Valens Semiconductor Ltd.

Good morning. My name is Hila, and I will be your conference operator today. At this time, I would like to welcome everyone to Valence Semiconductor's fourth quarter and full year 2025 early 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-Ali, Investor Relations for Valence Semiconductor. Please go ahead.

Thank you and welcome everyone to Valence Semiconductor's fourth quarter and full year 2025 earnings call. With me today are Yoram Senninger, 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 25 with the SEC on February 25, 2026 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 this business, and you can find reconciliations of these metrics within our earnings release. With that, I will now turn the call over to Yoram.

Thank you, Maiki. Hello, everyone, and thank you for joining us. I'd like to begin this call by introducing myself to you all. My name is Yor. I come to Valence with over 25 years of leadership experience in global high-tech companies. My background is in building and scaling technology companies for key growth phases, and that's exactly what I intend to do here at Valence. I'm really excited to have joined this company. I've only been here a few months, but it's already clear to me that Valence has exceptional technology, a strong executive team, dedicated and professional employees, and very compelling opportunity ahead. Before I dive into Q4 numbers and our annual overview, I want to take this opportunity, my first Valence earnings report, to present you with my initial thoughts about the company and to set expectations around Valence growth in the years ahead. This company has delivered some remarkable achievements over the years. We created the HDBaseT standard and founded the HDBaseT Alliance, which boasts over 200 member companies. We sell to nearly all the leading players across the audio-video industry, supporting their innovations across various verticals they serve. In the automotive market, We are a long-time supplier of chips for Mercedes-Benz, powering the state-of-the-art MBUX infotainment system. We were a key contributor to the NIPI AFI standard, and we've become a pillar within the growing AFI ecosystem, achieving four design wins for the next generation ADAS systems. We feel confident that both the audio-video and automotive industries represent significant long-term growth pillars for the company, and the first number I want to share with you is a new growth projection. We expect that in 2026, our revenues will reach between $75 and $77 million. The midpoint reflects growth approximately 8% over last year. While we expect to maintain growth in 2026, the pace and extent of the growth may be affected by microeconomic conditions and the pace of adoptions of new technologies, which could continue to reduce visibility and increase uncertainty. Given the current environment and reduced visibility beyond the near term, we will provide single-year growth projections going forward. My outlook for Valence and my strategy for achieving our growth target is as follows. From now on, we are concentrating our resources on our core businesses, audio, video, and automotive. Those are the markets where Valence brings unmatched technology leadership and where we see sustained profitable growth opportunities. That said, we remain proactive, focusing on seizing large revenue-generating opportunities that are raised in additional verticals that require high performance connectivity solutions in challenging environments. But our priority will be to ensure discipline, execution, profitability, and innovation within our core markets. With that as a starting point, I'd like now to dive into our Q4 and 2025 full year performance. We are pleased to report a strong fourth quarter, well above our initial expectation. We delivered revenues of $19.4 million, exceeding our guidance range of $18.2 to $18.9 million. As customer demand exceeded expectations in the audio-video market, this marked the seventh consecutive quarter of growth for our company. Gap gross margin for Q4 2025 came in at 60.5%, better than the guidance, and adjusted EBITDA loss was $4.3 million within the guidance range. Our full year revenues for 2025 were $70.6 million. Also exceeding our guidance range are 69.4 to $70.1 million. Gas gross margin for the full year 2025 came in at 62.4% and adjusted EBITDA loss was $16.9 million, both above our guidance. Looking ahead to Q1, 2026, we expect revenue to be in the range of $16.3 to $16.7 million. Beyond the numbers, I want to begin our quarterly discussion with a review of one of our core growth engines, audio-video. Valence is offering two unique and cutting-edge chipsets that fill market gaps for this industry, the VS3000 and the VS6320. Let's start with the VS3000, the only chip on the market that can extend uncompressed HDMI 2.0 over widely used category cables. is the solution of choice for products that need to reliably send high-resolution video over long distances. Think projectors, think lecture halls and auditoriums, think boardrooms, warehouses, sports bars, casinos, anything that requires multiple display and high-quality video. Our VS3000 is basically the most suitable option. In 2025, our VAS3000 finally transitioning from high-end only to more mainstream products. Major