Valens Semiconductor Ltd.

Thank you and welcome everyone to Valence Semiconductor's fourth quarter 2024 and full year earnings call. With me today are Gideon Bensvi, Chief Executive Officer, and Guy Natanzon, 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 February 26, 2025 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 reconciliation of these metrics within our earnings release. With that, I will now turn the call over to Gideon.

Thank you, Michal. Hello, everyone, and thank you for joining us. 2024 was a challenging year for many companies around the world, including semiconductor companies in many markets, and these challenges affected Valence as well. However, although our sales were slowed by continued inventory digestion and weakness in our customer markets, we believe that we are emerging from the bottom of the cycle and that 2025 will prove a turnaround year for our company. I want to start by giving you some highlights for 2024. First, we announced three design wins in the automotive industry for ADAS platforms. Second, we successfully completed our first acquisitions acronym, which will enable Valence to expand its position in the industrial market with a holistic USB-focused offering. Third, we released the VSC6320 chipset, the first ASIC-based USB 3.2 high-performance extension solution on the market. Fourth, we defined a goal to penetrate a new market that has high growth potential, industrial machine vision, and establish specific cooperation with companies in this space. Fifth, we announced an ambitious five-year plan that, if achieved, could see us more than quadruple our top-line revenues over the coming years. As part of the five-year plan, we reorganized our corporate structure in order to maximize our ability to reach new high growth potential markets. Over the next few minutes, I will walk you through the details of this plan and explain why I expect that we will achieve our goals. But before I do, I want to provide a quick overview of our fourth quarter financial performance. We reported revenues of $16.7 million, which exceeded the top end of our guidance. Yet gross margin for the fourth quarter came in at 60.4% above the midpoint of the guidance and adjusted EBITDA loss was $3.7 million better than the guidance range. Importantly, we have a robust balance sheet of $131 million of cash and cash equivalent. Now let's turn to the five-year plan and I'll start with the Cross Industry Business Unit or CIB and I'll bring down into the various sub-verticals included within it. First and foremost, the professional audio-video vertical. This is the bread and butter of Valence. It's where we got our start all those years ago with the HDBC standards and to this day it accounts for the bulk of our revenues. We have set clear goals for ProAV. As part of our five-year plan, we share that the video conferencing vertical alone represents a large opportunity for the company, which we estimate will signify a sum of $350 million by 2029. Although this market is currently addressed by our legacy HDBST solutions, we believe that there are significant additional growth opportunities here fueled by a variety of market dynamics, including increased demand for video and video peripherals inside meeting rooms, as well as the growing popularity of USB as the interface of choice for meeting rooms. Well, we're positioned to capitalize on this trend with our newest chipset, the VS6320, which we believe is the most reliable and cost-efficient extension solution for USB 3.2 on the market today. Last quarter, inventory digestion continued to impact our ProAV sales. However, we believe we are emerging from the bottom of the cycle. As such, we're seeing increasing interest in our solutions, which are set to be integrated into products that are expected to hit the market in the next few years. We are thrilled with the positive market feedback following the launch of the latest chipset. This was most recently evident at ISE, the industry's most renowned international conference for innovations in video conferencing, education, digital signage, entertainment and more. Then we showcased a variety of meeting room setups enabled by two of our newest chipsets, the VS6320 and the VA7000, and we announced that our solutions are powering the latest generation of products for some of ProAV's largest manufacturers. For example, We recently announced that our technology for the extension of USB and power was officially endorsed by audio-video leader Sennheiser and that our solution can be used to extend the company's popular Team Connect Bar product line. In addition, we demonstrated that balanced cutting-edge chipsets can power Logitech's innovative Rally Camera Streamline Kit and Logitech's Extend product, which enables unmatched flexibility for advanced video conferencing and hybrid learning applications. Both of these products illustrate how our chipsets can capitalize on important trends we see playing out within the video conferencing space. More conference rooms of all sizes, from small hotel rooms to large corporate conference rooms, more displays, more cameras, more video bars, all of which are opportunities for Valence to broaden its presence in this market. I would like to remind you that our technology is already embedded within all major projectors, including Epson, Panasonic, and NEC Sharp, and it is the extension solution of choice for all major audio-video distribution equipment companies, such as Crestron, Exxon, Aclona, and Kramer. We are the de facto providers of comprehensive meeting room