Company Overview - Valens Semiconductor (NYSE: VLN) is a leader in high-performance connectivity, enabling customers to transform digital experiences globally [3] - The company's chipsets are integrated into various devices, powering advanced audio-video installations, next-generation videoconferencing, and supporting the evolution of ADAS and autonomous driving [3] - Valens sets industry standards with its technology, including HDBaseT® and MIPI A-PHY [3] Upcoming Investor Events - Guy Nathanzon, Chief Financial Officer of Valens, will participate in several investor events in August 2025, including: - Oppenheimer 28th Annual Technology, Internet & Communications Conference from August 11 to August 13, with a presentation scheduled for August 11 at 2:05 pm ET [1] - Needham 6th Annual Virtual Semiconductor & SemiCap Conference on August 20 and 21 [2] - Jefferies Semiconductor, IT Hardware & Communications Conference on August 26 in Chicago, IL [2] - Evercore ISI Semi, IT Hardware & Networking Conference on August 27 in Chicago, IL [2] - Investors interested in one-on-one meetings with Valens during these conferences are encouraged to reach out to their sales representatives or contact Miri Segal [2]

Financial Data and Key Metrics Changes - The company reported revenues of $17.1 million for Q2 2025, exceeding guidance and marking the fifth consecutive quarter of growth [6][25] - GAAP gross margin was 63.5%, within the guidance range, while adjusted EBITDA loss was $4 million, better than the guidance range [6][28] - Full year 2025 revenue guidance was updated to $66 million to $71 million, reflecting a 14% to 23% increase compared to 2024 [6][31] - GAAP net loss for Q2 was $7.2 million, an improvement from $8.3 million in Q1 2025 and $8.9 million in Q2 2024 [28][29] - Cash, cash equivalents, and short-term deposits totaled $102.7 million at the end of Q2 2025, down from $112.5 million at the end of Q1 2025 [30] Business Line Data and Key Metrics Changes - Cross Industry Business (CIB) generated $12.8 million, approximately 75% of total revenue, while Automotive contributed $4.3 million, about 25% [25] - CIB gross margin was 67.8%, while Automotive gross margin was 50.5% for Q2 2025 [26][27] - The CIB revenue increased from $8.1 million in Q2 2024 to $12.8 million in Q2 2025, while Automotive revenue decreased from $5.5 million in Q2 2024 [25][26] Market Data and Key Metrics Changes - The company noted growing demand in the ProAV market, particularly for the VS3000 chip, with product launches increasing from around 100 to over 150 [9][10] - The automotive segment is seeing strong interest, with design wins from leading European OEMs and participation in major industry events [18][20] Company Strategy and Development Direction - The company focuses on integrating its chips into high-end products, expecting market penetration to take time as customers evaluate and adopt the technology [7] - The strategy includes targeting premium offerings in various industries, including Professional Audio-Video, Machine Vision, and Medical [8][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of global tariffs on customer forecasts, leading to a cautious revenue outlook for the second half of the year [6][31] - Despite the challenges, management expressed confidence in the long-term strategy and market opportunities, indicating a belief in returning to growth [33] Other Important Information - The company announced a leadership transition, with the current CEO stepping down in 2025 but remaining involved as a Board member and shareholder [22][23] - The company completed a share repurchase program, investing $10.2 million from a second plan to return value to shareholders [30] Q&A Session Summary Question: Impact of tariffs on revenue guidance - Management explained that the downward revision in guidance is primarily due to tariffs affecting customers in both CIB and Automotive segments [35][36] Question: Automotive gross margin expectations - Management indicated that while they do not provide specific segment guidance, they expect gross margin improvements in Automotive due to product cost optimization [37][38] Question: Customer activity and order improvements - Management noted a temporary weakness in both segments for Q3 but expressed optimism for better visibility in Q4 [42][43] Question: Updates on automotive design wins - Management confirmed that the design wins are with prestigious companies, creating positive industry noise and potential for further attention from other OEMs [46][47] Question: Trends in Industrial Machine Vision - Management highlighted strong market fit and growing interest in the Machine Vision segment, with ongoing discussions and design wins expected [50][51] Question: Customer activity in logistics and ProAV - Management observed a slow recovery in traditional markets and noted growth in the conference room segment as a new opportunity [52][53] Question: Changes in product development plans due to tariffs - Management stated that there have been no significant changes in customer product development plans, maintaining focus on long-term roadmaps [58][59] Question: Snapdragon Ride platform involvement - Management clarified that they demonstrated interoperability with the Snapdragon Ride platform, showcasing the ease of integration of their chips [60][61]

