Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Valens Semiconductor Ltd (VLN, Financial) exceeded its revenue guidance for Q2 2024, reporting $13.6 million in revenue.
- The company achieved a GAAP gross margin of 61.4%, slightly above the guided range.
- Valens Semiconductor Ltd (VLN) has a strong balance sheet with $130.6 million in cash and cash equivalents and no debt.
- The recent acquisition of Acroname is expected to enhance Valens' position in the industrial and audio-video markets.
- The VS6320 chipset has seen significant adoption, with over 50 customers developing products based on it, and mass production started in July 2024.
Negative Points
- Valens Semiconductor Ltd (VLN) experienced a significant reduction in audio-video revenue compared to the previous year, attributed to high inventory levels and macroeconomic weakness.
- The company reported a GAAP net loss of $8.9 million for Q2 2024, compared to a net loss of $4.6 million in Q2 2023.
- Adjusted EBITDA loss for Q2 2024 was $5.2 million, higher than the loss of $0.8 million in Q2 2023.
- The company's inventory levels remain high, although they have been reducing over the past five quarters.
- Valens Semiconductor Ltd (VLN) provided a cautious outlook for Q3 2024, with expected revenues of $14.7 million to $15.4 million and an adjusted EBITDA loss of $6.3 million to $6.8 million.
Q & A Highlights
Q: How far are you from bottoming out inventory, and what is the expected shape of recovery for the second half of the year, particularly in Q4?
A: We are seeing a trend of reducing inventory and consumption in line with our long-term goals. We are optimistic about achieving a reasonable number of inventory days soon.
Q: How confident are you in reaching the milestones required for the Acroname deal, and can you provide any details on the new product development?
A: While there is always uncertainty, we are seeing positive signs. However, we refrain from providing long-term forecasts but remain optimistic about achieving the milestones.
Q: What type of applications do you see first adoption for the new VS6320 audio-video product, and when do you expect these revenues to start contributing?
A: The first applications are in huddle rooms and small to medium-sized conference rooms. We also see significant interest in industrial applications. We already have orders and expect deliveries in the second half of this year, with a ramp-up in 2025.
Q: Can you elaborate on the impact of the Acroname acquisition on your financials and future growth?
A: The acquisition of Acroname, which closed on May 31, 2024, is expected to contribute $1.2 million to $1.4 million in revenue for Q3. This acquisition marks a significant milestone in our strategy to support non-organic growth through synergistic acquisitions.
Q: What are the current challenges in the audio-video markets, and how do you plan to address them?
A: We are experiencing a significant reduction in audio-video revenue due to macroeconomic weakness and high inventory levels among customers. However, we remain bullish on the medium and long-term prospects and expect the VS6320-based products to drive new revenue growth.
Q: How is the automotive business performing, and what are the prospects for the VA7000 chipset?
A: Our automotive business is stable, with the VA6000 chipsets used in Mercedes-Benz systems. We are progressing with the VA7000 chipset, which complies with the MIPI A-PHY standard, and have received encouraging feedback from global automotive OEMs.
Q: Can you discuss the significance of the partnership with Good Way Technology?
A: The partnership with Good Way Technology leverages our VS6320 in combination with Synaptics DisplayLink technology to offer simplified, flexible, and cost-effective solutions for the video conferencing market, opening the door for integration into reasonably priced meeting rooms.
Q: What are the trends in the machine vision and industrial verticals, and how is Valens positioned?
A: We are entering the machine vision market with our VS6320 and VA7000 chipsets, targeting IPC-based and embedded vision segments. Our solutions offer higher bandwidth and robustness to electromagnetic interference, positioning us well in this growing market.
Q: How is Valens addressing the growth of AI in various industries?
A: Valens' high-performance connectivity solutions are instrumental in enabling AI-driven applications in automotive, machine vision, and video conferencing industries, particularly those requiring real-time operations and uncompressed, error-free data transmission.
Q: What is the financial outlook for the third quarter of 2024?
A: We expect Q3 revenues to be in the range of $14.7 million to $15.4 million, with gross margins between 52% to 53%. Adjusted EBITDA loss is expected to be between $6.8 million to $6.3 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