connectivity solutions. We estimate that in 2025, we will return to growth given the following factors. Our customers are entering 2025 with much higher inventory levels and they report increased activity with more new bits and installations in their end markets. Then with the cross-industry business unit, we are going to move to our new high-growth markets, industrial machine vision and medical endoscopes. We have long been active in industrial and medical, offering IPC connectivity in the former and medical imaging connectivity in the latter. Additionally, as outlined in our five-year plan, we believe the industrial machine vision and medical endoscopy vertical represents new and exciting opportunity with high potential upside. In the industrial machine vision vertical, we are heavily promoting our VA6320 and VA7000 chipsets, which extend the commonly used USB 3.2 and CSI2 interfaces, respectively. We are actively engaged with leading camera module manufacturers, including Teledyne, E2V, Framos, Leopard Imaging, and D3 Embedded, among others, and these collaborations are developing quickly. For example, in Q4, D3 officially began selling camera modules based on the VA7000 A5 chipset offering half a dozen A5 models. We will be showcasing these chipsets among others at the Embedded World Conference taking place in Nuremberg next month. There is really no substitute for seeing live demonstrations of our chipsets and this premier machine vision event will be an excellent opportunity to further broaden our customer base. In total, our five-year plan anticipates that our potential thumb for the industrial machine vision vertical can reach $460 million by 2029, and I believe that we are well positioned to capture a significant share of this market. Our goal for 2025 is to achieve new design wins based on our advanced chipset with expected commercialization starting from 2026 and beyond. A couple of words about Acroname, the company we acquired in May 2024. We believe that Acroname has the potential to expand our position in the professional audio-video and industrial markets. Just last month, Acroname announced a new product based on the Valence VS6320 for point-to-point USB 3.0 and USB 2.0 switch extension with advanced power delivery. The product allows AV installers and OEM product manufacturers to control, manage, and extend USB devices, streamline product deployment for the machine vision, corporate, and education industries. This is the result of significant synergies between Valence and Acroname and is precisely what we envisioned when we purchased Acroname. Rounding out the cross-industry business unit, our five-year plan envisions that our medical vertical could provide long-term potential upside as our VA7000 chipset finds use in endoscopes. I'm talking about more reliable, uncompressed video with high resolutions suitable for computer-aided detection and AI applications. We have a variety of projects with companies in this space, some in the stage of preparing for clinical trials, while others are readying to seek FDA approval. To be clear, this is currently a small market and our solutions are only now starting to gain traction. However, in the long term, we are excited about how this vertical could evolve. I would like to turn now to the automotive industry. Our five-year plan clearly highlights this industry as a key component in our long-term vision. This is a vast long-term opportunity with an estimated time of $4.5 billion per year by 2029, with significant upside during the following years. One, there is wide market adoption of sophisticated ADA systems. And once again, I am confident that we will capture a significant share of this market, primarily through our flagship automotive chipset, the VA7000, which is the first to comply with the MIPI A5 standard for high-speed sensor connectivity. My confidence was bolstered during 2024 when we achieved 3 design wins with leading European OEMs for the BA7000. As you know, our ability to meet our ambitious 5-year targets in automotive depends on how quickly the MIPI A5 standard takes hold within the industry and these design wins provide a strong foothold for AFI within the OEM community. We are eager to build off these wins to promote AFI across the industry, and we will use the validation we received from these OEMs as a springboard to convince others of the superiority of the technology. We are currently in the midst of several evaluation processes at various stages with multiple OEMs. I would like to highlight one particular evaluation process we're undergoing with a top five global OEM. This OEM recently benchmarked our VH7000 A5 compliant chipset against competing solutions. As a result of intensive testing, which took place over the span of months, our technology won by a knockout and was found far superior across the majority of testing parameters, including resilience to EMC, satellite reception, noise injection, latency, and more. We believe that this testing gives our solution a significant competitive edge. Our goal in automotive for 2025 is to achieve new design wins based on the VA7000 chipset with leading OEMs with expected commercialization within a few years. As you may recall, our third generation of automotive chipsets, the VA6000, has been in mass production since 2021 in Mercedes-Benz. This contract has generated $21.6 million of revenues during 2024 and we expect it to account for most of our automotive revenues during 2025 as well. With that, I will turn the call to Guy to discuss our financial performance in more detail.