[Condensed Consolidated Interim Financial Statements (Unaudited)](index=1&type=section&id=CONDENSED%20CONSOLIDATED%20INTERIM%20FINANCIAL%20STATEMENTS) [Condensed Consolidated Interim Balance Sheet](index=3&type=section&id=Balance%20sheets) Total assets decreased from **$172.15 million** to **$144.79 million**, driven by reduced current assets and increased treasury shares, leading to a significant reduction in shareholders' equity Condensed Consolidated Interim Balance Sheet Summary | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | **Assets** | | | | Total Current Assets | 127,331 | 153,903 | | Total Long-Term Assets | 17,462 | 18,249 | | **TOTAL ASSETS** | **144,793** | **172,152** | | **Liabilities** | | | | Total Current Liabilities | 21,333 | 20,327 | | Total Long-Term Liabilities | 6,965 | 9,137 | | **TOTAL LIABILITIES** | **28,298** | **29,464** | | **Shareholders' Equity** | | | | Total Shareholders' Equity | **116,495** | **142,688** | | **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | **144,793** | **172,152** | - Total Assets decreased by **$27,359 thousand (15.89%)** from December 31, 2024, to June 30, 2025, mainly due to a decrease in short-term deposits[5](index=5&type=chunk) - Total Shareholders' Equity decreased by **$26,193 thousand (18.36%)** primarily due to net loss for the period and share repurchases[7](index=7&type=chunk) [Condensed Consolidated Interim Statements of Operations and Comprehensive Loss](index=5&type=section&id=Statements%20of%20operations%20and%20comprehensive%20loss) Revenues and gross profit increased for the six months ended June 30, 2025, with an improved net loss and per-share results Condensed Consolidated Interim Statements of Operations and Comprehensive Loss Summary | Metric (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Revenues | 33,887 | 25,156 | 17,059 | 13,597 | | Gross Profit | 21,417 | 15,159 | 10,835 | 8,344 | | Operating Loss | (16,845) | (20,699) | (7,389) | (9,410) | | Net Loss | (15,492) | (18,911) | (7,184) | (8,869) | | Basic and diluted net loss per ordinary share | (0.15) | (0.18) | (0.07) | (0.08) | - Revenues increased by **34.7%** for the six months ended June 30, 2025, compared to the same period in 2024, reaching **$33,887 thousand**[9](index=9&type=chunk) - Net loss improved by **18.08%** for the six months ended June 30, 2025, decreasing to **$15,492 thousand** from **$18,911 thousand** in the prior year[9](index=9&type=chunk) [Condensed Consolidated Interim Statements of Changes in Shareholders' Equity](index=6&type=section&id=Statements%20of%20changes%20in%20shareholder's%20equity) Shareholders' equity decreased from **$142.69 million** to **$116.50 million**, primarily due to net loss and significant share repurchases Condensed Consolidated Interim Statements of Changes in Shareholders' Equity Summary | Item (in thousands) | Six months ended June 30, 2025 | | :------------------ | :----------------------------- | | Balance as of January 1, 2025 | 142,688 | | Exercise of options and vesting of RSUs | 385 | | Repurchase of ordinary shares | (19,761) | | Stock based compensation | 7,941 | | Change in unrealized gains on cash flow hedges | 734 | | Net loss for the period | (15,492) | | Balance as of June 30, 2025 | 116,495 | - The company repurchased **7,500,298 ordinary shares** for **$19,761 thousand** during the six months ended June 30, 2025[11](index=11&type=chunk) - Stock-based compensation contributed **$7,941 thousand** to additional paid-in capital for the six months ended June 30, 2025[11](index=11&type=chunk) [Condensed Interim Consolidated Statements of Cash Flows](index=8&type=section&id=Statements%20of%20cash%20flows) Net cash increased, driven by investing activities, despite cash used in operating and financing, a shift from prior year Condensed Interim Consolidated Statements of Cash Flows Summary | Cash Flow Activity (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | (7,761) | (1,615) | (211) | (225) | | Net cash provided by (used in) investing activities | 38,121 | 8,754 | 15,531 | (10,355) | | Net cash provided by (used in) financing activities | (19,376) | 636 | (9,979) | 510 | | Increase (Decrease) in Cash and Cash Equivalents | 11,166 | 7,445 | 5,592 | (10,394) | | Cash and Cash Equivalents at the End of the Period | 46,589 | 24,706 | 46,589 | 24,706 | - Net cash used in operating activities increased significantly to **$7,761 thousand** for the six months ended June 30, 2025, compared to **$1,615 thousand** in the prior year[14](index=14&type=chunk) - Investing activities provided **$38,121 thousand** in cash for the six months ended June 30, 2025, a substantial increase from **$8,754 thousand** in the prior year, primarily due to