companies brought state-of-the-art VAS3000 powered products to market, including Lidl's, Crestron, Extra, Vermeer, and Atlona. This translated into bounce-back years, marking a nearly 100% increase in VAS3000 sales from 2024. This is great news for Valence. As the VS3000 is the most advanced HD-based T-chip, we offer and is a pillar of our growth opportunity in our core audio-video market. As 4K video becomes more mainstream and as lower-quality solutions become less viable for professional deployment, we expect VS3000 sales to continue to ramp up as we move further into 2026 and beyond. The second cutting edge chip I want to discuss in relation to the audio video market is our newest, the VS6320. As a reminder, this is the first and only high performance USB 3.2 extension solution built on a dedicated chip. While USB 2.0 has long been sufficient for extending basic peripherals such as keyboards, mice, audio devices, and early generation cameras, USB 3.2 is increasingly being used in this market to enable a new generation of products, high resolution USB cameras, interactive displays, and more. Applications include digital signage in airports, interactive kiosks in museums, video walls in retail stores, telemedicine setups in hospitals or high-end conference rooms. Released in 2024, sales of the VS6320 grew nearly 25% during 2025. Last year, many market leaders released products based on this chipset, including whole technologies, Innogeny, and Pro-ITAV. In January, In 2026, one of the world's top three pro EV manufacturers, whose name I cannot reveal at this time, released to market a new series of USB 3.0 extenders targeting meeting rooms based on this chip. We expect the VS6320 to be another growth engine for us in 2026 and beyond. As the market continues to break past the limitations of USB Now, I'd like to turn to our other core business, automotive. Our opportunity in automotive is dominated by the VA7000 chipset, which offers high-performance connectivity for cameras and radars, used in autonomous driving. It is the first chipset on the market to comply with the MIPI-A5 standard for high-speed sensor connectivity. to say when we're talking about ADAS and autonomous systems, errors could lead to catastrophic consequences for drivers, passengers, and pedestrians alike, which is why our VA-7000 offers best-in-class noise immunity, reaching error rates that are orders of magnitude lower than what our competition can support. MIPI-85 has achieved important milestones over recent months, We secured a new design wing for the VA7000 chipset, which will be integrated into an ADAS system of a premium global automotive OEM serving the Chinese market. The deal brings Valence to four VA7000 A5 design wings globally and reinforces the connectivity standard as a forerunner for next generation ADAS and autonomous systems. We also announced our partnerships around our VA7000 A5 chipset. Mobileye, a global leader in ADAS systems, selected our chips for the central to compute connectivity infrastructure underpinning the most advanced ADAS product. We successfully completed interoperability testing with seven vendors of A5 silicon. We supported Japanese company Sakai Rican as they unveiled a 7,000 base eMirror with an order of magnitude more imaging data than other solutions on the market. And in Q1, 2026, a major Korean supplier MCNX launched the industry first automotive grade QHD front and rear cameras over low cost channels based on our chipset. MIPI AFI reached other milestones as well. A different silicon vendor announced its own AFI design win with a major Chinese OEM. Sony Semiconductor Solutions introduced to the market the first sensor in the world which integrated AFI extension, and the AFI ecosystem continued to grow, with new products and integrations being developed by major players such as OmniVision, Panasonic, and Qualcomm. The industry is buying into AFI standards, and Valencia is recognized as the go-to leader within the ecosystem, positioning us well for the future design wins. Of course, our first generation of automotive chipsets, the VA6000, has been in mass production since 2021, with Mercedes-Benz. The contract generated revenues of $18.4 million during 2025, a 12% drop from 2024 revenues, derived from the decline in the number of products units sold by us to full installations in the citizens cloud coupled with an erosion in the average selling price i would like to conclude by mentioning the difficult but necessary decision to reduce our workforce in late january we announced that we will be reducing our workforce by approximately 10 percent across various departments which is expected to save around five million dollars annually in operating expenses the reduction was targeted and disciplined designed to optimize our cost structure streamline operation and sharpen execution across the company this was not a decision i took lightly valence was built by exceptional people and i'm grateful for the contributions of those who are leaving the company at the same time this step allows us to continue to invest in our core business segments with clarity, urgency, and confidence while maintaining the flexibility to capitalize on the right opportunities as they arise. With that, Guy, please go ahead and discuss our financial performance in more detail.