Thank you, Guido. Let me start with our fourth quarter and full year 2024 results, and then I'll provide our outlook for the first quarter of 2025. We achieved quarterly revenue of $16.7 million, the fourth consecutive quarter of revenue growth, which exceeded our guidance of between $16 million to $16.3 million. This compares to revenue of $16 million in Q3 2024 and $21.9 million in Q4 2023. The cross-industry business, or CIB, accounted for $11.7 million, or approximately 70% of total revenue, while automotive contributed $5 million, or approximately 30% of total revenue this quarter. This compares to Q3 2024 revenue of $9.4 million, from CIB and $6.6 million from automotive, which represented 60% and 40% of total revenue respectively. It also compares to Q4 2023 revenue of $15.8 million from the CIB and $6.1 million from automotive, representing 70% and 30% of total revenue respectively. Q4 2024 gross margin was 60.4% compared to our guidance of between 58% and 62%. This compares to a Q3 2024 gross margin of 56.4% and Q4 2023 of 61.7%. On a segment basis, Q4 gross margin from the cross-industry business was 64.7%. And gross margin from automotive was 50.5%. This compares to a Q3 2024 gross margin of 70.2% and 37% respectively. And Q4 2023 gross margin of 76.6% and 22.6% respectively. The increase in Q4 automotive gross margin was due to an optimization of our product cost. The decrease in gross margin of the cross-industry business, CAB, was due to a product mix shift and lower fixed cost absorption. Non-GAAP gross margin in Q4 was 64.5%, which compares to 60.7% in Q3 2024 and 63.1% in Q4 2023. Operating expense in Q4 2024 totaled $18.5 million, compared to $21.3 million at the end of Q3 2024 and to $15.3 million in Q4 2023. Research and development expense in Q4 totaled $10.1 million compared to $10.3 million in Q3 2024 and $8.6 million in Q4 2023. The increase compared to Q4 2023 is mainly due to payroll-related expenses of Akron's workforce in the amount of $0.9 million. SGN expenses in Q4 were $8.3 million compared to $10.7 million in Q3 2024 and $6.6 million in Q4 2023. The quarterly decrease was mainly driven by a $2.2 million expense resulting from a certain batch production incident expense recorded in Q3 2024. Gap net loss in Q4 was $7.3 million, compared to a net loss of $10.4 million in Q3 2024, and a net profit of $2.8 million in Q4 2023. Adjusted EBITDA in Q4 was a loss of $3.7 million, lower than the guidance range of loss between $4.9 million and $4 million. This compared to an adjusted EBITDA loss of $5.1 million in Q3 2024, and an adjusted EBITDA profit of $2.2 million in Q4 2023. GAAP loss per share in Q4 was $0.07 compared to a GAAP loss per share of $0.10 for Q3 2024 and a GAAP profit per share of $0.03 for Q4 2023. Non-GAAP loss per share in Q4 2024 was $0.02 compared to a loss per share of $0.03 in Q3 2024 and a profit per share of $0.06 in Q4 2023. The main difference between GAAP and non-GAAP loss per share was due to stock-based compensation, depreciation and amortization expense, and expense relating to a certain batch production incident. I will now turn to the full year 2024 results. Total revenue for the year 2024 were $57.9 million exceeding our guidance of between $57.2 million to $57.5 million. This compared to full year revenue from 2023 of $84.2 million. Revenue from the cross-industry business were $36.3 million of which Acronym contributed $3.4 million compared to $57.4 million in 2023. This decrease was due to customer walking through excess inventory, which slowed the pace of orders as well as the weakness in their end markets. Automotive business revenue was $21.6 million, down 19.4% from $26.8 million in 2023 due to gradual price erosion and a reduction in the number of units sold to Mercedes-Benz. Gap gross margin was 59.2% for the full year 2024. compared to 62.5% in 2023. On a segment basis, 2024 growth margin from the cross-industry business was 71% and growth margin from automotive was 39.5%. This compares to growth margin of 77.1% and 31.1% respectively in 2023. The increase in 2024 automotive growth margin was due to an optimization of our product cost. The decrease in gross margin of the CAB was due to a product mix shift and lower fixed cost absorption. Non-GAAP gross margin was 62.9% for the full year 2024 compared to 63.9% in 2023. Full year 2024 operating expense were lowered, reaching $75.6 million compared to $79.5 million in 2023. The year-over-year decrease of $3.9 million in OPEX was driven by a decrease in R&D expense, mainly due to the efficiency plan we deployed at the end of Q3 2023. R&D expense decreased by $7.7 million due to a $2.2 million decrease in payroll expense, a $3.3 million decrease in IP-related expense, and a $1 million decrease in cheap tape-out expense. On the other end, Operating expense were negatively impacted by the increase in SG&A expense in the amount of $3.4 million year-over-year, mainly due to a $2.2 million expense relating to a certain batch production incident recorded in 2024. Moving to net loss and adjusted EBITDA. Gap net loss for the full year 2024 increased to $36.6 million from $19.7 million in 2023. Adjusted EBITDA loss for the full year 2024 was $21.1 million, a decrease compared to $10.3 million in 2023. Gap net loss per share for 2024 was $0.35, a decrease compared to $0.90 in 2023. Non-gap loss per share for 2024 was $0.15, a decrease compared to $0.05 in 2023. Now turning to the balance sheet. We ended 2024 with a strong balance sheet, with cash, cash equivalent and short-term deposits totaling $131 million and no debt. This compares to $133.1 million at the end of Q3 2024 and $142 million at the end of 2023. Our working capital at the end of the quarter was $133.6 million compared to $136.1 million at the end of Q3 2024 and $158.8 million at the end of 2023. Our inventory as of December 31st, 2024 was $10.2 million, down from $11.7 million on September 30th, 2024, and $13.8 million on December 31st, 2023. Maintaining a robust balance sheet allows us to execute our strategy, fund our growth plan, and position us for sustainable profitability. During 2024, we completed the acquisition of Aquanem for a total consideration of $7.8 million in cash and potential earn-out of up to an additional $7.2 million that shall be paid during 2025, depending on the achievement of certain revenue EBITDA and cash flow targets in 2024 and 2025, and the development of a certain product by June 2026. The company is actively looking for more acquisition opportunities with a focus on companies generating revenue with a clear path to profitability, particularly in the ProEV and the industrial machine vision markets. In addition, we recently announced another share repurchase program of up to $15 million, following the completion of a $10 million program we announced in late 2024. The new share repurchase program reflects our confidence in the company's long-term growth and commitment to enhancing our shareholder's value. Now, I would like to provide our guidance for the first quarter of 2025 and the full year of 2025. For 2025, we expect our annual revenue to be in the range of $71 million to $76 million, which represents a year-over-year growth of 23% to 31%. We expect Q1 revenue to be in the range of $16.3 to $16.6 million. We expect gross margin for Q1 to be in the range of 60.8% to 61.3%. And we expect adjusted EBITDA loss in Q1 to be in the range of $4.5 to $4.2 million loss. I would like to remind you that our five years plan, which we presented in November 2024, set our long-term financial goals. We are targeting that by 2029, our revenue will be in the range of $220 to $300 million with growth margin in the range of 50% to 60% and EBITDA margin in the range of 15% to 20%. I'll now turn the call back to Gideon for his closing remarks before opening the call for Q&A.

