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  Title	Earnings call transcript: Valens Q4 2025 results beat revenue expectations
  ID	30677483
  External ID	a2dd63994490bc006d27ec3dc755e814
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  Published Date	Feb. 25, 2026, 8:38 a.m.
  Summary	Earnings call transcript: Valens Q4 2025 results beat revenue expectations
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  Content	Valens Semiconductor reported its Q4 2025 earnings, surpassing revenue expectations with $19.4 million, compared to a forecast of $18.6 million. However, the company posted a higher-than-expected loss per share of $0.09, missing the forecast of a $0.04 loss. Despite the revenue beat, Valens' stock saw a pre-market decline of 0.72%, reflecting investor concerns over the earnings miss and ongoing operational challenges. Key Takeaways Valens' Q4 2025 revenue exceeded expectations, marking a 12.4% increase from Q3 2025. The company reported a GAAP loss per share of $0.09, larger than the anticipated $0.04 loss. The stock fell 0.72% in pre-market trading, despite strong revenue growth. Continued growth in the audio-video segment offset declines in the automotive sector. Strategic workforce reductions aim to save $5 million annually. Company Performance Valens Semiconductor demonstrated robust revenue growth in Q4 2025, with a 12.4% sequential increase and a 16.2% year-over-year rise. This performance was driven by strong demand in the audio-video market, particularly for its VS3000 chipset. However, the automotive segment faced challenges, contributing to a larger net loss compared to the previous quarter. Financial Highlights Revenue: $19.4 million, up 12.4% from Q3 2025 and 16.2% from Q4 2024. GAAP Loss Per Share: $0.09, compared to $0.07 in both Q3 2025 and Q4 2024. Non-GAAP Loss Per Share: $0.04, consistent with Q3 2025 but wider than $0.02 in Q4 2024. - GAAP Gross Margin: 60.5%, above the guidance range of 58%-60%. The company maintains a solid financial position with several strengths worth noting. According to InvestingPro analysis, Valens holds more cash than debt on its balance sheet and its liquid assets exceed short-term obligations, with a current ratio of 5.68. The company's gross profit margin over the last twelve months stands at 62.5%, demonstrating pricing power despite competitive pressures. Yet analysts do not anticipate the company will be profitable this year, one of 10 key InvestingPro Tips available to subscribers tracking VLN's performance. Earnings vs. Forecast Valens reported a revenue surprise of 4.3%, generating $19.4 million against a forecast of $18.6 million. However, its EPS of -$0.09 missed the forecasted -$0.04 by 125%, reflecting increased operating expenses and challenges in the automotive sector. Market Reaction Despite the revenue beat, Valens' stock declined 0.72% in pre-market trading, with shares priced at $1.519. This movement suggests investor concerns over the larger-than-expected loss and potential headwinds in the automotive market. The stock remains near its 52-week low of $1.37, indicating broader market pressures. Notably, InvestingPro data suggests the stock is currently undervalued, with Fair Value analysis pointing to potential upside from current levels—placing it among stocks on the Most Undervalued list. Outlook & Guidance Valens projects continued revenue growth, with future quarters expected to see modest increases. The company forecasts EPS losses of $0.03 to $0.04 in upcoming quarters, reflecting ongoing investments in product development and market expansion. Wall Street analysts maintain a bullish stance, with price targets ranging from $3 to $5, suggesting significant upside potential. For investors seeking deeper analysis, Valens is among 1,400+ US equities covered by comprehensive InvestingPro Research Reports, which transform complex data into clear, actionable intelligence. Executive Commentary CEO Yoram Salinger highlighted the company's strategic focus on core markets, stating, "Our commitment to innovation and market leadership in the audio-video segment is driving our growth trajectory." He also noted the importance of operational efficiency initiatives, which include a 10% workforce reduction to streamline costs. Risks and Challenges Supply Chain Disruptions: Potential delays in component availability could impact production schedules. Automotive Sector Decline: Continued price erosion and sales reduction in automotive could affect overall profitability. Currency Fluctuations: Exchange rate volatility, particularly between the US dollar and Israeli shekel, may influence financial results. Competitive Market: Intensifying competition in semiconductor markets may pressure margins. Q&A During the earnings call, analysts inquired about the impact of workforce reductions on future growth and the company's strategy to mitigate automotive sector challenges. Executives emphasized ongoing investments in high-growth areas and operational efficiencies to support long-term objectives. Full transcript - Valens (VLN) Q4 2025: Hila, Conference Operator : Good morning. My name is Hila. I will be your conference operator today. At this time, I would like to welcome everyone to Valens Semiconductor's fourth quarter 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. Michal Ben-Ari, Investor Relations, Valens Semiconductor : Thank you. Welcome everyone to Valens Semiconductor's fourth quarter 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 February 25, 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. Yoram Salinger, Chief Executive Officer, Valens Semiconductor : 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. 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 long-time supplier of chips for Mercedes-Benz, powering the state-of-the-art MBUX infotainment systems. We were a key contributor to the MIPI A-PHY standard, and we've become a pillar within the growing A-PHY ecosystem, achieving four 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, and 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 million and $77 million. 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 environment. 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 fourth quarter, well above our initial expectations. We delivered revenues of $19.4 million, exceeding our guidance range of $18.2 million-$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. Our full year revenues for 2025 were $70.6 million, also exceeding our guidance range of $69.4 million-$70.1 million. GAAP gross margin for the full year, 2025, came in at 62.4%, and 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 million-$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 2 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. 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, 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 powered products to market, including leaders Crestron, Extron, Barco, 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. 