Thank you, Yohan. I'll start with our fourth quarter and full year 2025 results and then provide our outlook for the first quarter and full year of 2026. we generated quarterly revenue of $19.4 million, which exceeded our guidance range of $18.2 to $18.9 million. This compared to revenue of $17.3 billion in Q3 2025 and $16.7 million in Q4 2024. The cost industry business, or CIB, accounted for $13.9 million, or approximately 70% of total revenues, while Automotive contributed $5.5 million, or approximately 30% of total revenues this quarter. This compares to Q3 2025 revenues of $13.2 million from CIB and $4.1 million from automotive, which represented approximately 75% and 25% of total revenues, respectively. In Q4 2024, revenues from CLB were $11.7 million and $5 million were from automotive, or approximately 70% and 30% of total revenues, respectively. Q4 2025 gross profit was $11.7 million compared to $10.9 million in the third quarter of 2025 and compared to $10.1 million in the fourth quarter of 2024. Q4 2025 gross margin was 60.5% compared to our guidance range of 58% to 60%. This compared to a Q3 2025 gross margin of 63% and 60.4% in Q4 2024. On a segment basis, Q4 2025 gross margin for the CIB was 66.4% and gross margin from automotive was 45.9%. This compares To Q3 2025, gross margin of 69.1% and 43.2% respectively. And for Q4 2024, gross margin of 64.7% and 50.5% respectively. The decrease in gross margin of the CIB compared to Q3 2025 was due to a change in the product mix. the increase in Q4 2025 in automotive gross margin compared to Q3 2025 was due to cost optimization. Non-GAAP gross margin in Q4 was 63.9%, which compares to 66.7% in Q3 2025 and 64.5% in Q4 2024. Operating expense in Q4 2025 totaled $20.9 million, compressed to $19 million in Q3 2025, and $18.5 million in Q4 2024. Research and development expense in Q4 totaled $11.1 million, compressed to $10.8 million in Q3 2025, and $10.1 million in Q4 2024. SG&E expenses in Q4 were $10.1 million, compared to $7.4 million in Q3 2025, and $8.3 million in Q4 2024. The increase compared to Q3 2025 is mainly due to lower income from a certain debt production incident in an amount of $1 million in higher payroll expense. Change in annual liability in Q4 was an income of $0.3 million compared to an expense of $0.7 million in Q3 2025 and an expense of $0.1 million in Q4 2024. The change compared to Q3 2025 is mainly due to reassessment of the annual demand to be paid to acronym shareholder. Gas net loss in Q4 was $8.8 million compared to a net loss of $7.3 million in Q3 2025 and a net loss of $7.3 million in Q4 2024. Adjusted EBITDA in Q4 was a loss of $4.3 million within the guidance range of a loss between $4.6 million to $4.2 million. This compared to an adjusted EBITDA loss $4.3 million in Q3 2025, and an adjusted EBITDA loss of $3.7 million in Q4 2024. Gap loss per share for Q4 was 9 cents, compared to a gap loss per share of 7 cents for Q3 2025, and a gap loss per share of 7 cents for Q4 2024. Non-gap loss per share in Q4 2025 was 4 cents, compared to a loss per share of $0.04 in Q3 2025 and a loss per share of $0.02 in Q4 2024. The difference between gap and non-gap loss per share was mainly due to stock-based compensation, changing annuity ability, depreciation and amortization expense, and certain batch production incidence income. I will now turn to the full year 2025 results. Total revenues for the year 2025 were $70.6 million, exceeding our guidance of between $69.4 million to $70.1 million. This compares to full-year revenues from 2024 of $57.9 million. Revenues from the cross-industry business were $51.6 million, representing 73% of the total revenues. compared to $36.3 million in 2024. This increase was due to the recovery in the market of the audio-video. Automotive business revenue was $19 million, representing 27% of total revenue, down 12% from $21.6 million in 2024, due to gradual price erosion and a reduction in the number of units sold to Mercedes-Benz. Get gross margin was 62.4% for the full year 2025, compared to 59.2% in 2024. On a single basis, 2025 gross margin from the cross-industry business was 68.1%, and gross margin from automotive was 47%. This compares to gross margin of 71% 39.5% respectively in 2024. The increase in 2025 automotive gross 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. Non-GAAP gross margin was 66.1% for the full year 2025, compared to 62.9% in 2024. Full year 2025 operating expense were higher, reaching $78.1 million compared to $75.6 million in 2024. The primary increase in operating expense was related to R&D expense, which increased by $2.2 million, mainly due to increased payroll expense that was driven by two factors, the U.S. dollar Israeli shekel currency influence and the additional headcount in 2025 due to the acquisition of Acronym in May 2024. GECC net loss for the full year 2025 decreased to $31.6 million from $36.6 million in 2024. Adjusted EBITDA loss for the full year 2025 was $16.9 million, a decrease compared to $21.1 million in 2024. Gap net loss per share for 2025 was $0.31, a decrease compared to $0.35 in 2024. Non-gap loss per share for 2025 was $0.14, a decrease compared to $0.15 in 2024. Turning to the balance sheet. We ended Q4 with cash, cash equivalent, and short-term deposits totaling $92.6 million and no debts. This compares to $93.5 million at the end of Q3 2025 and $131 million at the end of 2024. The decrease in cash from the previous year is attributed to large part of our share repurchase program, which totals $24 million in 2025. This means that the company consumed $14.4 million in ongoing operations during 2025. Our working capital at the end of Q4 was $95.7 million compared to $98.9 million at the end of Q3 2025 and $133.6 million at the end of 2024. Our inventory as of December 31st, 2025 was $10.1 million, a decrease from $11 million on September 30th, 2025 and $10.2 million on December 31st, 2024. Now, I would like to provide our guidance for the first quarter and full year of 2026. We expect Q1 revenues to be in the range of $16.3 to $16.7 million. We expect gross margin for Q1 to be in the range of 57% to 59%, and we expect adjusted EBITDA loss in Q1 to be in the range of 7.9 to $7.5 million loss. For the full year 2026, we expect revenues to be in the range of $75 to $77 million. The midpoint reflects growth of approximately 8% compared to the annual revenues of 2025. I'll now turn the call back to Yoram for his closing remarks before opening the course of Q&A. Thank you, Guy.