maturities of short-term deposits[14](index=14&type=chunk) - Financing activities used **$19,376 thousand** in cash for the six months ended June 30, 2025, mainly due to share repurchases, contrasting with cash provided in the prior year[14](index=14&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=10&type=section&id=Notes%20to%20consolidated%20financial%20statements) [NOTE 1 - General Information and Geopolitical Risks](index=10&type=section&id=NOTE%201%20-%20GENERAL) Valens Semiconductor Ltd., an Israeli semiconductor provider, monitors geopolitical conflicts, with no material operational impact - Valens Semiconductor Ltd. was incorporated in Israel in 2006 and began trading on the NYSE under the symbol 'VLN' as of June 30, 2021[16](index=16&type=chunk) - The company is a leading provider of semiconductor products (chips) for Audio-Video and Automotive industries, known for its Physical Layer (PHY) technology and HDBaseT Technology[17](index=17&type=chunk) - Ongoing conflicts in Gaza, Northern Israel, Lebanon, Iran, and the broader region have not materially affected operations to date, but the company continues to monitor developments[17](index=17&type=chunk) [NOTE 2 - Summary of Significant Accounting Policies](index=10&type=section&id=NOTE%202%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Interim financial statements adhere to GAAP and SEC rules, with no material accounting policy changes; new pronouncements are being evaluated - Financial statements are prepared in accordance with GAAP and SEC rules for interim financial reporting, with all adjustments being normal and recurring[18](index=18&type=chunk)[19](index=19&type=chunk) - No material changes in significant accounting policies since December 31, 2024[21](index=21&type=chunk) - The company is evaluating ASU 2023-09 (Improvements to Income Tax Disclosures) effective after December 15, 2025, and ASU 2024-03/2025-01 (Expense Disaggregation Disclosure) effective after December 15, 2026, for potential impacts[22](index=22&type=chunk)[23](index=23&type=chunk) [NOTE 3 - Business Combination (Acroname Acquisition)](index=12&type=section&id=NOTE%203%20-%20BUSINESS%20COMBINATION) Valens acquired Acroname Inc. for **$11.20 million**, contributing **$2.42 million** in revenues and **$1.20 million** net loss for the period - Valens acquired Acroname Inc. on May 31, 2024, for a total consideration of **$11,196 thousand**[25](index=25&type=chunk)[26](index=26&type=chunk) Consideration Transferred | Consideration Transferred (in thousands) | Amount | | :--------------------------------------- | :----- | | Cash payment | 9,160 | | Fair value of earnout liability | 2,036 | | **Total consideration** | **11,196** | - Acroname contributed **$2,421 thousand** in revenues and **$1,197 thousand** in net loss to Valens' consolidated results for the six months ended June 30, 2025[27](index=27&type=chunk) Acquired Assets and Assumed Liabilities | Acquired Assets and Assumed Liabilities (in thousands) | Amount | | :----------------------------------------------------- | :----- | | Total assets acquired | 12,184 | | Total liabilities assumed | (988) | | **Net assets acquired** | **11,196** | [NOTE 4 - Inventories](index=14&type=section&id=NOTE%204%20-%20INVENTORIES) Total inventories increased to **$11.50 million** from **$10.16 million**, driven by finished goods, with significantly reduced write-downs Inventory Summary | Inventory Category (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Work in process | 3,851 | 4,547 | | Finished goods | 7,646 | 5,608 | | **Total Inventories** | **11,497** | **10,155** | - Inventories increased by **$1,342 thousand (13.22%)** from December 31, 2024, to June 30, 2025[32](index=32&type=chunk) - Inventory write-downs decreased substantially from **$300 thousand** in the six months ended June 30, 2024, to **$9 thousand** in the same period of 2025[32](index=32&type=chunk) [NOTE 5 - Commitments and Contingent Liabilities](index=14&type=section&id=NOTE%205%20-%20COMMITMENTS%20AND%20CONTINGENT%20LIABILITIES) Noncancelable purchase obligations decreased; a provision for a customer complaint regarding damaged chips is recorded, with reimbursement expected Commitments Summary | Commitment Type (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------- | :------------ | :---------------- | | Open purchase orders | 6,058 | 8,044 | | Non-paid IP/license agreements | 1,029 | 2,349 | - The company is not a party to any material legal actions or investigations as of June 30, 2025, except for a customer complaint[36](index=36&type=chunk) - A provision for a customer complaint regarding damaged chips, amounting to **$2,136 thousand**, is recorded in other current liabilities as of June 30, 2025[37](index=37&type=chunk)[38](index=38&type=chunk)[40](index=40&type=chunk) The provision was decreased by **$323 thousand** during the three months ended June 30, 2025[40](index=40&type=chunk) [NOTE 6 - Other Current Liabilities](index=15&type=section&id=NOTE%206%20-%20OTHER%20CURRENT%20LIABILITIES) Total