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 in airports, interactive kiosks in museums, video walls in retail stores, telemedicine setups in hospitals, or high-end conference rooms. 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 Pro AV. 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 USB three 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 two. 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. 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. 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. 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 4 VA7000 A-PHY design wins globally, reinforces the connectivity standard as a front runner for next generation ADAS and autonomous systems. We also announced our partnerships around our VA7000 A-PHY chipset. 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 7000 base 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 chipset. 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. The A-PHY 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 A-PHY standard. 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 to full 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. 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 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. Guy Nathanzon, Chief Financial Officer, Valens Semiconductor : Thank you, Yoram. 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. We generated quarterly revenue of $19.4 million, which exceeded our guidance range of $18.2 million-$18.9 million. This compares 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. 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 the third quarter of 2025, and compared to $10.1 million in the fourth quarter of 2024. Q4 2025 gross margin was 60.5%, compared to our guidance range of 58%-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. 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. Research and development expense in Q4 totaled $11.1 million, compared to $10.8 million in Q3 2025, and $10.1 million in Q4 2024. 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 a 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. 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-$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. 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-$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 revenue, compared to $36.3 million in 2024. This increase was due to the recovery in the market of the audio-video. Automotive business revenue was $19 million, representing 27% of total revenue, down 12% from $21.6 million in 2024, due 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. 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 expense were higher, reaching $78.1 million, compared to $75.6 million in 2024. The primary increase in operating expense was related to R&D expense, which increased by $2.2 million, 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 Acroname in May 2024. 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. 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. 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 December 31st, 2025, was $10.1 million, a decrease from $11 million on September 30, 2025, and $10.2 million on December 31st, 2024. I would like to provide our guidance for Q1 and full year 2026. We expect Q1 revenues to be in the range of $16.3 million-$16.7 million. We expect gross margin for Q1 to be in the range of 57%-59%, and we expect adjusted EBITDA loss in Q1 to be in the range of $7.9 million-$7.5 million loss. For the full year 2026, we expect revenues to be in the range of $75 million-$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 course of Q&A. Yoram Salinger, Chief Executive Officer, Valens Semiconductor : Thank you, Guy. We believe that Valens is in a strong position. We have a 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? Hila, Conference 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 Sujeeva De Silva of ROTH MKM. Please go ahead. Sujeeva De Silva, Analyst, ROTH MKM : Hi, Yoram. Hi, Guy. Congrats on the progress here. The fourth quarter guide, just to review that, what were the drivers of the upside on the fourth quarter versus the prior guidance? Yoram Salinger, Chief Executive Officer, Valens Semiconductor : Thank you for your question. Usually, Q4 is categorized 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. Sujeeva De Silva, Analyst, ROTH MKM : Okay. Helpful. Then 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? Maybe you can talk qualitatively what about what you expect in the auto business in the coming year with the wins that the 3 wins, OEM wins you have out there? Yoram Salinger, Chief Executive Officer, Valens Semiconductor : I think when you refer to the wins, you mean the 4 wins that we have with the. Sujeeva De Silva, Analyst, ROTH MKM : The four, not three. Sorry. Four. Yes. Yoram Salinger, Chief Executive Officer, Valens Semiconductor : 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. Sujeeva De Silva, Analyst, ROTH MKM : 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. Yoram Salinger, Chief Executive Officer, Valens Semiconductor : you know, Valens has been known for years for establishing the HDBaseT standard and the HDBaseT Alliance. I think that, you know, encapsulating 200 Our 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, quote, 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 and are 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? Sujeeva De Silva, Analyst, ROTH MKM : Just the medical, the newer areas, medical, industrial, any thoughts on driving the growth there? Yoram Salinger, Chief Executive Officer, Valens Semiconductor : I think 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 the both industrial and medical over the past year. We will continue pursuing larger opportunities in those markets. You know, the emphasis is that we 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, significant opportunities, both in industrial and medical alike. Sujeeva De Silva, Analyst, ROTH MKM : Okay. Appreciate all the detail there, Yoram. Thanks. Hila, Conference Operator : The next question is from Quinn Bolton of Needham & Company. Please go ahead. Quinn Bolton, Analyst, Needham & Company : Hi, Yoram. Welcome to Valens. I guess I wanted to follow up on Sujit'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. 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? Yoram Salinger, Chief Executive Officer, Valens Semiconductor : 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 the company shouldn't look in a light way. By saying that, we're just kind of stating pretty much the obvious, that we're gonna focus on that. You know, a company like having the Mercedes-Benz deal for I think like 6 years now, and having 4 design wins in the ADAS market, is something of significance for us. We're gonna 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. 