We believe that Valence is in a strong position. We have a healthy balance sheet. We are market leaders in audio video, and we are well positioned to take a leadership position in automotive as well. We are reusing our newest chipset to open up new growth opportunities while focusing now more than ever on our core businesses. We expect good things ahead in 2026 and beyond. With that, I'll now open the call to answer your questions. Operator?

Thank you. Ladies and gentlemen, at this time, we'll 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. Please stand by while we pull for your questions. The first question is from Suji De Silva of Ruth Capital. Please go ahead.

Hi, Yoram. Hi, Guy. And congrats on the progress here. The fourth quarter, Guy, just to review that, what were the drivers of the upside on the fourth quarter versus the prior guidance?

So thank you for your question. So usually Q4 is... is categorized by end of year budget to be consumed within the Q4. This is what drove our customers to increase their orders with us, and this is what kind of drove the Q4 results. Okay, helpful.

And then as we look ahead to 26 in the full year revenue guide, Any thoughts on how that might break out between the AV business and the auto business, or maybe you can talk qualitatively about what you expect in the auto business in the coming year with the wins, the three wins, OEM wins you have out there?

So I think when you refer to the wins, you mean the four wins that we have with the… The four, not three, sorry.

Four, yes.

Yeah, so basically we're not splitting our guidance between the different business units. So we're not going to go into that today. But, you know, having more design wins in automotive is obviously something that we're striving towards and maintaining a very strong position within the audio-video business is something that we'll be focusing on in 2026 and beyond.

Okay, and then my last question. Yoram, can you talk maybe about how you would leverage the channel and partnership success in the ecosystem that Valens has had to try to drive further growth and maybe touch on the incremental areas like medical instruments and industrial factory automation as how you'll ramp those? Thanks.

Oh, you know, Valens has been known for years for establishing the HD-based standard and the HD-based alliance. I think that, you know, um, in calculating 200, uh, uh, leaders in the other audio video market is, is an amazing tool for us to drive our products into the market for the years to come. So we will be focusing on that and enhancing our relations quote, you know, closer relations with, with the channel. When you, when we speak about, when we speak about the automotive, I think there are two distinct. partners that we need to focus on. One is Mobileye, and Mobileye is a very strong and close partner for Valencia. And the other one is the announcement of the Sony sensor and of supporting AFI. Those two are marking the road for us for looking for more partnerships in order to drive our success in the automotive ADAS business.

Was there other part of this question that I missed?

Just the newer areas, medical, industrial, any thoughts on driving the growth?

I think that Valence is relevant for any market that is looking for high-performance connectivity solutions in challenging environments. This is a larger category. We announced some deals in both industrial and medical. over the past year. We will continue pursuing large opportunities in those markets. But, you know, the emphasize is that we've got two very strong anchors that we're going to be extremely focused on. And this is why we kind of outlined the two other than, you know, the automotive and pro AV. But we would obviously chase large opportunities, significant opportunities, both in industrial and medical. I like it. Okay.

Appreciate all the detail there, Yoram. Thanks.