Thank you, Guy. We believe that Valen Semiconductor is well positioned for a return to growth in our target markets, leveraging our industry-leading technology and robust balance sheets. We remain committed to executing our long-term strategy to drive renewed growth and profitability. Before opening the call for questions, I want to express my gratitude to the entire Valence global team for their ongoing commitment and dedication. With that, I will now open the call to answer your questions. Operator.

Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you're using speaker equipment, kindly lift the handset before pressing the numbers. Please ask your questions in a loud and clear voice. Your questions will be polled in the order they are received. Please stand by while we poll for your questions. The first question is from Quinn Bolton of Needham and Company. Please go ahead.

Hey, it's for Quinn Bolton. So within the cross-industry business, which end markets are showing the strongest demand in the near term? Are there any showing weakness? And then also looking forward, how should we think about the growth trajectory for this segment throughout 2025? Thanks. And then I have a follow-up.

Thanks for the question. And the answer is not simple. The answer is mixed, and I will try to simplify it. We have the traditional audio-video market, which we are a strong player, and this was the market that suffered from weakness in the past year. Yet the market has new opportunities, which are very natural for us to continue, such as the Huddle room, the small conference room, and all the traction that is to connect the cameras, which are just below the TV, to the room. This is a market which is a growing market for us, and in a sense is a kind of a low-hanging fruit because it's a natural progress for our customers. When we speak about industrial market, we definitely speak about larger magnitude, but it's not as fast as a natural growth because some of the customers are new customers. So on one hand you have more demanding market. We answer there a very painful need but it's a market with different characteristics. So if you look at the market, the traditional pro AV, the new AV opportunity, which is the conference room, and the market of the machine vision, I believe the differences will be about the timing, about the magnitude, and sometimes longer time is also longer magnitude, which is nature in this case. But in general, all three of them are very appealing to us, and we're very much looking forward for all the three.

