Financial Data and Key Metrics Changes - In Q4 2021, the company reported record total revenues of $20.7 million, up 47% compared to Q4 2020 [7][38] - For the full year 2021, total revenues reached $70.7 million, an increase of 24% from 2020 [8][44] - Gross profit for Q4 2021 grew to $14.8 million, a 43.5% increase, with a gross margin of 71.2% [40] - Full-year gross profit was $50.6 million, up 16.3%, with a gross margin of 71.6% [47][51] Business Line Data and Key Metrics Changes - Audio-video revenues in Q4 2021 increased by 40% to $18.6 million, while automotive revenues reached $2.2 million, a 141.2% increase [39] - For the full year 2021, audio-video revenues were $62.8 million, up 15%, and automotive revenues were $7.9 million, up 281% [8][44] Market Data and Key Metrics Changes - The company noted strong demand in the audio-video market, particularly in APAC and EMEA, recovering from COVID-19 impacts [27][30] - In the automotive sector, the company is seeing growing interest in the MIPI A-PHY standard from various companies across the supply chain [18] Company Strategy and Development Direction - The company aims to become a one-stop shop for all in-vehicle high-speed connectivity solutions, focusing on both audio-video and automotive markets [23][35] - The introduction of the VA7000 chipset is part of the strategy to secure design wins and drive significant revenue growth [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting customer demand despite supply chain challenges, having fulfilled all orders in 2021 [46] - The company anticipates continued strong demand for its products in 2022, supported by a robust backlog of over $78 million [48][56] Other Important Information - The company ended 2021 with a strong balance sheet, including cash and equivalents of $174.4 million and no debt [52] - The company plans to invest in the development and commercialization of next-generation products, with a focus on enhancing its product offerings [56][58] Q&A Session Summary Question: Can you elaborate on proactive measures taken to address supply chain issues? - Management highlighted that they increased inventory levels to meet customer commitments despite global supply chain challenges [64][66] Question: What is the timing for revenue contribution from the trucking market? - Initial revenues from the Stoneridge partnership are expected towards the end of 2022, with mass production anticipated in early 2023 [71] Question: How do you see chip inventory levels in the automotive space? - Management noted that inventory levels among customers are low, which is encouraging for future revenue growth [84] Question: Can you provide insights on the VA7000 chipset sampling? - The VA7000 is in the evaluation stage, with positive feedback on its performance, particularly regarding electromagnetic capabilities [99] Question: What is the expected mix of automotive revenues for 2022? - The company expects automotive revenues to contribute about 20% of total revenues in 2022, primarily from the VA6000 chipset [95]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIE ...

[Executive Summary](index=1&type=section&id=Executive%20Summary) [Fourth Quarter and Full Year 2021 Performance Highlights](index=1&type=section&id=Key%20Financial%20and%20Business%20Highlights) Valens Semiconductor achieved record revenues for Q4 and full year 2021, driven by strong demand in its Audio-Video and Automotive segments Key Performance Metrics | Metric | Q4 2021 | Q4 2020 | FY 2021 | FY 2020 | YoY Change (FY) | | :----- | :------ | :------ | :------ | :------ | :-------------- | | Revenues | $20.7 million | $14.1 million | $70.7 million | $56.9 million | +24.2% | | Audio-Video Revenues | N/A | N/A | $62.8 million | N/A | +14.5% | | Automotive Revenues | N/A | N/A | $7.9 million | N/A | +281% | | GAAP Gross Margin | 71.2% | 72.8% | 71.6% | 76.4% | -4.8 ppts | | Non-GAAP Gross Margin | 71.5% | 73.4% | 71.8% | 76.9% | -5.1 ppts | | Record Backlog (as of Dec 31, 2021) | N/A | N/A | $78.2 million | N/A | N/A | | Cash, cash equivalents and short-term deposits (as of Dec 31, 2021) | N/A | N/A | $174.4 million | N/A | N/A | - Shipped **first-in-industry MIPI A-PHY** automotive chipsets to potential customers and leading ecosystem players[3](index=3&type=chunk)[5](index=5&type=chunk) - Generated initial revenue from Stello, the newest Audio-Video product family, which is already embedded in designs of **over 100 different products**[3](index=3&type=chunk)[5](index=5&type=chunk) - Met all customer demand despite a **severely supply-constrained environment**[5](index=5&type=chunk) [Business and Strategic Developments](index=1&type=section&id=Business%20and%20Strategic%20Developments) The company advanced its market position in 2021 through mass production for Mercedes-Benz and the launch of its new Stello chipset - 2021 marked the **first full year