Valens Semiconductor Ltd.

Ladies and gentlemen, thank you for standing by. The call will begin shortly. Thank you. Good morning. My name is Yoni and I will be your conference operator today. At this time, I would like to welcome everyone to Valence Semiconductor's second quarter 2023 earnings conference call and webcast. All participant lines have been placed in the listen-only mode. Opening remarks by Valence Semiconductor management will be followed by a question and answer session. I will now turn the call over to Daphna Golden, Vice President of Investor Relations for Valence Semiconductor. Please go ahead.

Thank you and welcome everyone to Valence Semiconductor's second quarter 2023 earnings call. With me today are Gideon Bensley, Chief Executive Officer, and Laura Heisenberg, Chief Financial Officer. Earlier today, we issued a press release that is available on the investor relations section of our website under investors.valence.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 20F filed with the SEC on March 1, 2023, for a discussion 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 the business and to find reconciliations of these metrics within our earnings relief. In the coming weeks, we will be conducting investor conferences and meetings virtually and in Chicago and Tel Aviv. If you're interested in meeting with us, please email me at investors at valence.com. With that, I will now turn the call over to Gidon.

Thanks, Daphna, and thank you all for joining our Q2 2023 call. In Q2 2023, Valence Semiconductor revenues reached a record of $24.2 million. metrics on our journey towards adjusted EBITDA break-even by the end of this year. We continue to make progress, executing against our long-term growth opportunities as well. As we further push the boundaries of connectivity with our advanced offering and enable our customers to bring to market new disruptive products to existing and untapped markets. We continue to track the current macroeconomics headwinds. the rising inflation, interest rates, and slower than anticipated inventory digestion. While these trends are driving some near-term uncertainty, long-term trends for the semiconductor industry and balance remain positive. I will start our second quarter business discussion with our audio-video business. The audio-video market is highly correlated to macroeconomic trends. We can now see indication for a recovery of the market, which we believe will start to improve at a relatively slow pace towards the end of 2023 and through the first half of 2024 and gain momentum into the second half of 2024. We have identified that one of the main contributors for the expected improvement is the increasing demand for high-performance USB peripherals. As such, Balen Semiconductor is driving adoption globally across verticals. Valet Semiconductor's long-term vision is to accelerate the transformation of the video conferencing market with an extensive product portfolio. Our latest chipset, the VS6320, is the first single chip in the market for extension of high-performance USB. It targets its growing market and can extend USB 3.2 peripherals at up to 100 meters or 328 feet. We recently received the first samples of the VS-6320 from the successful tape of Accretuted in C1-2023, and we remain on track to ship the first engineering samples to selected customers by Q4 of this year. We believe that revenues from the new product will start ramping up during the second half of 2024 as our customers will introduce their new products, embedding these new chipsets. The VS6320 chipset is ideal for connecting the many remote USB 3.2 peripherals required in videoconferencing, industrial, and medical applications. Each of these applications presents a large market. Multicamera videoconferencing is one of the fastest growing areas for audio-video equipment in the coming years. As modern video conferencing applications increasingly require a unified meeting room experience with a flexible, efficient, and high-performance connectivity solution. Many leading audio, video, and PC manufacturers are investing in the development of advanced solutions for small, medium, and loud meeting rooms. The video conferencing market is projected to essentially double from about $7 billion in 2022 to more than $14 billion in 2029, or 11% to 12% bigger, according to Research Fair Fortune Business Insights. We recently demonstrated how another one of our products, the VA7000 chipset family, that was originally designed for automotive, can be leveraged for multi-camera video conferencing applications. At Infocom International in June, we announced our collaboration with iTech Technology, a leading AI image processing fiber semiconductor design company. The two companies are working together to develop a flexible, efficient, and high-performance multi-camera video conferencing solution that leverages our VA7000 chipset family and iCatch Technologies AI imaging system on chip known as SOC. While we're deploying, the solution will benefit from the ability to cover the entire room and enhance the in-room and remote participants' equity. Another benefit of this new solution is the ability to use smaller cameras that consume less power at reduced cost. During the many discussions held with customers about the VS6320 and the VA7000 chipset, it was clear that with these innovative solutions, valence semiconductor is once again at the forefront of the industry. Turning to automotive. First, our symmetric automotive chipset family, the VA6000. 2023 is the first year in which our BA6000 chipset is being broadly deployed in Mercedes-Benz S, C, and E-Class models, including the electric vehicle EV model, the EQ series. As such, our annual sales in 2023 are expected to increase as a result of being deployed in more models than prior years. We expect to stay in the same car model going forward. As such, beyond this year, the expected growth rate for our VA6000 chipsets should be correlated to Mercedes-Benz passenger car growth rate. In Q2, we recorded initial sales of the tractor-trailer railview safety solution we jointly developed with Stone Ridge for the fleet operator customers. These customers are in the process of conducting pre-production extensive live on-road evaluations. We expect this will result in ramping sales during the second half of 2024. Moving to the VA7000, our MIPI-A5 non-symmetric automotive chipset family for safety applications known as ADAS. There is a growing demand from automotive OEMs for ADAS, including vision-based systems, which are key enablers for ADAS and 360-degree perception sensor for applications such as surround view, parking assist, and reverse assist. The VA7000 perfectly fits for vision-based systems. And over the past quarter, we grew the big pipeline with automotive OEMs considering the deployment of the VA7000 in mass production. The ongoing discussion with the OEMs looking at potentially selecting the VA7000 give us confidence that we remain on track to announce our first design wins this year. As a reminder, it typically takes fewer years following automotive design wins before generating additional revenues. To close out my opening remarks, I want to spend a moment discussing the plan we announced in June to improve the efficiency of our operations. In light of our focus on reaching profitability, while maintaining our ability to reach our technological and business goals, we arranged our R&D and development infrastructure in a more efficient manner and streamlined our development platform. This enables us to operate a stronger and leaner organization for the benefit of Valen Semiconductor stakeholders. Drog will provide more detail in his prepared remarks. I'll now turn it over to Goran Hildenberg, our CFO, to review our Q2 2022 financial results and provide our financial outlook.