other current liabilities slightly decreased to **$8.28 million** from **$8.38 million**, with accrued vacation as a key component Other Current Liabilities Summary | Item (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------ | :------------ | :---------------- | | Accrued vacation | 3,786 | 3,166 | | Estimated accrual for a certain batch production incident | 2,136 | 2,182 | | Derivative liabilities | 600 | 605 | | Accrued expenses | 1,536 | 1,738 | | Other | 186 | 662 | | **Total** | **8,277** | **8,384** | - Accrued vacation increased by **$620 thousand (19.58%)** from December 31, 2024, to June 30, 2025[40](index=40&type=chunk) [NOTE 7 - Forfeiture Shares](index=15&type=section&id=NOTE%207%20-%20FORFEITURE%20SHARES) 359,375 ordinary shares remain subject to forfeiture due to unmet price targets, after 646,875 shares were forfeited in September 2024 - **1,006,250 Ordinary Shares** were initially subject to forfeiture based on price targets or M&A transaction minimum price[41](index=41&type=chunk) - On September 30, 2024, **646,875 Ordinary Shares** were forfeited[42](index=42&type=chunk) Forfeiture Shares Valuation Metrics | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Stock price | 2.63 | 2.60 | | Expected term (years) | 0.25 | 0.75 | | Expected volatility | 63.84% | 63.84% | | Risk-free interest rate | 4.41% | 4.20% | - The fair value of forfeiture shares remained at **$1 thousand** at June 30, 2025, and December 31, 2024[43](index=43&type=chunk) [NOTE 8 - Earnout Liability](index=16&type=section&id=NOTE%208%20-%20EARNOUT%20LIABILITY) Earnout liability decreased to **$1.75 million** from **$2.41 million**, resulting in a **$0.66 million** gain recognized in operations - Earnout payments of up to **$7.2 million** are contingent on product development completion and achievement of revenue, EBITDA, and cashflow targets in 2024 and 2025[45](index=45&type=chunk) Earnout Liability Valuation Metrics | Metric | June 30, 2025 | | :-------------------- | :------------ | | Discount rate | 20.7%-21.0% | | Expected term (years) | 0.50-1.00 | | Expected volatility | 45.89% | | Risk-free interest rate | 4.29% | Earnout Liability Activity | Earnout Liability Activity (in thousands) | Six months ended June 30, 2025 | Year ended December 31, 2024 | | :---------------------------------------- | :----------------------------- | :--------------------------- | | Fair value at the beginning of the period | (2,413) | - | | Initial recognition of earnout liability | - | (2,036) | | Change in fair value of earnout liability | 663 | (377) | | **Fair value at the end of the period** | **(1,750)** | **(2,413)** | [NOTE 9 - Derivatives and Hedging](index=17&type=section&id=NOTE%209%20-%20DERIVATIVES%20AND%20HEDGING) Valens uses foreign currency forward contracts for risk management; non-designated hedges resulted in a **$0.62 million** net loss, designated hedges impacted expenses - The company uses foreign currency forward contracts to mitigate foreign currency exchange rate fluctuations, not for trading or speculative purposes[50](index=50&type=chunk) Non-Designated Hedges Summary | Non-Designated Hedges (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Notional amount (ILS/USD) | 5,069 | 20,038 | | Fair value of derivatives assets | 28 | 1 | | Fair value of derivatives liabilities | 600 | 605 | - Non-designated hedges resulted in a net realized and unrealized loss of **$619 thousand** for the six months ended June 30, 2025, recognized in financial income, net[52](index=52&type=chunk) Designated Hedges Summary | Designated Hedges (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Notional amount | 13,436 | 20,061 | | Fair value of derivatives assets | 1,335 | 601 | - For designated cash flow hedges, **$614 thousand** of gains were reclassified from accumulated other comprehensive income into profit or loss for the six months ended June 30, 2025, impacting cost of revenue, R&D, sales & marketing, and G&A expenses[54](index=54&type=chunk) [NOTE 10 - Treasury Shares](index=19&type=section&id=NOTE%2010%20-%20TREASURY%20SHARES) Valens initiated two share repurchase programs, acquiring 3,302,194 shares for **$10 million** and 4,823,786 shares for **$11.4 million** - The company initiated a share repurchase program of up to **$10 million** on December 27, 2024, repurchasing **3,302,194 shares** for **$10 million** as of June 30, 2025[62](index=62&type=chunk) - A second share repurchase program of up to **$15 million** was initiated on February 11, 2025, with **4,823,786 shares** repurchased for **$11.4 million** as of June 30, 2025[62](index=62&type=chunk) [NOTE 11 - Stock-Based Compensation](index=19&type=section&id=NOTE%2011%20-%20STOCK-BASED%20COMPENSATION) Stock-based compensation totaled **$7.94 million** for the six months ended June 30, 2025, with significant grants of stock options and RSUs Stock-Based Compensation Summary | Stock-Based Compensation (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Total stock-based compensation (Options) | 661 | 1,582 | 278 | 690 | | Total stock-based compensation (RSUs) | 7,279 | 5,917 | 3,496 | 3,045 | - Unrecognized compensation costs for unvested stock options were **$1,466 thousand** as of June 30, 2025, expected to be recognized over **1.97 years**[60](index=60&type=chunk) - Unrecognized compensation costs for unvested RSUs totaled **$23,931 thousand** as of June 30, 2025, expected to be expensed over approximately **2.50 years**[66](index=66&type=chunk) [Stock Options](index=19&type=section&id=Stock%20Options) 11,765,601 stock options were outstanding as of June 30, 2025, with 1,689,425 granted and 476,431 exercised during the period Stock Option Activity | Stock Option Activity | Six months ended June 30, 2025 | | :-------------------- | :----------------------------- | | Options outstanding as of December 31, 2024 | 10,569,170 | | Granted during the period | 1,689,425 | | Exercised during the period | (476,431) | | Forfeited during the period | (16,563) | | Options outstanding as of June 30, 2025 | 11,765,601 | | Options exercisable as of June 30, 2025 | 9,934,550 | - The weighted-average fair value of options granted during the six months ended June 30, 2025, was **$2.31** at the grant date[64](index=64&type=chunk) - The total intrinsic value of options exercised during the six months ended June 30, 2025, was **$829 thousand**, a decrease from **$1,821 thousand** in the prior year[64](index=64&type=chunk) [Restricted Stock Units](index=22&type=section&id=Restricted%20Stock%20Units) 10,644,869 RSUs were outstanding as of June 30, 2025, with 4,583,634 granted and 2,515,132 vested, resulting in **$7.28 million** in expenses RSU Activity | RSU Activity | Six months ended June 30, 2025 | | :-------------------------------- | :----------------------------- | | RSUs outstanding at the beginning of the year | 8,827,092 | | Granted during the period | 4,583,634 | | Vested during the period | (2,515,132) | | Forfeited during the period | (250,725) | | Outstanding at the end of the period | 10,644,869 | - The weighted average grant date fair value of outstanding RSUs at June 30, 2025, was **$2.72**[66](index=66&type=chunk) - RSU expenses increased to **$7,279 thousand** for the six months ended June 30, 2025, from **$5,917 thousand** in the prior year[68](index=68&type=chunk) [NOTE 12 - Net Loss Per Ordinary Share](index=23&type=section&id=NOTE%2012%20-%20NET%20LOSS%20PER%20ORDINARY%20SHARE) Basic and diluted net loss per ordinary share was **$(0.15)**, an improvement from **$(0.18)**, with anti-dilutive securities excluded Net Loss Per Ordinary Share Summary | Metric | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Net loss (in thousands) | (15,492) | (18,911) | (7,184) | (8,869) | | Weighted average common shares and vested RSUs | 104,403,869 | 104,563,467 | 103,551,779 | 105,079,508 | | Basic and dilutive net loss per common share | (0.15) | (0.18) | (0.07) | (0.08) | - The weighted-average number of shares used in computing net loss per ordinary share remained relatively stable year-over-year[70](index=70&type=chunk) - Options (**11.17 million**), Restricted Stock Units (**9.74 million**), Private Warrants (**3.33 million**), Public Warrants (**5.75 million**), and Forfeiture Shares (**0.36 million**) were anti-dilutive and excluded from diluted EPS calculation for the six months ended June 30, 2025[70](index=70&type=chunk) [NOTE 13 - Financial Income, Net](index=23&type=section&id=NOTE%2013%20-%20FINANCIAL%20INCOME%2C%20NET) Financial income, net, decreased to **$1.46 million** from **$1.77 million**, due to derivative losses and reduced interest income Financial Income, Net Summary | Item (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Foreign currency exchange differences | (157) | (1,271) | (17) | (745) | | Realized and unrealized losses on derivative instruments | (619) | - | (823) | - | | Interest income on short-term deposits | 2,322 | 3,061 | 1,088 | 1,294 | | Other | (83) | (16) | (23) | (9) | | **Total financial income, net** | **1,463** | **1,774** | **225** | **540** | - Realized and unrealized losses on derivative instruments amounted to **$619 thousand** for the six months ended June 30, 2025, compared to none in the prior year[71](index=71&type=chunk) - Interest income on short-term deposits decreased by **$739 thousand (24.14%)** for the six months ended June 30, 2025[71](index=71&type=chunk) [NOTE 14 - Segment and Revenue by Geography and by Major Customer](index=24&type=section&id=NOTE%2014%20-%20SEGMENT%20AND%20REVENUE%20BY%20GEOGRAPHY%20AND%20BY%20MAJOR%20CUSTOMER) CIB revenues significantly increased, Automotive revenues slightly decreased; Hong Kong and Portugal grew, while Hungary and the US declined [a. Operating Segments (CIB and Automotive)](index=24&type=section&id=a.