"In Q2 2022, Valens Semiconductor reported its highest ever quarterly revenues of $22.5 million, up 28.4% from Q2 2021, as we continued to meet the growing demand from customers in our audio-video and automotive markets," said Gideon Ben-Zvi, CEO of Valens Semiconductor. "In audio video, the main trends we are seeing are the transition to higher resolutions and growing demand for high bandwidth video connectivity and camera imaging extensions, as organizations aim to enhance and optimize content transmission. It is clear that our audio-video distribution technology will continue to play an important role in fields such as work, education, medical, government and others. In our automotive business, revenues from our VA6000 from Mercedes Benz cars continue to ramp. We made strides advancing our rear-view camera for trucks project with Stoneridge, who will incorporate our VA6000 chipsets into a safety connectivity solution. With a sizable number of potential automotive customers and partners looking to integrate our VA7000 chipsets to support Advanced Driver-Assistance Systems (ADAS) into their platforms, we believe that we are on track to attain design wins by mid-year 2023.
"Considering our better than anticipated first half of the year and visibility into the second half of 2022, we are increasing our full year revenues, gross margin and adjusted EBITDA guidance. Through our ongoing conversations with prospective customers and partners, we are learning more about their priorities, plans and timing for use of our current and next generation solutions. To match their roadmaps, we recently realigned and optimized our automotive R&D efforts for the next two years, which we believe will also contribute to us reaching adjusted EBITDA breakeven towards the end of 2023. Now more than ever, Valens Semiconductor is well-positioned to create long-term value for our stakeholders."
Key Financial and Business Highlights
- Record quarterly revenues of $22.5 million, up 28.4% from Q2 2021 and up 4.0% from Q1 2022
- Q2 2022 GAAP gross margin was 70.2% compared to 71.2% in Q2 2021 (non-GAAP gross margin was 71.0% compared to 71.1% in Q2 2021)
- Q2 2022 GAAP Net Loss was $(10.0) million, which included net financial expenses of $3.6 million, primarily from devaluation of Israeli-shekel related cash balance, compared to Net Loss of $(3.7) million in Q2 2021, and Adjusted EBITDA loss in the second quarter was $(4.5) million, compared to $(2.1) million in Q2 2021
- Strong balance sheet with working capital of $168.3 million, and $156.8 million in cash, cash equivalents and short-term deposits as of June 30, 2022
- Automotive:
- 2022 automotive revenues on track to double from 2021
- Continue to make progress with the evaluation of the company's MIPI A-PHY new VA7000 chipsets, as over 30 OEMs, Tier 1s and Tier 2s are evaluating this product for ADAS and surround view applications - Audio-video:
- Received substantial demand for VS3000, Valens Semiconductor's newest audio-video product family, from Tier 1 customers across many geographies
- Crestron Electronics announced full suite of more than 24 Professional Audio-Video (ProAV) products powered by the VS3000 for use by enterprises, in education and more. This adds to the multiple VS3000-based products already introduced by Crestron
- Interest in the company's technology in the medical space continues to grow. Introduced a connectivity solution with Würth Elektronik for medical imaging in unprecedented resolution that complies with the strict medical isolation specifications
Financial Outlook[1]
"Q2 2022 came in above the top end of our guidance, marking a strong first half for the year, and positioning us for a better than originally anticipated full year 2022," said Dror Heldenberg, CFO of Valens Semiconductor.
"For the third quarter of 2022, revenues are expected to range between $22.5 million and $22.8 million. Gross margin is expected to range between 65.4% and 66.1%, and Adjusted EBITDA loss is expected to be in the range of $(6.2) million to $(5.6) million.
"We are also raising our revenue, gross margin and Adjusted EBITDA guidance for the full year 2022. The company now expects revenues to range between $89.1 million and $89.8 million, up from the prior range of between $86.5 million and $88.0 million. Most of this increase is attributed to audio-video, while also essentially doubling the automotive revenue from the full year 2021. Gross margin is expected to range between 68.0% and 68.5%, up from the prior range of 66.0% and 67.3%. Adjusted EBITDA loss is expected to be in the range of $(25.7) million to $(24.3) million, substantially better than our previous guidance of $(37.2) million to $(35.5) million, due to the greater than expected revenues and improved gross margin. In addition, we expect to continue to see a benefit from a strong USD on our Israeli shekel-based expenses. Finally, we refined our automotive R&D focus for the next two years to products supporting sensor to ECU connectivity. This will allow us to slow the pace of hiring and reduce our investment in automotive R&D without impacting revenue opportunities or changing our longer-term technology roadmap.
"We are expecting to reach adjusted EBITDA breakeven by the end of next year, as the modest increase in 2023 R&D expenses from the lowered 2022 level will be offset by anticipated year-over-year revenue growth," concluded Heldenberg.
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.
