are still in the same ballpark of the break even in terms of revenue. Assuming the same level of operating expenses and the same level of gross margin, the company can be Adjusted EBITDA positive anywhere between $110 million to $120 million revenue, and there is no change on that aspect.

Guy Nathanzon: ll, the cuts were all over the company in order to reduce the OpEx and increase efficiency. This is the first part of the question. With respect to the second part, we are still in the same ballpark of the break even in terms of revenue. Assuming the same level of operating expenses and the same level of gross margin, the company can be Adjusted EBITDA positive anywhere between $110 million to $120 million revenue, and there is no change on that aspect.

Speaker #2: Okay, so first of all, the cuts were all over the company in order to reduce OPEX and increase efficiency. So, this is the first part of the question.

Speaker #2: And with respect to the second part, we are still in the same ballpark of the breakeven in terms of revenue. Assuming the same level of operating expenses and the same level of gross margin, the company can be EBITDA positive anywhere between 110 to 120 million dollars revenue.

Speaker #2: There is no change on that aspect.

Speaker #5: Thank you.

Rayna Kumar: Thank you.

Wei Mok: Thank you.

Speaker #4: The next question is from Dave Storm of Stonegate. Please go ahead.

Operator: The next question is from Dave Storm of Stonegate. Please go ahead.

Dave Storms: Morning, to circle back to some of the on the remarks, but have you given a cadence those savings will take place? Will they be more, first half or second half weighted? Just saying.

Speaker #3: Morning, and thank you for taking the circle back to some of the stuff on the remarks. But have you given a cadence in those savings will take place?

Speaker #3: Will they be? Will they be more first half or second half weighted? Just saying.

Speaker #2: Sorry, it was extremely hard for us to understand the question you were cutting off. Dave, are you there?

Yoram Salinger: Sorry, it was extremely hard for us to understand the question. You were cutting off. Dave, are you there?

Speaker #3: Apologies. The cadence for the cost savings? Will they be evenly distributed throughout the year? Savings will take place.

Dave Storms: Apologies. The cadence, for the cost savings, will they be evenly distributed through the year? Savings will take place.

Speaker #2: So it's very hard for us to hear your full question. I assume you're asking how was the cuts conducted? Right?

Yoram Salinger: It's very hard for us to hear your full question. I assume you're asking, how is the cuts conducted? Right?

Speaker #3: Yes.

Dave Storms: Yes.

Speaker #2: Yeah. Well, if I got the question right, it was cross-company. So the cuts were done cross-company departments. So it was not one segment or the other that has been impacted.

Yoram Salinger: Well, if I got the question right, it was cross-company. The cuts were done cross-company departments, so it was not one segment or the other that has been impacted. It was cross-company, and I think it's part of being an extremely responsible management team that looks at the, you know, our very strong balance sheet and trying to actually optimize the operation of the company to ensure further growth in the years to come.

Speaker #2: It was cross-company. And I think it's part of being an extremely responsible management team that looks at the very strong balance sheet and trying to act the optimize, the operation of the company to ensure further growth in the years to come.

Speaker #3: Understood. Thank you. For the customer acquisition environment, you had a lot of strong wins. In 2025, how do you see the customer acquisition environment changing in 2026?

Dave Storms: Understood. Thank you. For the customer acquisition environment, you had a lot of strong wins in 2025. How do you see the customer acquisition environment changing in 2026?

Speaker #2: Are you referring to a specific segment, or are you speaking in general regarding customer acquisition?

Yoram Salinger: Are you referring to a specific segment, or were you speaking in general regarding customer acquisition?

Speaker #3: Primarily in automotive, but if you would like to map the automotive customer acquisition environment into maybe machine vision or medical and how you see those the potential to win more contracts there, that'd be helpful as well.

Dave Storms: Primarily in automotive, but, if you would like to map the automotive customer acquisition environment into maybe machine vision or medical, and how you see those, you know, the potential to win more contracts there, that'd be helpful as well.

Speaker #2: So, obviously, in the automotive business, in order to have design wins, you need to be in connection with the ecosystem, including the car manufacturers, the Tier Ones, and the suppliers of the industry.

Yoram Salinger: Obviously in the automotive business, in order to have design wins, you need to be in connection with the ecosystem, including the car manufacturers, the Tier 1s, and, you know, the suppliers of the industry. Being close to, you know, the entire chain is something that you need to be focusing on in order to be able to ensure customer acquisition in the short term, mid-term, and long term. That's exactly what we're working with. We're working with the partners I mentioned and others, in order to be in a position to be considered for winning more business in the years to come. That's on the automotive.

Speaker #2: Being close to the entire chain is something that you need to be focusing on in order to be able to ensure customer acquisition in the short term, mid-term, and long term.

Speaker #2: And this is exactly what we're working with. We're working with the partners I mentioned and others in order to be in a position to be considered for winning more business in the years to come.

Speaker #2: So that's on the automotive. On the industrial and medical, as we as I've indicated earlier, we're focusing on larger opportunities, which suggests that we're looking to have wins with leading providers of those both industries.

Yoram Salinger: On the industrial and medical, as I've indicated earlier, we're focusing on larger opportunities, which suggests that we're looking to have wins with, you know, leading providers of those both industries. That's exactly what we're doing. Obviously, for obvious reasons, I cannot disclose names, but you could be rest assured that once we have something to share, we would definitely share with you guys how we advance in those markets.

Speaker #2: And that's exactly what we're doing. Obviously, for obvious reasons, I cannot disclose names, but you could be rest assured that once we have something to share, we would definitely share with you guys how we advance in those markets.

Speaker #3: Understood. Thank you.

Dave Storms: Understood. Thank you.

Speaker #4: 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.

Operator: If there are any additional questions, please press star one. If you wish to cancel your request, please press star two. Please stand by. We'll wait for more questions. There are no further questions at this time. Mr. Salinger, would you like to make a concluding statement?

Speaker #4: There are no further questions at this time. Mr. Salinger, would you like to make a concluding statement?

Speaker #2: Thank you. I would like to thank you all for joining us today for our fourth-quarter and full year 2025 earning call. And for your continued support and interest in Valens Semiconductor.

Yoram Salinger: Thank you. I would like to thank you all for joining us today for our Q4 and full year 2025 Earnings Call, and for your continued support and interest in Valens Semiconductor. I hope to meet you again in our next earnings call. Goodbye.

Speaker #2: I hope to meet you again in our next earnings call. Goodbye.

Operator: Thank you. This concludes the Valens Semiconductor Results Conference Call. Thank you for your participation. You may go ahead and disconnect.

Q4 2025 Valens Semiconductor Ltd Earnings Call

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