%20Operating%20Segments%20(CIB%20and%20Automotive)) CIB segment revenues grew substantially to **$24.58 million**, while Automotive revenues slightly decreased to **$9.31 million** - Valens operates in two segments: Cross Industry Business (CIB) and Automotive[72](index=72&type=chunk)[73](index=73&type=chunk) Segment Performance | Segment Performance (Six months ended June 30, 2025, in thousands) | CIB | Automotive | Consolidated | | :------------------------------------------------- | :----- | :--------- | :----------- | | Revenues | 24,576 | 9,311 | 33,887 | | Gross profit | 16,821 | 4,596 | 21,417 | | Segment operating loss | (5,450)| (11,395) | (16,845) | - CIB revenues increased by **61.19%** for the six months ended June 30, 2025, compared to the same period in 2024[76](index=76&type=chunk)[77](index=77&type=chunk) - Automotive revenues decreased by **6.03%** for the six months ended June 30, 2025, compared to the same period in 2024[76](index=76&type=chunk)[77](index=77&type=chunk) [b. Geographic Revenues](index=26&type=section&id=b.%20Geographic%20Revenues) Hong Kong, China, Portugal, and Japan showed significant revenue growth, while Hungary and the United States experienced declines Geographic Revenues Summary | Geography (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :----------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Israel | 193 | 431 | 129 | 178 | | Hong Kong | 5,094 | 1,574 | 3,279 | 841 | | China | 4,574 | 3,507 | 2,353 | 1,987 | | United States | 4,329 | 4,462 | 1,652 | 3,013 | | Portugal | 4,556 | 3,098 | 2,318 | 1,207 | | Hungary | 4,710 | 6,129 | 1,830 | 4,082 | | Japan | 3,011 | 2,036 | 1,682 | 837 | | Other | 7,420 | 3,919 | 3,816 | 1,452 | | **Total** | **33,887** | **25,156** | **17,059** | **13,597** | - Hong Kong revenues surged by **223.63%** for the six months ended June 30, 2025, compared to the prior year[79](index=79&type=chunk) - Hungary revenues decreased by **23.15%** for the six months ended June 30, 2025, compared to the prior year[79](index=79&type=chunk) [c. Supplemental data - Major Customers](index=26&type=section&id=c.%20Supplemental%20data%20-%20Major%20Customers) Customer A's accounts receivable share increased to **25%**, while Customer D's dropped to **0%**; Customer A and C maintained or increased revenue Accounts Receivable by Major Customer | Customer | Accounts Receivable (% of Total) June 30, 2025 | Accounts Receivable (% of Total) December 31, 2024 | | :--------- | :--------------------------------------------- | :------------------------------------------------- | | Customer A | 25% | 14% | | Customer B | 20% | 18% | | Customer C | 10% | 16% | | Customer D | 0% | 14% | Revenues by Major Customer | Customer | Revenues (% of Total) Six months ended June 30, 2025 | Revenues (% of Total) Six months ended June 30, 2024 | | :--------- | :--------------------------------------------------- | :--------------------------------------------------- | | Customer A | 13% | 12% | | Customer C | 9% | 7% | | Customer D | 8% | 14% | | Customer E | 4% | 10% | | Customer F | 4% | 10% | | Customer G | 2% | 10% | - Customer A's accounts receivable percentage increased from **14%** to **25%**, while Customer D's decreased from **14%** to **0%** from December 31, 2024, to June 30, 2025[80](index=80&type=chunk) [d. Long-lived assets by Geography](index=27&type=section&id=d.%20Long-lived%20assets%20by%20Geography) Total long-lived assets slightly decreased to **$10.61 million**, with the majority located domestically in Israel Long-lived Assets by Geography | Geography (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Domestic (Israel) | 9,082 | 9,482 | | China | 273 | 314 | | USA | 1,003 | 931 | | Other | 248 | 286 | | **Total** | **10,606** | **11,013** | - Long-lived assets in Israel constitute the largest portion, totaling **$9,082 thousand** at June 30, 2025[82](index=82&type=chunk) [NOTE 15 - Related Party Transactions](index=27&type=section&id=NOTE%2015%20-%20RELATED%20PARTY%20TRANSACTIONS) Valens granted 789,425 stock options and 549,654 RSUs to executive officers and Board members, with a total fair value of **$2.08 million** - **789,425 stock options** were granted to executive officers and Board members during the six months ended June 30, 2025, with a weighted average exercise price of **$2.36**[83](index=83&type=chunk) - **549,654 RSUs** were granted to executive officers and Board members during the six months ended June 30, 2025[84](index=84&type=chunk) - The fair value of granted stock options was **$857 thousand**, and granted RSUs was **$1,222 thousand**, both to be recognized over **1-4 year** vesting periods[85](index=85&type=chunk) [NOTE 16 - Subsequent Events](index=27&type=section&id=NOTE%2016%20-%20SUBSEQUENT%20EVENTS) Valens completed its Second Buyback program by purchasing an additional 1,327,439 Ordinary Shares for **$3.6 million** and is assessing the OBBBA tax reform impact - Between July 1, 2025, and July 21, 2025, Valens purchased an additional **1,327,439 Ordinary Shares** for **$3.6 million**, completing its Second Buyback program[86](index=86&type=chunk) - The United States enacted the One Big Beautiful Bill Act (OBBBA) in July 2025, allowing for immediate expensing of U.S. R&D and certain capital expenditures, among other tax changes[87](index=87&type=chunk) - Valens is currently assessing the impact of the OBBBA tax reform on its future consolidated financial statements[87](index=87&type=chunk)