of mass production** for first-generation chipsets in Mercedes-Benz automobiles[3](index=3&type=chunk) - Shipped first-in-industry engineering samples of **MIPI A-PHY standard chipsets (VA7000)** to OEMs, Tier 1s, and other leading automotive companies for evaluation[3](index=3&type=chunk) - Introduced and began generating revenue from the new **Stello chipset product family** in Audio-Video, which is embedded in over 100 different products[3](index=3&type=chunk)[5](index=5&type=chunk) - Plans to expand its foothold in Automotive and Audio-Video markets with new product offerings in 2022 and beyond[4](index=4&type=chunk) [First Quarter and Full Year 2022 Outlook](index=2&type=section&id=First%20Quarter%20and%20Full%20Year%202022%20Outlook) The company projects continued revenue growth for 2022, with a significant increase anticipated in the Automotive segment Q1 and Full Year 2022 Guidance | Metric | Q1 2022 Guidance | FY 2022 Guidance | | :----- | :--------------- | :--------------- | | Revenue | $20.6 million - $21.0 million | $83.0 million - $85.0 million | | Gross Margins | 66.5% - 67.0% | 65.5% - 67.2% | | Adjusted EBITDA | $(10.7) million - $(9.7) million | $(38.4) million - $(37.8) million | - Anticipates **substantial growth in Automotive revenues** in 2022 compared to 2021[8](index=8&type=chunk) - The company's ultimate goal is to **achieve and amplify profitability**[6](index=6&type=chunk) [Company Overview](index=2&type=section&id=Company%20Overview) [About Valens Semiconductor](index=3&type=section&id=About%20Valens) Valens Semiconductor provides high-speed connectivity solutions for the automotive and audio-video industries, with its HDBaseT technology a market standard - A leading provider of semiconductor products for long-reach, high-speed video and data transmission for the automotive and audio-video industries[15](index=15&type=chunk) - **HDBaseT technology** is the leading standard in the professional Audio-Video market with tens of millions of chipsets integrated into products[15](index=15&type=chunk) - Valens Automotive chipsets are already on the road and its technology is the basis for the **new international standard for automotive connectivity**[15](index=15&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This report contains forward-looking statements that are subject to significant risks, uncertainties, and other factors - Forward-looking statements are identified by words such as "estimate," "plan," "project," "forecast," "intend," "will," and "expect"[12](index=12&type=chunk) - These statements are based on current expectations of management and are **not predictions of actual performance**[12](index=12&type=chunk) - Statements are subject to risks including changes in market conditions, ability to manage growth, competition, and global health epidemics[13](index=13&type=chunk)[14](index=14&type=chunk) [Detailed Financial Statements](index=4&type=section&id=Detailed%20Financial%20Statements) [Summary of Financial Results](index=4&type=section&id=SUMMARY%20OF%20FINANCIAL%20RESULTS) This section presents key GAAP and Non-GAAP financial metrics for Q4 and the full year 2021 Financial Highlights (in thousands, except per share data) | Metric | Q4 2021 | Q4 2020 | FY 2021 | FY 2020 | | :----- | :------ | :------ | :------ | :------ | | Revenues | $20,739 | $14,123 | $70,684 | $56,910 | | Gross Profit | $14,767 | $10,288 | $50,579 | $43,478 | | Gross Margin | 71.2% | 72.8% | 71.6% | 76.4% | | Net loss | $(7,973) | $(6,011) | $(26,534) | $(19,635) | | Cash, cash equivalents and short-term deposits | $174,359 | $61,570 | $174,359 | $61,570 | | Net cash used in operating activities | $(11,380) | $(6,368) | $(21,609) | $(19,606) | | Non-GAAP Gross Margin | 71.5% | 73.4% | 71.8% | 76.9% | | Adjusted EBITDA (after issuance-related costs) | $(6,951) | $(4,592) | $(14,010) | $(16,366) | | Loss per share (after issuance-related costs) | $(0.08) | $(0.56) | $(0.62) | $(1.88) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The statement details revenues, costs, and expenses, resulting in a net loss for the reported periods Statement of Operations (in thousands, except per share data) | Metric | Q4 2021 | Q4 2020 | FY 2021 | FY 2020 | | :-------------------- | :------ | :------ | :------ | :------ | | REVENUES | $20,739 | $14,123 | $70,684 | $56,910 | | COST OF REVENUES | $(5,972) | $(3,835) | $(20,105) | $(13,432) | | GROSS PROFIT | $14,767 | $10,288 | $50,579 | $43,478 | | Research and development expenses | $(14,890) | $(10,833) | $(46,875) | $(44,725) | | Sales and marketing expenses | $(4,460) | $(3,420) | $(14,214) | $(13,657) | | General and administrative expenses | $(4,042) | $(2,454) | $(16,556) | $(7,884) | | TOTAL OPERATING EXPENSES | $(23,392) | $(16,707) | $(77,645) | $(66,266) | | OPERATING LOSS | $(8,625) | $(6,419) | $(27,066) | $(22,788) | | NET LOSS | $(7,973) | $(6,011) | $(26,534) | $(19,635) | | BASIC AND DILUTED NET LOSS PER ORDINARY SHARE | $(0.08) | $(0.90) | $(1.15) | $(3.25) | - General and administrative expenses for FY 2021 include **$5,958 thousand in issuance-related costs**[23](index=23&type=chunk) [Condensed Consolidated Balance Sheets](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The balance sheet outlines the company's assets, liabilities, and shareholders' equity as of year-end 2021 and 2020 Balance Sheet (in thousands) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :-------------------- | :----------- | :----------- | | TOTAL CURRENT ASSETS | $199,031 | $76,377 | | TOTAL LONG-TERM ASSETS | $3,569 | $2,788 | | TOTAL ASSETS | $202,600 | $79,165 | | TOTAL LIABILITIES | $20,403 | $11,777 | | REDEEMABLE CONVERTIBLE PREFERRED SHARES | — | $149,611 | | SHAREHOLDERS' EQUITY (DEFICIT) | $182,197 | $(82,223) | - Significant increase in cash, cash equivalents and short-term deposits from **$61,570 thousand in 2020 to $174,359 thousand in 2021**[21](index=21&type=chunk)[26](index=26&type=chunk) - Redeemable convertible preferred shares were converted to ordinary shares by September 29, 2021, resulting in a shift from a **shareholder deficit to positive equity**[26](index=26&type=chunk)[35](index=35&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This statement details cash flows from operating, investing, and financing activities for fiscal years 2021 and 2020 Statement of Cash Flows (in thousands) | Metric | FY 2021 | FY 2020 | | :-------------------- | :------ | :------ | | Net cash used in operating activities | $(21,609) | $(19,606) | | Net cash provided by (used in) investing activities | $(84,163) | $28,314 | | Net cash provided by financing activities | $135,431 | $406 | | INCREASE IN CASH AND CASH EQUIVALENTS | $30,475 | $10,760 | | CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | $56,791 | $26,316 | - Net cash provided by financing activities **significantly increased in 2021** due to proceeds from transactions related to the merger (public listing)[6](index=6&type=chunk)[28](index=28&type=chunk) [Reconciliation of GAAP to Non-GAAP Financial Measures](index=8&type=section&id=RECONCILIATION%20OF%20GAAP%20TO%20NON-GAAP%20FINANCIAL%20MEASURES) This section reconciles GAAP Net Loss and Loss per Share to their non-GAAP counterparts, Adjusted EBITDA and Non-GAAP Loss per Share - **Adjusted EBITDA** is defined as net profit (loss) adjusted for financial items, taxes, depreciation, amortization, and share-based compensation[19](index=19&type=chunk)[30](index=30&type=chunk) - Non-GAAP measures may not be comparable to similar measures disclosed by other issuers due to different calculation methods[19](index=19&type=chunk)[30](index=30&type=chunk) - Guidance for projected Net profit (loss) is not provided due to the **high variability and difficulty** of making accurate forecasts for certain elements[31](index=31&type=chunk) [Adjusted EBITDA Reconciliation](index=8&type=section&id=Adjusted%20EBITDA%20Reconciliation) This table reconciles GAAP Net Loss to Adjusted EBITDA by adjusting for non-cash and non-operating items Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Q4 2021 | Q4 2020 | FY 2021 | FY 2020 | | :-------------------- | :------ | :------ | :------ | :------ | | Net loss | $(7,973) | $(6,011) | $(26,534) | $(19,635) | | Financial income (expense), net | $(820) | $(428) | $(929) | $(3,300) | | Income taxes | $169 | $37 | $407 | $164 | | Equity in earnings of investee | $(1) | $(17) | $(10) | $(17) | | Depreciation | $312 | $294 | $1,099 | $1,093 | | Share-based compensation expenses | $1,362 | $1,533 | $9,869 | $5,329 | | Adjusted EBITDA - before issuance-related costs | $(6,951) | $(4,592) | $(16,098) | $(16,366) | | Issuance-related costs | — | — | $2,088 | — | | Adjusted EBITDA - after issuance-related costs | $(6,951) | $(4,592) | $(14,010) | $(16,366) | [Loss Per Share Reconciliation](index=9&type=section&id=Loss%20Per%20Share%20Reconciliation) This table reconciles GAAP Loss per Share to Non-GAAP Loss per Share, adjusting for preferred share dividends and issuance costs Reconciliation of GAAP to Non-GAAP Loss Per Share (in thousands, except per share data) | Metric | Q4 2021 | Q4 2020 | FY 2021 | FY 2020 | | :----- | :------ | :------ | :------ | :------ | | GAAP Net Loss | $(7,973) | $(6,011) | $(26,534) | $(19,635) | | Accrued dividend related to Preferred Shares | — | $(3,662) | $(11,330) | $(14,330) | | Total Loss used for computing GAAP Loss per share | $(7,973) | $(9,673) | $(37,864) | $(33,965) | | GAAP Loss per share | $(0.08) | $(0.90) | $(1.15) | $(3.25) | | Non-GAAP Net loss (adjusted for issuance-related costs) | $(7,973) | $(6,011) | $(20,576) | $(19,635) | | Non-GAAP Loss per share | $(0.08) | $(0.56) | $(0.62) | $(1.88) | - All **Preferred Shares were converted into Ordinary Shares** as of September 29, 