The next question is from Queen Bolton of Meadham & Company. Please go ahead.

Hi, Yoram. Welcome to Valens. I guess I wanted to follow up on Suji's sort of last question there. It was a little confusing to me where it sounds like you're trying to refocus Valens' efforts on your two core markets of pro AV or the AV market in general as well as automotive. It isn't entirely clear. Are you de-emphasizing the machine vision and medical opportunities? Will you be more selective with opportunities you pursue in those markets, or are you still focused on the machine vision and medical markets leveraging the technologies you've developed in the AV and automotive markets?

That's actually a very good question, and I'm happy to clarify our position. so you know being in in in the av market for so long having so many achievements so many large and good customers is something that the company should shouldn't look uh in a light way so by by saying that we're just kind of stating pretty much the obvious that we're going to focus on that you know a company like i was having the mercedes-benz uh deal for I think like six years now and having four design wins in the 8th market is something of significance for us. We're going to focus on the automotive, trying to leverage our partnerships in order to win more deals in the automotive. I think in your question you pretty much outlined our position. We are still looking at the medical and industrial. That being said, we are looking to find anchor deals, like sizable deals that could make an impact on the industry, making our name as the newcomers into this industry. We need to see some large anchor deals in order for us to become a player that could play this game, the entire game of those two relatively new markets for the company.

Understood. Thank you for the clarification. And then I just wanted to come back to the AV market, you highlighted both the VS3000 and the VS6320. And in your prepared comments, you mentioned both of those devices are expected to continue to grow year on year in 2026. Are there legacy businesses that you would expect to decline or the VS3000 and VS6320, the vast majority of the AV business? Just want to make sure, you know, if there are some headwinds, that we identify those.

So just to be clear on that, we're not segmenting our revenues based on our chipset families. You know, the VS3000 and the VS6320 are the newest generation of our product. It takes time for products to kind of ramp up into its entire capacity or, you know, market adoption. Market adoption in the chipset industry takes time, right? Because we are introducing chips that are being introduced to our customers which are building their products and then launch to the market. It takes time for those to gain the momentum and actually be influential in the total result. Therefore, I highlighted those as growing factors in our business not to say anything or don't conclude anything about other family of chips that we have in the market.

Got it. And then just last question for me. You mentioned that sort of year-end budget flush drove some of the upside in the fourth quarter. When I look at the March quarter guidance, it's down slightly on a year-over-year basis after some pretty healthy year-on-year growth in the past three quarters. Just wondering, is the first quarter guidance sort of reflecting, do you think this year in budget plus created a little bit of an inventory accumulation in Q4 that you sort of worked through in Q1? And is that the reason for sort of the down year on year guidance for March? Or are there other factors, macro, or just the rate of new product adoption that you mentioned in the script that accounts for this sort of year-on-year decline in the first quarter?

So, you know, guidance for the year represents growth, yet another growth year for the company. The guidance is $75 to $77 million for the year. You know, microeconomics and instability and tariffs are things that are influencing our business like pretty much everybody else. We see Q1 to be a little bit slower than the rest of the year, but as we said, we're still confident that this is going to be yet another growth year for the company. Q1 would be scored. After a very strong Q4, usually what happens is that our customers will utilize what they've acquired from us, and then as the year advances, it's going to ramp up.

Understood. Thank you.

The next question is from Rick Schaffer of OpenAiner. Please go ahead.

Hi, this is way on the line for Greg. I wanted to welcome Yoram and thanks for taking the question. So my first question is on the strategic vision of the company. And I appreciate the commentary and the prepared remarks and other questions about focusing on core businesses like audio, video, and auto. But as you step into the CEO role and evaluate the company's position, where do you see the key strengths? Like where are the biggest opportunities to sustain growth? I just wanted to ask if you could help us better understand the long-term strategic vision and the competitive position of the company. That would be great. Thanks.

So, you know, it's actually your question kind of driving me to the core competency of this company, right? And we are a high-performance connectivity solution. in challenging environments, right? This is what, you know, we are extremely strong when it comes to noise immunity and extenders. We're probably the leading technology in the world. I think that the reason we're focusing on the two core businesses of the company is because we see great growth opportunity within those two markets. And I think that in order for us to be appreciating the opportunity, we're pretty much stating that those markets are not declining and it's not something that we're going to kind of shift our eyes from the ball, so to speak. That being said... we would definitely see the opportunities within other markets in order to explore other opportunities in adjacent markets. So, and you know, I've been asked the direct question about medical or industrial. Yeah, we are pursuing some large opportunities with global care in both of those markets. And we hope that those markets would materialize for us in order to drive the growth of the company for the years to come. But I think that It's important to me and essential for me coming into this job to re-emphasize the strengths of this company in the markets that we operate for years now.

