Valens Semiconductor .(VLN) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Q2 2022 revenues reached a record high of $22.5 million, up 28% compared to Q2 2021 [7][24] - Gross margin for Q2 2022 was 70.2%, slightly down from 71.2% in the previous year [25] - Adjusted EBITDA loss for Q2 2022 was $4.5 million, significantly better than the guidance midpoint of $9.3 million [26] - GAAP net loss for Q2 2022 was $10 million, with a loss per share of $0.10, compared to a loss of $0.68 per share in Q2 2021 [27] Business Segment Data and Key Metrics Changes - The audio-video segment saw substantial demand, particularly for the VS3000 product, with revenues more than doubling from Q1 2022 [12] - The automotive segment is expected to grow significantly, with a projected addressable market for ADAS connectivity estimated between $8 billion and $10 billion [19] Market Data and Key Metrics Changes - The company is experiencing strong demand across various sectors, including corporate, education, healthcare, and command-and-control centers [10][16] - The automotive market is projected to manufacture approximately 100 million cars by 2025, with each car expected to have 8 to 15 video productivity sensors [19] Company Strategy and Development Direction - The company is focusing on sensor to ECU connectivity solutions to align with customer roadmaps, which has led to a reduction in planned R&D investments [42][32] - The company aims to reach adjusted EBITDA breakeven by the end of 2023 and expects to achieve cash flow profitability in 2024 [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained growth and success, highlighting the first mover advantage in wired, high-speed connectivity solutions [36] - The company anticipates continued revenue growth in 2023, driven by strong demand in both audio-video and automotive markets [51] Other Important Information - The company ended Q2 2022 with a strong balance sheet, including cash and equivalents totaling $156.8 million and no debt [28] - Inventory increased to $17.3 million, attributed to anticipated sales growth and securing production capacity [29] Q&A Session Summary Question: Can you elaborate on the OPEX and product strategy shift? - Management explained that the R&D budget for 2022 is lower due to rescheduling investments and a refined focus on sensor to ECU connectivity [42] Question: What is the expected mix of auto versus AV for positive EBITDA in 2024? - Management stated it is too early to discuss the specific mix but indicated that scaling automotive volumes will improve gross margins [45] Question: What visibility do you have into 2023? - Management noted strong demand from audio-video customers and anticipated revenue growth from automotive projects, particularly with Mercedes Benz and Stoneridge [51]