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. Quinn Bolton, Analyst, Needham & Company : 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-on-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. Yoram Salinger, Chief Executive Officer, Valens Semiconductor : Just to, 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 products. 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. 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. Quinn Bolton, Analyst, Needham & Company : Got it. Just last question for me. You, you'd mentioned that sort of year-end budget flush drove some of the upside in the fourth quarter. 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. Just wondering, is the first quarter 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, and is that the reason for sort of the down year-on-year guidance for March? Are there other factors, macro, or just the rate of new product adoption that you'd mentioned in the script that accounts for the sort of year-on-year decline in the first quarter? Yoram Salinger, Chief Executive Officer, Valens Semiconductor : You know, our guidance for the year represents growth, yet another growth year for the company. The guidance is $75 million, $75 million-$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, we're still, as we said, we're still confident that this is gonna be yet another growth year for the company. Q1 will be slower after, you know, after a very strong Q4. Usually what happens is that our customers will utilize what they've acquired from us, and then as the year advance, it's gonna ramp up. Quinn Bolton, Analyst, Needham & Company : Understood. Thank you. Hila, Conference Operator : The next question is from Rick Schafer of Oppenheimer. Please go ahead. Ray, Analyst, Oppenheimer : Hi, this is Ray on the line for Rick. Thank you for the welcome, 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 prepared remarks 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. Thanks. Yoram Salinger, Chief Executive Officer, Valens Semiconductor : 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 extended, 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 are not it's not something that we're gonna kind of shift our eyes from the ball, so to speak. That being said, we would definitely see the opportunities within other markets in order to explore other opportunities in adjacent markets. And, 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, and 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 re-emphasize the strengths of this company in the markets that we operate for years now. Ray, Analyst, Oppenheimer : Great. Appreciate it. Thank you. My second question is on the fourth A-PHY 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. Yoram Salinger, Chief Executive Officer, Valens Semiconductor : Well, thanks for the question. We are not, we're 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. The other thing 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. 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, because 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. Ray, Analyst, Oppenheimer : 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, 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 EBITDA breakeven. Has the target or timing of this breakeven changed? Thanks. Yoram Salinger, Chief Executive Officer, Valens Semiconductor : Okay. First of all, 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 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 million-$120 million revenue, and there is no change on that aspect. Ray, Analyst, Oppenheimer : Thank you. Hila, Conference Operator : The next question is from Dave Storm of Stonegate. Please go ahead. Dave Storm, Analyst, Stonegate : Good morning, thank you for today. To circle back to some of 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. Yoram Salinger, Chief Executive Officer, Valens Semiconductor : Sorry, it was extremely hard for us to understand the question. You were cutting off. Dave, are you there? Dave Storm, Analyst, Stonegate : Apologies. The cadence, for the cost savings, will they be evenly distributed for the year? David, take place. Yoram Salinger, Chief Executive Officer, Valens Semiconductor : It's very hard for us to hear your full question. I assume you're asking how is the cuts conducted, right? Dave Storm, Analyst, Stonegate : Yes. Yoram Salinger, Chief Executive Officer, Valens Semiconductor : 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, 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. Dave Storm, Analyst, Stonegate : 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? Yoram Salinger, Chief Executive Officer, Valens Semiconductor : Are you referring to a specific segment, or were you speaking in general regarding customer acquisition? Dave Storm, Analyst, Stonegate : Primarily in automotive, if you would like to map the automotive customer acquisition environment into maybe machine vision or medical, and how you see those, you know, potential to win more contracts there, that'd be helpful as well. Yoram Salinger, Chief Executive Officer, Valens Semiconductor : 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, you know, suppliers of the industry. Being close to the, you know, 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, and that, this is exactly what we are, 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. On the, 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. Dave Storm, Analyst, Stonegate : Understood. Thank you. Hila, Conference Operator : If there are any additional questions, please press star 1. If you wish to cancel your request, please press star 2. Please stand by. We'll report for more questions. There are no further questions at this time. Mr. Salinger, would you like to make a concluding statement? Yoram Salinger, Chief Executive Officer, Valens Semiconductor : Thank you. I would like to thank you all for joining us today for our fourth quarter 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. Hila, Conference Operator : Thank you. This concludes the Valens Semiconductor Results Conference Call. Thank you for your participation. You may go ahead and disconnect. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. Should you be buying VLN right now? ProPicks AI evaluates VLN alongside thousands of other companies every month using 100+ financial metrics . Using powerful AI to generate exciting stock ideas, it looks beyond popularity to assess fundamentals, momentum, and valuation. The AI has no bias—it simply identifies which stocks offer the best risk-reward based on current data with notable past winners that include Super Micro Computer (+185%) and AppLovin (+157%). Want to know if VLN is currently featured in any ProPicks AI strategies, or if there are better opportunities in the same space?
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