Valens Semiconductor Ltd.

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 Semiconductors' third quarter 2025 earnings call. With me today are Gideon Bensvi, Chief Executive Officer, and Guy Nathanson, 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 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'll 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. With that, I will now turn the call over to Gideon.

Thank you, Michal. Hello, everyone, and thank you for joining us. Before we begin with the rundown of our Q3 highlights, I would like to take a moment to acknowledge our leadership transition. As you know, this will be my last earning call. As of tomorrow, Yoram Salinger will assume the role of Chief Executive Officer of Valen Semiconductor. Yoram brings over 25 years of leadership experience in global high-tech companies and a track record of driving growth, innovation, and successful exits. As I step down from the CEO position, I will continue to be a board member of the company. And now, let's discuss the business highlights. We are pleased to report a strong third quarter well above our initial expectations. We delivered revenues of $17.3 million significantly above our guidance range of $15.1 to $15.6 million as customer demand exceeded expectations in the ProAV market, marking the sixth consecutive quarter of growth for our company. Looking ahead to Q4 2025, we expect revenue to be in the range of $18.2 to $18.9 million, setting us up for a seventh straight quarter of growth. For the full year of 2025, we expect revenue to be in the range of $69.4 to $70.1 million. Gap growth margin for Q3 2025 came in at 63%, better than the guidance and adjusted EBITDA loss was $4.3 million above the guidance range. I'll begin our quarterly discussion with a review of our cross-industry business unit, which covers industrial machine vision, medical, and the traditional professional audio-video, where our customers have reported better than expected demands. In ProEV, we are succeeding with our strategy of first targeting high-end products and allowing the rest of the market to follow. Adoption of the VS-3000 chipset continues to grow, underscoring the demand for longer distribution of uncompressed 4K video. The VS-3000 remains the only solution available that delivers HDMI 2.0, high fidelity audio, Ethernet, USB 2.0, control signals, and power over single category cables at distances up to 100 meters. One notable trend in Q3 was the growing adoption of matrix solutions. These are increasingly being used to deliver high-resolution video in command and control centers, museums, and live events. Several market leaders have launched state-of-the-art matrix products powered by the VS-3000, including Extron's DTP3, Crosspoint, Kramer's MTX3, and a PLONAS 4K HDR switcher. We also had exciting news from the field regarding our USB 3 extension solution, the VS6320. A major player that had previously been designing with a competing technology has now engaged us in four new designs based on the VS6320. We expect continued strong interest in this product moving forward. Staying with the cross-industry business unit, let's turn to industrial machine vision. In July, we announced that our VA7000 chipset, the series originally developed for automotive, is powering the market's first end-to-end camera-to-processor MIPI AFI platform from D3 Embedded. This solution provides the industry's first product ready pass to implementing the standard in AI-based embedded vision systems. We are observing strong momentum for MIPI AFI from within the ecosystem where companies are impressed by AFI's superior performance. Next quarter, we're excited to showcase the AFI offering alongside customers and partners at ITE in Yokohama, Japan, an important region for industrial vision systems. We continue to expect industrial machine vision to become an increasingly meaningful part of our revenue mix in the coming quarters. with initial revenue anticipated by the end of 2026 and strong growth potential in the years that follow. I would like to conclude this discussion of our cross-industry business unit with an update on the notable progress we are making in medical endoscopies. You have heard us speaking about disposable endoscopies several times. It is time to be explicit. Recently, we announced some exciting news. Three OEMs will launch the first VA7000-based endoscopies on the market, including the first disposable colonoscopy with 4K video resolution. As a reminder, the VA7000 chipset is the first on the market with built-in electrosurgical noise cancellation. To explain how important this innovation is, I would like to cite the international standard governing safety and performance requirements for medical endoscopies. Quote, the short interruption of illumination or image display shall not be considered unacceptable degradation for endoscopy equipment. That is to say, the official standard governing safety in endoscopy procedures allows for video loss. And the reason is simple. Until now, there have not been endoscopies that could flawlessly handle electromagnetic interference while supporting the highest resolution sensors. Valence technology offers a solution for endoscopies vendors that provides seamless video experience. And that's the main reason why we're seeing such strong market fit, both for single-use and reusable medical endoscopies. In the medical world, there are two major trends. reducing the use of invasive surgeries, and shifting toward single-use medical devices. Valen's solution addresses both of these emerging needs by enabling high-resolution video transmission and allowing for surgical procedures to be performed without electromagnetic interference. We will be showcasing the medical offering next week at the Medica trade show taking place in Düsseldorf, Germany, and we anticipate considerable interest driven by the growing momentum this solution is generating across the market. Our goal over the next year is to secure additional design wins and continue supporting existing ones, always with the aim of ramping into mass production starting in 2027 to 2028. This market is representing a long-term growth opportunity. It's known for its high barrier to entry, but stickiness tends to be strong once you're in. Now, I would like to turn to the automotive industry. As a reminder, our opportunity in automotive is dominated by the VA7000, which offers high bandwidth and best-in-class EMI immunity. It is the first chipset on the market to comply with the MIPI-A5 standard for high-speed sensor connectivity. Late last year, we announced three design wins with leading European OEMs for the solution, gaining a strong foothold for AFI within the global OEM community. To drive AFI forward and ensure it is the key connectivity standard in the automotive industry, we collaborate with multiple silicon vendors, validating interoperability as their AFI solutions come to market. The impact was clear in Q3 as another AFI provider announced the standard 4 design wing. This makes AFI the first automotive standard to secure design wings across more than one silicon vendor. Another important milestone for MIPI AFI came from Sony Semiconductor Solutions, which announced the upcoming release of the IMX828 the automotive industry's first image sensor with a built-in MIPI AFI interface. According to Sony, the camera brings a number of benefits to OEMs and T1s, including reduced cost, compact ball size, suppressed heat generation, reduced camera module power consumption, and improved resistance to error due to external noise. Having an integrated product is a pivotal milestone for any standard, And this is why Valence partnered with Sony from the early stages of this product development, ensuring that the camera met the AFI specification and was interoperable with our VA7000 chipset. When Sony markets this chip to its customers and partners, it is highly likely that the Valence VA7000 will be involved on the receive side. AFI also receives another major endorsement by the leading player in the automotive industry. Samsung Electronics. We were proud to announce last quarter that Samsung is supporting the MIPI AFI standard, reflecting strong market interest from global OEMs. In addition, we will fabricate our new generation of AFI solution at Samsung Foundry. Here is what Samsung Corporate VP Foundry Technology Planning stated about AFI. OEMs are demanding a next-generation connectivity solution that can ferry them to higher level of ADAS and autonomous driving, and AFI offers the key technical breakthroughs necessary to achieve this. It's clear that the momentum around AFI is building all around the world. We continue to be engaged in several evaluation processes with multiple OEMs, each at different stages of development. This sustained activity highlights the growing strengths of the MIPI AFI ecosystem and its acceptance as an emerging industry standard. We remain confident in our leadership position in AFI, supported by three design wins with leading European OEMs and a strong partnership with Mobileye. With that, Guy, please go ahead and discuss our financial performance in more detail.