Okay, great. Thanks. And then, did you walk us through the key drivers behind the gross margin guide for the first quarter? And then, additionally, do you see this level sustaining beyond the first quarter, or should we expect any fluctuations in the margin profile throughout the rest of the year?

Thanks. So, for the CAB, we've seen a specific product shift. It might be changed in the following quarters. For the automotive, we think it will be more sustainable because we were able to optimize the cost structure of the device, of the chip, and this is why we believe it will continue in the following quarters as well. And the overall, the average gross margin of the overall company is very much dependent on the ratio of the revenue between the CIB and automotive. So, and it's yet to be seen.

Okay. The next question is from Rick Schaefer of Oppenheimer. Please go ahead.

Hi. Good morning. This is Wayne Mark on the line for Rick. Thanks for taking the question and congrats on the results. For my first question, in your prepared remarks, you talked about emerging from the bottom of the cycle. I was wondering if you can expand on this. Anything you can share on customer demand today compared to 90 days ago? What are you seeing that gives you confidence in this outlook? Thanks.

Okay. Thank you very much for the question, Wei. And the answer here is as follows. We have some access and we speak with our customers to learn from them what they sense from the market. and some of them obviously suffered from the same weakness in the past year, and they are our sources to know the recovery of the market. So this is one source, and this is one of the reasons for this optimism. The other source for the optimism is that we're actually not looking only at the same market as we did before, and we add to the market we had before, also connecting the camera to the room, and the USB-C connection, our product VS6320, which represents new opportunities for us. One of them we announced a few weeks ago about the collaboration with Sennheiser. And we hope and we're working on this market very hard. And this is a natural growth of this market, which I think we prepared ourselves well enough to be positioned well for this market. So the answer is both the source of our customers that share with us optimism about the recovery that they see, and this is actually the best way for us to know what happens in this market, because they are the ones that are sensing their customers and their channels. And the other is the product roadmap that enables us to penetrate other segments of this market, which we haven't been before.

That's good to hear. Thanks. So my second question, I want to shift over to Otto. In December, there was an M&A announced for one of your competitors in the vehicle connectivity market. I was wondering if you can share your thoughts on this. How does it change the competitive landscape? And how do you see API positioned to compete against them?

Yeah, we definitely sensed this M&A. We're not here to explain every M&A and the logic behind it. We're very persistent that whenever you go out with the resolution and the bandwidth, the problems are different and we're very confident that AFI is the best and by far the unique solution to cope with high bandwidth, with unshielded cables, and the fact that one company has been acquired or the second company has been acquired that represents a derivative or what's supposed to be a derivative of Ethernet doesn't confuse us. I can tell you something, we said it in the past, we could go with this standard very easily. For us it's a derivative, it's definitely a subset of the complexity of what we chose to do. We chose to go on A-Fi Not because we just look for the highest technological barrier. We chose on AFI because we predicted that the market, when they go on higher resolution and they have big, higher bandwidth, and the ADA system wants to cover more potential accident cases, they will have no chance but to have more data, and more data is more bandwidth, and more bandwidth is more exposure to noise. And Valence's ability to do it is unbeatable in a big, big gap. And we're always welcoming companies to challenge my sentence here and my declaration here. And yes, we hear news and definitely every company has to maximize their ability and their presence. At the end of the day, there is marketing and there are chips. And when it comes chip against chip, semiconductor and again semiconductor, we believe we are not winning in points, we are winning in knockout and the three design wins we had are people who have far easier and more access to any other technology than to us and it simply failed and they came to us.

Great, that's good to hear. Thank you.

The next question is from Suji Da Silva of Roth Capital. Please go ahead.

Hi, Gideon. Hi, Guy. So maybe perhaps on the auto side, you could update us on the three European OEMs and just remind us of L2 or L2+, the programs, and what the timeframe expectation is there. That would be helpful. Thanks.