Company Overview - Valens Semiconductor is a fabless semiconductor company listed on NYSE under the ticker VLN[13] - The company has shipped over 40 million chipsets and has over 100s of customers[13] - Valens has accumulated ~$05 billion in cumulative R&D expenses and holds 125 patents[13, 19] - In Q2 2025, Valens reported revenues of $171 million[13] Financial Performance - The company's revenue for 2024 was $579 million, with $363 million from Cross-Industry Business and $216 million from Automotive[68] - In Q2 2025, revenue was $171 million, with $128 million from Cross-Industry Business and $43 million from Automotive[69] - GAAP gross margin for Q2 2025 was 635%, with Cross-Industry Business at 678% and Automotive at 505%[71] - Adjusted EBITDA loss for Q2 2025 was $(40) million[71] Market Opportunities - The Total Addressable Market (TAM) for video conferencing is projected to reach $350 million by 2028/29[25] - The Total Addressable Market (TAM) for automotive is projected to reach $45 billion by 2029, with 14 billion chips per year[34] - The Total Addressable Market (TAM) for industrial machine vision is projected to reach $460 million by 2028/29[52] - The Total Addressable Market (TAM) for single-use endoscopy is projected to reach $625 million, assuming a 50% shift to single-use endoscopes[61] Future Outlook - The company is targeting revenue between $66 million and $71 million for 2025, representing a ~14%-23% year-over-year growth[72, 78] - Valens aims for revenue goals of $220-$300 million by 2029, with a CAGR of ~30%-~40% from 2024[75] - The company's long-term goals include a gross margin of 50%-60% and an adjusted EBITDA margin of 15%-20%[75, 80]

Core Insights - Valens Semiconductor Ltd. reported financial results for Q2 2025, achieving revenues of $17.1 million, marking the fifth consecutive quarter of growth [2][3] - The company updated its full-year 2025 revenue guidance to a range of $66 million to $71 million, reflecting a 14% to 23% increase compared to 2024, primarily due to the impact of tariffs [3][4] Financial Performance - Q2 2025 revenues reached $17.1 million, exceeding guidance of $16.5-$16.8 million, compared to $16.8 million in Q1 2025 and $13.6 million in Q2 2024 [4][17] - Q2 gross margin was 63.5% GAAP and 67.2% non-GAAP, compared to 62.9% GAAP in Q1 2025 and 61.4% GAAP in Q2 2024 [8][17] - Q2 net loss was $(7.2) million, an improvement from $(8.3) million in Q1 2025 and $(8.9) million in Q2 2024 [8][17] Segment Performance - Cross-Industry Business (CIB) revenues accounted for approximately 75% of total revenues at $12.8 million, up from $11.7 million in Q1 2025 and $8.1 million in Q2 2024 [4][5] - Automotive revenues represented about 25% of total revenues at $4.3 million, down from $5.1 million in Q1 2025 and $5.5 million in Q2 2024 [5] Business Highlights - Strong demand was noted in the ProAV market, with positive momentum in industrial machine vision [3] - The MIPI A-PHY standard continued to gain traction in the automotive sector, enhancing long-term market potential [3] - The company launched the first MIPI A-PHY standard platform in the industrial machine vision market [8] Cash Position - As of June 30, 2025, cash, cash equivalents, and short-term deposits totaled $102.7 million, down from $112.5 million as of March 31, 2025 [8][17] - The company utilized $10.2 million for a share repurchase program during Q2 2025 [8] Future Outlook - For Q3 2025, Valens Semiconductor expects revenues between $15.1 million and $15.6 million, with a gross margin range of 58.0% to 60.0% [9]

Core Insights - 22nd Century Group, Inc. has launched its new Pinnacle VLN® Gold and Pinnacle VLN® Menthol reduced nicotine content cigarettes, with initial shipments supporting a sales launch on September 1, 2025, at nearly 1,000 locations across 12 states for a top-5 U.S. convenience store chain [1][2] - The Pinnacle VLN® products represent a significant innovation in the tobacco industry, offering a 95% reduction in nicotine compared to traditional cigarettes, aligning with the FDA's proposed low nicotine mandate [2][4] - The company aims to expand the reach of its VLN® products to promote harm reduction in smoking habits, backed by extensive clinical research [4][6] Product Details - VLN® products utilize proprietary tobacco that has 95% reduced nicotine content, making them the first combusted tobacco products compliant with the FDA's proposed new Tobacco Product Standard for Nicotine Yield [3][7] - The VLN® cigarette is designed to provide traditional smokers with a familiar alternative that allows them to control their nicotine consumption [6][7] - The company holds a comprehensive patent portfolio, ensuring it remains the only provider of low nicotine combustible cigarettes in the U.S. and critical international markets [7] Market Strategy - The launch of Pinnacle VLN® products is expected to enhance brand loyalty among customers of the convenience store chain, reinforcing the company's position in the tobacco harm reduction movement [2][4] - The company plans to continue adding more states and locations for Pinnacle VLN® products, along with re-ordering inventory through the distributor [2]

