Valens Semiconductor Ltd. (NYSE:VLN) Q4 2022 Earnings Call Transcript

Dror Heldenberg : Thank you very much for the question and for joining us this morning. We have just recently completed the first phase of development and we are now moving towards the next phase. We believe that the benefits this project will provide to the school students, teachers and other trigger many additional similar projects.

Brian Dobson : Very good. Thanks. And then turning to automotive, we gave some very positive commentary about the revenue growth this year, particularly, as you described gross margin enhancement in the automotive segment. As you’re working toward EBITDA breakeven rather than the EBITDA breakeven run-rate, what level of margin enhancement do you contemplate within your automotive segment? And where do you think that ultimately goes?

Dror Heldenberg : So as you know, we don’t provide our guidance per segment. We just report the historical numbers per segment. I’ll just tell you that in 2023, obviously, the automotive revenues supposed to be based on the VA6000. Similar to what we’ve seen in 2022. I would assume that more or less the gross margins that you can see in our reports, and by the way, our financial reports that are part of the annual report on Form 20-F that we just filed with the SEC includes the P&L by segments, so you can see the breakdown there. So I think more or less the gross margin that we put in for automotive that will 30% — approximately 30% in 2022. These are the same gross margins that we’re going to see going forward. It’s the same product. With respect to the adjusted EBITDA, just to make sure if I understand your question. You asked specifically about to automotive, or in general with the company?

Brian Dobson : I asked about automotive, but in general the company is helpful as well?

Dror Heldenberg : Okay, so with respect to the company in general, I think that I refer to that point, I think the combination of the fact that we expect to see slightly steeper revenue growth in the second half of the year, and the fact that in the second half of the year, the portion of the audio-video revenue is expected to be a bit higher, as we expect customers, the audio-video customers to consume their inventory that we just discussed. I think that this should have a positive impact on the gross profit in the second half of 2023 and together with the fact that we will have a bank balance effect, these should contribute or help us to get to the target of adjusted EBITDA towards the end of 2023. Specifically, with respect to automotive, it’s in our control.

We can decide to show profitability for automotive tomorrow morning, if we decide to slow down the pace of investment in new product development. At this point in time, given the opportunities that we see ahead of in automotive, it’s our decision, it’s our selection to continue and invest in order to enhance our product offerings, automotive, we see lots of opportunities. And that’s the reason why we think that at this point, despite the fact that we continue to spend money, the spending is higher than the gross profit in automotive overtime that’s the right decision.

Daphna Golden: Again, Brian, if I may add, it’s Daphna, just to reiterate with what was said earlier, where we said also in the prepared remarks, and everything, that taking all of that into account, we remain committed to reaching adjusted EBITDA towards the end of — breakeven towards the end of this year.

Brian Dobson : Excellent, thanks. It was great seeing senior team. Yeah, and looking for new technology first, and particularly the backup camera technology. You can give us a bit of an update on what kind of market feedback you receive there?