Okay. Hi, Suji. Good to see you while you're going in the show, in the CS show. And the answer is as follows. We have dates, and I will tell you what we predict it is, but I want to say a statement. We are working in the automotive industry. Automotive industry, sometimes there are delays which are dependent because of a different totally component relating to a seat of the car, a postponed car. And we're subject to this, so we have the dates, but do we have the dates? We have the expected that we'll start to see chips shipped and embedded in the cars within end of 2026. It can be a little bit earlier or later, but that's what we're hitting for. But this is this market and I guess everyone know automotive know that's a very hard to predict the exact date. It has also an advantage. It also lasts more because of that. So actually from the end of the end of the day, what you think is actually will be out of the design when after several years, it also takes more time. So the long tail is also longer. So that's, you know, who wants to play in the automotive industry, that's the game. And we decided to play.

Okay. And the cars were L2, L2 Plus, just to clarify, or L3?

I will tell you that you will be very happy to drive each of them.

Okay, good to know. And then, great. And then maybe switching over to the industrial side, the medical imaging, what's the timing of that opportunity? And are you using go-to-market partners there? to target that market?

Okay. Well, I must say that the medical, and I must admit to the market, it came to us. We were not proactive in meeting this market, and we're very happy about the market being approaching us because the unique need that seems that we have here. When we had the meeting in New York with the investors, we were... put it many, many years ahead. I'm today more optimistic that it will be earlier than I said, but it will be, I don't have enough information to give a date, but I would say it's earlier than what we thought significantly.

Okay. Okay, great. And then maybe lastly, Gideon, just the, you said acquisitions are an important part of the strategy. How is the environment for targets, valuations, you know, just give me any thoughts there as to how the opportunity is right now for you guys?

There are different opportunities. Some of the opportunities are around companies that made many M&As and found out that they are serving too much of debt and they are selling some of the activities that were not merged very good into them, which is one kind and the other are companies which are might be good companies but the vcs which are tired of being so many as the company or or a family businesses that are there are no inheritance and no one to no next generation to take it so a lot of you know we're in the both the av and the industrial are not vc backed and not private equity based it's a lot of family businesses and and in the nature of family business is different than those which we are far more aware of the public market and VC and all this chain. And a lot less fluctuated. So we don't see very big change, very large changes in the expectation for price or the willingness to sell. For good and for bad, it's the same market. It's less volatile than a market that are exposed to pension funds, stock markets, VCs, private equity, and so forth.

OK, alright, thank you.

The next question is from Dave Storms of StoneGate. Please go ahead.

Morning and appreciate you taking my questions. I wanted to start by asking about maybe the cadence of your guidance for 2025. Should we expect a gradual ramp through the year or are there other variables that could lead to a step up that we should keep in mind?

Excuse me, can you, I skipped some of the words. You should ask about design wins in 2025? The cadence of your guidance in 2025.

Oh, our guidance. Okay, that's guys, please. So we did not provide a, we provide the overall guidance for the year and we provided a guidance which is $71 to $76 million of revenue. we provided a guidance for the first quarter, 16.3 to 16.6. We did not provide the following quarters. Generally speaking, I would say that we expect some ramp in the second half of the year because, for example, the 6320 designs that are expected to be matured and released to the market during the second half of the year. But this is currently what we could say.

Understood. Thank you. And then just in the CID, curious as to what you're seeing in the new customer acquisition environment. Maybe see how you see that evolving over 2025 as some of this inventory digestion takes its course.

Well, as I am pressing for the question, and as I said before, The inventory digestion, we see it recovering and we think 2025 will be between high part or almost, not the total recovery of the market, but the market is recovering. Sorry. So we see the recovery and we hear there are digestion of inventory in most of the customers, not with all of the customers, but with the majority. Some of them are the level of 2019 now, some are not. But in general, we see that the inventory crisis is behind us and picking up back.

Understood. Thank you for taking my questions.

If there are any additional questions, please press star 1. If you wish to cancel your request, please press star 2. Please stand by while we poll for more questions. There are no further questions at this time. Mr. Bensvi, would you like to make your concluding statement?

Yes, please. I would like to thank you all for joining today and for the fourth quarter of the full year of 2024, Nicole. and for your continued support interest in valence semiconductor and i'm sure and hope that we'll meet again in our next earning call and looking forward for this interest in valence and thank you all thank you this concludes the valence semiconductor results conference call thank you for your participation you may go ahead and disconnect