Core Insights - 22nd Century Group, Inc. has announced a significant increase in state authorizations for the sale of its VLN® reduced nicotine content cigarettes and other products, enabling new sales activities and product launches [1][2][3] - The company aims to achieve nationwide availability of VLN® products across all 50 states, demonstrating compliance with the FDA's Low Nicotine Mandate [3][4] - The company has over 2,000 partner VLN® retailers preparing to implement sales, with expectations for further growth in the second half of 2025 [3][4] Product and Market Expansion - The increase in state authorizations allows for the launch of new partner brands and private label VLN® products in large, untapped markets across the U.S. [4] - There are over 272,000 retail outlets in the U.S. selling tobacco products, presenting a substantial market opportunity for both VLN® and conventional products [4] - Key state authorizations include VLN® Gold and Green in 41 states, VLN® Red in 21 states, and various Smoker Friendly and Pinnacle® products across multiple states [8] Harm Reduction and Innovation - 22nd Century Group has been a leader in the tobacco harm reduction movement for 27 years, focusing on reducing smoking rates and health harms through its VLN® products [5][6] - VLN® cigarettes contain 95% less nicotine than traditional cigarettes, supported by decades of peer-reviewed studies indicating reduced smoking rates and health risks [5][7][10] - The company utilizes proprietary technologies to create reduced nicotine tobacco blends, ensuring a unique position in the market with its patented products [10]

Core Insights - 22nd Century Group is expanding the availability of its VLN® reduced nicotine content products through partnerships with multiple tobacco brands, aiming to reduce smoking rates and related health harms [1][2][3] - The FDA's proposed Tobacco Product Standard for nicotine yield, which sets a maximum nicotine content of 0.7 mg per gram of tobacco, is driving interest in VLN products, which average 0.5 mg per gram [3][4][5] - The implementation of the FDA's proposal could prevent approximately 48 million youth and young adults from starting to smoke by the year 2100 [4][6] Company Overview - 22nd Century Group is recognized as a pioneering company in nicotine harm reduction, providing smokers with options to control their nicotine consumption [7][8] - The VLN® cigarette is designed to offer a familiar alternative for traditional smokers, containing 95% less nicotine than conventional cigarettes [8][9] - The company holds a comprehensive patent portfolio that ensures it has the only low nicotine combustible cigarette in the U.S. and critical international markets [9]

Core Viewpoint - Valens Semiconductor will release its second quarter 2025 financial results on August 6, 2025, and will host a conference call to discuss these results and the business outlook [1][2]. Company Overview - Valens Semiconductor (NYSE: VLN) is a leader in high-performance connectivity, providing chipsets that enhance digital experiences globally [3]. - The company's technology is integral to advanced audio-video installations, next-generation videoconferencing, and the development of ADAS and autonomous driving systems [3]. - Valens is known for setting industry standards, including HDBaseT® and MIPI A-PHY [3]. Conference Call Details - The conference call will take place on August 6, 2025, at 8:30 a.m. Eastern Time (ET) [2]. - Access numbers for the call include U.S: +1 (888) 281-1167, UK: 0 (808) 101-2717, Israel: 03 918 0610, and other: +972 3 918 0610 [2]. - A live webcast will be available on Valens Semiconductor's investor relations website, with a replay accessible shortly after the call [2].

Core Insights - D3 Embedded and Valens Semiconductor are collaborating to promote the adoption of MIPI A-PHY technology in embedded vision systems, which is expected to transform deployment across various industries [1][2][3] - The A-PHY standard offers high-speed data transmission over long distances with excellent electromagnetic compatibility, addressing challenges in harsh environments and simplifying system design [1][2] - D3 Embedded's platform includes an NVIDIA Jetson Orin processor and multiple A-PHY input ports, enhancing connectivity and performance for developers [1] Company Overview - Valens Semiconductor is a leader in high-performance connectivity, providing chipsets that power advanced audio-video installations and autonomous driving technologies [2] - D3 Embedded specializes in end-to-end solutions that integrate sensors, connectivity, and AI for performance-critical applications, holding partnerships with major tech companies like NVIDIA and Intel [3]