Valens Semiconductor Ltd. Q3 FY2025 earnings call

• Leadership transition: Gideon Ben-Zvi's last earnings call as CEO, with Johann Stalinger assuming the role effective tomorrow. - Business highlights: Q3 2025 revenues of $17.3 million exceeded initial expectations. In ProEV, VF3000 chipset adoption grew, with matrix solutions gaining traction and a major player engaging for USB 3 extension solution VX6320. In Industrial Machine Vision, VA7000 chipset powered T3 embedded's MiPi A5 platform, with momentum building. In medical endoscopies, three OEMs launched V7000-based endoscopies, including a disposable colonoscopy with 4K video, and the solution will be showcased at a medical trade show. In automotive, VA7000 chipset, compliant with MiPi A5 standard, has design wins with European OEMs, and MiPi A5 received endorsements from Sony and Samsung.

In Q3 2025, Valens Semiconductor generated total revenues of $17.3 million. Cross-Industry Business (CIB) accounted for $13.2 million, which is approximately 75% of total revenues, with a gross margin of 69.1% in Q3 2025. Automotive contributed $4.1 million, making up approximately 25% of total revenues, with a gross margin of 43.2% in Q3 2025. Compared to Q2 2025, CIB gross margin was 67.8% and automotive was 50.5%. In Q3 2024, CIB revenues were $9.4 million (60% of total) with a gross margin of 70.3%, and automotive revenues were $6.6 million (40% of total) with a gross margin of 36.8%.

• Q4 2025 revenue expected to be in the range of $18.2 million to $18.9 million. - Q4 2025 gross margin expected to be in the range of 58% to 60%. - Q4 2025 adjusted EBITDA loss expected to be in the range of $4.6 million to $4.2 million. - Full year 2025 revenue expected to be in the range of $69.4 million to $70.1 million, representing a midpoint growth of approximately 20% compared to 2024.

• No specific risks explicitly highlighted in detail during the call, but general mentions of factors like tariff influences and manufacturing line transitions impacting automotive gross margin were noted as one-time events.

Q: Neil Anthony Young asked about the gross margin across the two businesses, specifically regarding automotive's sequential drop and what drives strength in CIB/Pro AV.

A: Guy Nathanzon stated automotive's sequential drop was due to product versions mix and one-time operational expenses related to manufacturing line transition, expecting improvement in Q4. Gideon Ben-Zvi mentioned tariff influence is milder, driving CIB strength with ProAV recovery.

Q: Suji Desilva asked about ProAV upside sustainability and factors pacing/gating MiPi adoption.

A: Gideon Ben-Zvi said ProAV recovery is due to market returning to normal, and MiPi A5 adoption is driven by advantages in handling electromagnetic interference, higher bandwidth, and resolution needs across industries.

Q: Dave Storms asked about Q4 gross profit margin guide and medical segment product launches.

A: Guy Nathanzon explained Q4 gross margin guidance is based on product mix and revenue drivers. Gideon Ben-Zvi discussed medical segment's adoption due to continuity of surgery without frame loss, move to single-use endoscopy, and larger picture visibility from remote lens-sensor connection.