Valens Semiconductor Ltd.

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 third quarter 2023 earnings conference call and webcast. All participant lines have been placed in a 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 third quarter 2023 earnings call. With me today are Gideon Bensley, Chief Executive Officer, and Yair Rosenberg-Heine, Interim 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 20-F filed with the SEC on March 1, 2023 and 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 you can find reconciliations of these metrics within our earnings release. I invite you to read our recent ESG report, issued in September, to learn how Valence Semiconductor constantly strives for excellence and innovates daily to ensure our products and solutions meet the highest standards of our customers and provide society the connectivity it requires in an ever-evolving environment. In the coming weeks, we will attend the Roth MKM Technology Conference in New York, the UBS Global Technology Conference in Phoenix, and the Goldman Sachs Global Automotive Conference in London. 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 Guido.

Thanks, Daphna, and thank you all for joining our Q3 2023 call. I'm joined today by Yael Rosenberg-Heine, our Interim CFO. Yael joined Valence Semiconductor over 10 years ago and has been managing our finance department since. Previously, she worked at two semiconductor companies, Broadcom and Provigent. With Yael's finance and industry knowledge, we are fortunate to have her step into the role of interim CFO. Today, I'll begin with a review of the markets we operate in, our quarterly performance, and longer-term vision. Since the last call, our world has changed dramatically with the brutal attack by Hamas terrorists at the break of dawn of October 7th. In the face of deep sorrow and tragedy, we stand strongly united with our fellow citizens and soldiers as they defend our country. In Israel, we have developed a culture of flexibility and strength as a nation, as individuals, and as a company. Given our country's history and the global pandemic, our team in Israel and abroad is experienced in working seamlessly and efficiently under unusual conditions. Valen Semiconductor works in a fabulous business model, and their manufacturing is outsourced to third-party manufacturers in Asia and Europe. Zooming out. The semiconductor industry is still working through a cycle of global uncertainty due to the macro environment of high interest rates, ongoing inflation, and inventory adjustments that are causing customers to remain relatively cautious. Valen Semiconductor Q3 revenues came in at the high end of our guidance at $14.2 million, reflecting the impact of our customers' inventory digestion in line with global trends. In Q3, we were successful in achieving gross margin and adjusted EBITDA above our guidance. Looking ahead, we're confident that the long-term opportunity of Valen Semiconductor's long-reach connectivity solutions is very strong in both our existing and new targeted markets. I will elaborate more in my prepared remarks. I will start with our audio-video business. Our audio-video connectivity solutions are at the forefront of the industry and are deployed where long-reach, high-performance video systems are required. The applications for our solutions cover many industries such as corporate, medical, education, industrial and transportation. Our latest exciting news is the launch of the VS6320 chipset for long reach high performance extension of USB 3.2 peripherals at up to 100 meters or 328 feet. We began shipping engineering samples to select customers during Q4 and some have begun embedding our unique low power single chip USB 3.2 extension into their products for video conferencing, IT, industrial and medical applications. As such, we expect to start ramping revenues from this new chipset during the second half of 2024. We expect to capture a substantial share also in this new untapped market for this high-performance USB extension. The traditional audio-video market is also constantly evolving, presenting new opportunities. For example, More and more corporations are implementing return to office policies. To promote office presence and ensure effective interaction that bridges the physical and virtual divide, corporations will need to invest in their video conferencing platforms. Another projected growth area is multi-camera video conferencing. As modern video conferencing applications increasingly require a unified meeting room experienced with a flexible, efficient and high-performance connectivity solution. Our offerings are increasingly relevant for all types of meeting rooms from large corporate boardrooms to small huddle rooms and small office home office setups known as SOHO. We are well positioned to continue to advance our company's vision to drive the transformation of people's digital experiences in our targeted markets. Turning to automotive, we are excited about the huge opportunity this growing multi-billion market presents. Our technology is designed to provide seamless connectivity for the increasing number of sensors and infotainment systems in today's and future cars. This is an unstoppable trend. Supported by content uplift, as regulatory and safety requirements are increasingly adopted, primarily for advanced driver assistance systems known as ADAS and other safety-related solutions. Over the past quarter, our VA6000 symmetric chip continued to contribute to our automotive revenues in infotainment and telematic systems in Mercedes-Benz cars, including in EV models. Now, for an update on our VA7000, our MIPI A5 non-symmetric automotive chipset family for safety applications. We continue to gain traction in the third quarter that will set us up for eventual mass production of the VA7000 chipset family. In August, we shared that LG Electronics Vehicle Component Solutions selected our VA7000 for its Active Safety Next Generation Camera System project. They were especially intrigued by the VA7000 feature set and excellent electromagnetic compatibility, known as EMC, after having examined different connectivity solutions on the market. The automotive industry continues to evolve towards sensor fusion, which leverages a combination of different sensors, cameras, LIDARs, and radar to deliver data and functionality required by safety applications. This is coupled with continuous effort to transition to software-defined vehicles which rely more and more on software. At AutoSense Brussels in September, together with our partner smart radar solution SRS, we showcase how our VA7000 chipsets are transforming high-speed sensor connectivity for ADAS applications. Embedding our VA7000 into the SRS centralized processing radar optimizes central radar processing and sensor fusion in a more efficient and accurate way than what conventional processing can deliver. We are also making progress on the various bids we are participating in for the VA7000. While we continue to move forward, the decision process may take longer than originally anticipated and design mini awards could be extended into 2024. Once customers choose to embed our chipset into cars, we expect to have a long-term revenue opportunity and efficiencies of scale that in turn are expected to generate a large and recurring revenue stream. To close out my opening remarks, at Valen Semiconductor, we keep the focus on managing those elements within our control as we aim to reach our revenue and profitability goals. We are developing relationships with long-term partners that see the value in our differentiated high-performance connectivity solutions. Our customers need to stay ahead of the technology curve and we are ready to meet their needs with our innovative solutions as we continue to develop the right products that set industry standards in our targeted markets. I will now turn it over to Yael to review our Q3 2023 financial results and provide our financial outlook.