2021[35](index=35&type=chunk) [Corporate Information](index=2&type=section&id=Corporate%20Information) [Conference Call Information](index=2&type=section&id=Conference%20Call%20Information) The company hosted a conference call on March 2, 2022, to discuss its financial results and business outlook - Conference call held on **Wednesday, March 2, 2022**, at 8:30 a.m. Eastern Time (ET)[9](index=9&type=chunk) - Access was available via dial-in numbers for the U.S., UK, Israel, and other locations[9](index=9&type=chunk) - A live webcast of the conference call was available via the investor relations section of Valens' website, with a replay available after the call[10](index=10&type=chunk) [Annual Financial Report Announcement](index=2&type=section&id=NYSE%20Rule%20203.01%20Annual%20Financial%20Report%20Announcement) The company announced the filing and availability of its 2021 Annual Report on Form 20-F with the SEC - The Annual Report on **Form 20-F for 2021** was filed with the U.S. Securities and Exchange Commission on March 2, 2022[11](index=11&type=chunk) - The report is available in the investor relations section of Valens' website[11](index=11&type=chunk) - Hard copies of the 2021 Annual Report will be provided free of charge upon request[11](index=11&type=chunk) [Contact Information](index=10&type=section&id=For%20more%20information%2C%20please%20contact) This section provides contact details for investor relations and media inquiries - Investor Relations Contact: Daphna Golden, VP Investor Relations, Valens Semiconductor Ltd., investors@valens.com[36](index=36&type=chunk) - Media Contact: Moriah Shilton, Financial Profiles, Inc., US: +1 310-622-8251, Valens@finprofiles.com[36](index=36&type=chunk)

Financial Data and Key Metrics Changes - The company reported record revenues of $19.1 million for Q3 2021, representing a 48.8% increase from Q3 2020 [28] - Gross profit increased from $9.5 million in Q3 2020 to $13.8 million, with a gross margin of 72.4% compared to 74.4% last year [31] - The net loss for Q3 2021 was $8.5 million, an improvement from a loss of $8.8 million in Q3 2020, with a loss per share of $0.94 [35] - The company ended Q3 with cash, cash equivalents, and short-term deposits of over $205 million, with no debt [37] Business Line Data and Key Metrics Changes - Audio-video revenues increased by 38.5% to $17.1 million, while automotive business revenues contributed $2 million, an increase of over 300% year-over-year [29] - Record bookings of $36 million during Q3 resulted in a book-to-bill ratio of 1.88, supporting growth projections [32] Market Data and Key Metrics Changes - The serviceable addressable market is estimated to grow to over $9 billion by 2026 across automotive and audio-video markets [19] - The company is seeing strong interest in the MIPI A-PHY standard, with over 15 prospective customers and partners eager to test the VA7000 chip [24] Company Strategy and Development Direction - The company aims to leverage its first-mover advantage with the MIPI A-PHY standard to capture a substantial share of the growing automotive market [16][20] - The focus remains on executing its strategy to enhance the development and commercialization of next-generation products [37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in fulfilling customer demand despite global supply chain shortages, indicating that supply should not be an issue for Q4 [46] - The company anticipates revenue in the range of $19.4 million to $20.6 million for Q4 2021, reflecting an increase in full-year revenue guidance [38] Other Important Information - The company has a compelling financial model supported by high gross margins and long-term revenue visibility [21] - Operating expenses for Q3 were $22 million, with an expected increase of about $2 million per quarter moving forward due to public company costs [51] Q&A Session Summary Question: Visibility on backlog and supply constraints - Management highlighted that they met all customer commitments during Q3 despite supply chain shortages, with extended lead times and price increases being the main impacts [45][46] Question: Competitive landscape for A-PHY - Management noted strong momentum for A-PHY adoption, with partnerships expanding and a superior technology position [48] Question: Automotive revenue mix for 2022 and 2023 - The majority of revenues will still come from existing projects, with initial revenues from new automotive products expected by the end of 2022 [49][50] Question: Average dollar content in vehicles - Currently, Daimler vehicles contain 3-4 chips from the company, with potential revenue per car increasing to $70-$100 with new products [57][58] Question: Backlog allocation and revenue projections - Management expressed confidence in meeting revenue targets for Q4 and indicated that the backlog will support revenue projections for the following year [63]