Great, I appreciate it. Thank you. So my second question is on the fourth A5 design win. Is there anything you can share with us on timing or the size of this win? Does this win for the Chinese market provide a bigger revenue opportunity than the other earlier three wins? Any additional details would be great. Thank you.

Well, thanks for the question. So we're not able to disclose the name, obviously the sizes of those deals, as those deals have been done with OEMs and partners that we have to be conscious of privacy. So sorry for that, but that's the nature of this business. That being said, we could say that we assume that the start of revenue generation for those deals is going to be somewhere in the second half of 2027. And we need to put kind of an asterisk on that because we know that automotive projects tend to be delayed somewhat at times. The other thing needs to be kind of acknowledged is that the ramping up of model years is taking some more years for this to get to its full capacity. At that point, the only thing I could say, we're extremely proud to have those four design wins. We're extremely happy to have to have one in China, which is obviously signaling a lot in what's happening in the automotive business. And what we're focusing on is actually achieving more design wins. Because when you actually achieve those design wins, it takes time, but when it materializes, it could be big business for us. And the best example for us is obviously our long-lasting relations with Mercedes.

Great, thank you.

And maybe lastly, I wanted to ask about the cost cuts. One of the first actions taken was the $5 million cost reduction. I was wondering if you can expand on that a little bit. Will the cuts be equally between the, I think it was previously called the CID, or cost industrial business, and the auto business? And I believe previously you talked about the top line revenues of around $150 110 million in order to get to EBITDA break even. Has the target or timing of this break even changed? Thanks.

Okay, so the cuts were all over the company in order to reduce the OPEX and increase efficiency. So this is the first part of the question. And with respect to the second part, we are still in the same ballpark of the break-even in terms of revenue. Given the same level of operating expenses and the same level of gross margin, the company can be EBITDA positive anywhere between $110 to $120 million revenue. There is no change on that aspect.

Thank you.

The next question is from Dave Storm of StoneAid. Please go ahead.

Good morning, and thank you for taking the time to circle back to some of the remarks. Have you given a cadence when those savings will take place? Will they be easier? Will they be more first half or second half weighted? Just saying. sorry it was extremely hard for us to understand the question you were cutting off dave are you there apologies uh the cadence uh for the cost savings will they be evenly distributed savings will take place

So it's very hard for us to hear your full question.

I assume you're asking how was the cuts conducted, right?

Yes.

Yeah, well, if I got the question right, it was cross-company. So the cuts were done cross-company departments. So it was not one segment or the other that has been impacted. It was cross-company. And I think it's part of being an extremely responsible management team that looks at our very strong balance sheet and trying to actually optimize the operation of the company to ensure further growth in the years to come.

Understood. Thank you. For the customer acquisition environment, you had a lot of strong wins in 2025. How do you see the customer acquisition environment changing in 2026?

Are you referring to a specific segment or you're speaking in general regarding customer acquisition?

Primarily in automotive, but if you would like to map the automotive customer acquisition environment into maybe machine vision or medical and how you see those, you know, potential to win more contracts there, that'd be helpful as well.

So obviously in the automotive business, in order to have design wins, you need to be in connection with the ecosystem, including the car manufacturers, the tier ones, and the suppliers of the industry. Being close to the entire chain is something that you need to be focusing on in order to be able to to ensure customer acquisition in the short-term, mid-term, and long-term. And this is exactly what we're working with. We're working with the partners I mentioned and others in order to be in a position to be considered for winning more business in the years to come. So that's on the automotive. On the industrial and medical, as I've indicated earlier, we're focusing on large opportunities, which suggests that we're looking to have wins with leading providers of those both industries. And that's exactly what we're doing. Obviously, for obvious reasons, I cannot disclose names, but you could be rest assured that once we have something to share, we would definitely share with with you guys how we advance in those markets.

Understood. Thank you.

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

Thank you. I would like to thank you all for joining us today for our fourth quarter and full year 2025 earnings call, and for your continued support and interest in Valen Semiconductor. I hope to meet you again in our next earnings call. Goodbye.

Thank you. This concludes the Valen Semiconductor results conference call. Thank you for your participation. Let me go ahead