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 first quarter 2025 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 Michal Ben-Ari, Investor Relations, for Valence Semiconductor. Please go ahead.

Thank you and welcome everyone to Valence Semiconductor's first quarter 2025 earnings call. With me today are Gideon Bensley, 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 earning 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 February 26, 2025 for a discussion of the factors that will 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. Valence kicked off 2025 on a high note, delivering solid performance across key metrics. We reported revenues of $16.8 million, which exceeded the top end of our guidance. Gap growth margin for the first quarter came in at 62.9% above the guidance and adjusted EBITDA loss was $4.3 million within the guidance range. Beyond the numbers, I'd like to highlight some of our key achievements in Q1 that reinforce my confidence in our growth potential for the near future. And I will start with our cross-industry business unit, or CAB, which consists of a variety of industries, professional audio-video, industrial machine vision, and medical. In ProEV last quarter, inventory digestion continued to impact our sales. But as expected, we are emerging from the bottom of this cycle. As such, We are seeing an increasing interest in our solutions, which are currently being integrated into products that are set to hit the market by the middle of 2026. The interest of our ProEV solutions was most apparent during a couple of industry events. First, in February, we were at ICE, the industry's most renowned international conference for innovations in video conferencing, education, digital signage, entertainment, and more. There, we showcase a variety of meeting rooms, set-ups powered by our latest chipset, the VA6320 and the VA7000. We also announced the integration of this chipset into next-gen products from top manufacturers and showcasing products from customers such as Sennheiser and Logitech. These partnerships reflect key industry trends, more rooms, more displays, more video equipment, all creating more opportunities for Valence. Second at Infocom China in April, we were honored with a Best of Choice Award in the Best Technology Application category. This award was for our innovation in USB 3.0 extension with our VS-6320 chip and is further testament to the superiority of our technology. Infocom China is an influential conference. And China is a large and growing market, so this sort of recognition is important as we continue to promote our chipset offering. As mentioned in previous calls, we are seeing growing adoption of our BS6320 chipset for the extension of US market. There are now over 70 products that have hit the market with our chip inside. Examples of recently released 6320-based products include Hull Technologies Discovery 3-Therm, InnoGene, Eurabridge Wallplace and Pro IPAV Extenders, all of which hit the market over the last couple of months. Staying with our cross-industry business unit, I would like to discuss another industry, Machine Vision, where once again a recent international conference shined the spotlight of our technology with very positive customer feedback. In March, at the Embedded World Event in Nuremberg, we showcased our innovative connectivity solutions, the VA7000 and VS6S320. Initially developed for the automotive and private industries, these chipsets are already proven and mass produced and are now being repurposed to extend commonly used machine vision protocols. At the conference, we met with the leading players in the industry, all of whom were impressed by our technology. There is no substitute for seeing live demonstrations of our chipsets and this renowned industry event was an excellent opportunity to further broaden our customer base. Our project with leading machine vision players continues to progress and we are confident that our AFINE-based solution will soon begin to wedge this industry open. One machine vision partnership I would like to mention, which we announced just after the show, is with Argo Robotics and Cherry Embedded Solutions. This collaboration integrates Argo's advanced perception engine, Valence VA7000 chipset, and Cherry Rockchip-based hardware module. The collaboration delivers unprecedented design flexibility, cost efficiency, and performance for mobile machine manufacturers, enabling AI robotics applications. Valence chips offer a number of important advantages in this industry. First, Valence chips support the highest resolution video, increasing the precision of automated machine vision solutions. Second, the Valence chips are standardized, facilitating the implementation of smaller form factor camera modules. Third, like all our other chips, Valence solutions are the most in my resilience on the market, important for ensuring 24-7 operation in the noisy electromagnetic environment of the factory floor. And fourth, due to their ability to operate over low-cost cables and connectors, these chipsets enable significant total system cost reduction. Kirill was the head of BDS Cherry's head to say, and I quote, the addition of Valens V7000 NIPI A5 connectivity into our portfolio opens new opportunities per platform, end of quote. The co-founder and CEO of AgroRobotics agreed, and I quote again, our robotics perception engine demands high quality video data and that's exactly what Valerio's connectivity solution provides while allowing us to distance the processing unit from the sensors, end of quote. Next week, at Automated Choice, we will be showcasing our machine vision solutions with partners that are adding AFI technology to their platforms, such as D3 Embedded and Tramos. In addition, our AFI chipset has been shortlisted for the show's innovation award. We are very proud of this industry's recognition. In all, we continue to support our customers in bringing solutions to the market based on our VS7000 and VS6320 chipsets, and we are confident that the machine vision industry will become an even more significant source of revenues for us before long. We expect initial revenue from the end of 2026 with significant potential growth during the following years. I would like to turn now to the automotive industry. As a reminder, our opportunity in automotive is dominated by the V7000 chipset, the first in the industry to comply with the MIPI A5 standard for high-speed sensor connectivity. Late last year, we announced three design wins with leading European OEMs and solutions, gaining a strong foothold for AFI within the OEM community. The momentum from EP AFI continued to build in Q1 2025, as we announced two significant milestones. The fact is that Mobileye, a global leader in data systems, selected our chips for the in-car sensor-to-compute connectivity infrastructure for Mobileye's IQ6 high-production programs underway with a group of global automotive brands. That is to say, the design wins we announced last year came about through a strong collaboration with one of the most central automotive tier ones in the industry, Mobileye. Most importantly, in announcing this partnership, we are signaling to the OEM community that AFI has the backing of a key industry player like Mobileye and that they will be working with us to bring this solution to other OEMs around the world. Here is what the Executive Vice President of Engineering at Mobileye said, quote, MIPI AFI believes in efficient and robust high-performance standardized connectivity and we look forward to working with Valence to broaden the MIPI API ecosystem and deliver this technology to more market-leading automakers. The second significant milestone that we announced is the successful interoperability with seven vendors of API silicon. Notice interoperability is a hallmark of any true standard. So having multiple suppliers for MIPI API can only broaden the API pipe or the API, as I like to call it. I will make special mention to one of these AFI vendors, OmniVision, a global supplier of imaging solutions of automotive OEMs, which is integrating AFI directly inside the sensor. After Sony, OmniVision is the second major company to announce this type of integration, which is only possible because AFI is a standard. Here is what the senior director of design at OmniVision said, quote, Integrating MIPI AFI directly into our sensors provides significant value for OEM customers and partners." I would like to take a moment to discuss the growth of MIPI AFI in China. We are hearing that the Chinese automotive ecosystem is rapidly adopting the AFI standard. From a variety of local AFI silicon vendors to Tier 2 and Tier 1 suppliers designing around this specification to significant interest from OEM in this technology. Of course, China is unlike any other country in the world. They are fast to adopt new technologies, but there are also a series of regulations that we are required to adhere to when attempting to penetrate this market. To address some of these challenges, we have partnered with the local Chinese firm ES Wing Computing to present Chinese automakers the opportunity to source locally manufactured production-ready MIPI-A5 chipsets for both sensor and display connectivity. This partnership allows us to access the large and gross MIPI-A5 business opportunity that exists in the Chinese market. Additionally, with regards to our activities in China, we were proud to display our A5 technology at the Auto Shanghai Conference at the end of April. At our booth, we unveiled a number of A5 demonstrations with major players in the automotive industry. First, we had Qualcomm's Snapdragon Ride 4 evaluation platform with A5 connectivity. Second, we had Chameleon's Tier 1 Supply Desire SV with A5 surround view system. Third, we had Horizon Robotics' Journeys platform with A5. And finally, an ASUS reference design with Sigma Star based on A5. It's clear that the momentum around A5 continues to build. We continue to participate in several evaluation processes at various stages with multiple OEMs. With that, I will turn the call to Guy to discuss our financial performance in more detail.