Valens Semiconductor Ltd. · NYSE:VLN
Valens Semiconductor — Investor Day (November 2024)
40 slides from Valens Semiconductor's investor day presentation, Nov 12, 2024
Slide 1: Welcome to Valens Semiconductor's 2024 Investor Day
1 Welcome to Valens Semiconductor’s 2024 Investor Day
Slide 2: Forward-Looking Statements
Forward - Looking Statements Certain statements in this presentation (this "Presentation") are “forward - looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 . Forward - looking statements may be identified by t
Slide 3: GAAP and non-GAAP Measures
GAAP and non - GAAP Measures This presentation includes GAAP and non - GAAP measures . Non - GAAP Gross Margin is defined as GAAP Gross Profit excluding share - based compensation, depreciation and amortization expenses, divided by revenue . Non - GAAP Operating Expenses is defined as GAAP Operating
Slide 4: The High-Performance Connectivity Company
The High - Performance Connectivity Company The Highest Bandwidth High - speed connectivity for a variety of applications, with no latency. The Lowest Error Rate Reliable, error - free connectivity for Safety - critical systems. The Longest Reach Unprecedented flexibility for system Design over the
Slide 5: The Pain Points of Wired Connectivity
Rough environments EMC, EMI, temperature changes, cable aging Distance limitations Extended reach compromises signal integrity High costs Design, development, infrastructure & maintenance costs Too many cables At our homes, offices, plants & vehicles Installation complexity Time consuming, complex a
Slide 6: Select Customers & Products Empowered by Valens
Medical Industrial Video Conferencing Education Digital Signage Entertainment Automotive Select Customers & Products Empowered by Valens
Slide 7: The Valens Edge: A DSP-Based Approach to Error Handling
The Valens Edge: A DSP - Based Approach to Error Handling Backed by 120+ Patents Valens delivers the most optimized connectivity solutions for long - reach, high - resolution video. We provide superior performance wherever others can’t. Sticking to our CORE
Slide 8: The Valens Difference: Best-in-class EMC Performance
The Valens Difference: Best - in - class EMC Performance Legacy connectivity solutions are RESTRICTED by noise, forcing OEMs to: ▪ Reduce bandwidth ▪ Deploy expensive wiring ▪ Shorten cable length ▪ Rely on sub - optimal architecture Valens’ unique approach to noise handling LIBERATES Customers, off
Slide 9: Our Strategy for Growth
Our Strategy for Growth Leveraging our Core to Advance Existing Verticals and Transform New Ones Video Conferencing Automotive Industrial/Machine Vision Medical Established Pro - AV Leadership 1 2 Transforming New Markets Mergers & Acquisitions 3 ▪ Futureproof, scalable technology ▪ Continuously dev
Slide 10: Valens Created the Leading Industry Standard and Largest Interoperable Ecosystem
▪ Inventor of HDBaseT technology – an audio - video industry standard ▪ Co - Founder of the HDBaseT Alliance, with Samsung, LG and Sony Pictures. Over 200 members developing HDBaseT - enabled products ▪ Market leader with unmatched technology for the distribution of ultra high - resolution video and
Slide 11: Video Conferencing: Changing the Way We Work, Learn and Live
Market Drivers ▪ New AI era of intelligent meeting experiences, led by Microsoft Teams and Zoom ▪ Democratization of video conferencing for remote and in - room participants ▪ Growing requirement for bring - your - own - device (BYOD) in huddle and conference rooms ▪ Increased adoption of USB in Pro
Slide 12: CHDBT
CHDBT
Slide 13: Spotlight on Automotive Success
Spotlight on Automotive Success Enabling State - of - the - Art Infotainment Systems In Mercedes - Benz Vehicles ▪ On the road with Mercedes since 2020 ▪ The only multi - gig connectivity over unshielded cabling (UTP) Providing Unprecedented Visibility to Truck Drivers Around the World ▪ Exceptional
Slide 14: MIPI A-PHY: the global standard for sensor connectivity
Automotive OEMs have called for a global standard for next - generation sensor connectivity. That standard is MIPI A - PHY. . ▪ Best - in - class EMC performance ▪ Clear roadmap to ultra - high bandwidth ▪ Simple architecture ▪ End - to - end safety Valens technology was selected as the basis of the
Slide 15: A-PHY Ecosystem
A - PHY Ecosystem IP & Development Tool Vendors Huashan - 2 A1000 L ADAS Platform EyeQ platform Intel x86 platform SoCs supported by A - PHY ADAS platform Camera & Radar Module Vendors Silicon & SIP Vendors Verification IP AE2010R SerDes test platform Verification IP Supporting A - PHY tech Marlin A
Slide 16: Automotive: The Foundation for Next-Gen ADAS & Autonomous Systems
Market Drivers ▪ Race towards higher levels of ADAS and Software - Defined Vehicles, leading to: ▪ Increasing number of high - resolution sensors ▪ Complex, centralized architectures ▪ Industry striving for standardized connectivity ▪ Platform lifecycle shortened (due to competition from ‘newer’ com
Slide 17: The MIPI A-PHY Ecosystem
THE MIPIA-PHY ECOSYSTEM = ao /¥ NetVision cadence’ nextchip dSPACE | | besa DS Embedded SAMSUNG aw oes Wraiens on hen =TE intelfoundry Tektronix: Yeunicreon Barn Gin ay arnce KEYSIGHT qs Trucchip
Slide 18: Spotlight on Industrial & Medical Success
The combination of Machine Vision trends and Valens’ new offering represents a unique opportunity for the company to expand its customer base in these industries Spotlight on Industrial & Medical Success Valens New Market Enablers Leveraging our Automotive and ProAV Chipsets Industrial PCs and Panel
Slide 19: Industrial Machine Vision: Advancing Vision-Driven Automation
Industrial Machine Vision: Advancing Vision - Driven Automation 1 Imaging for Industrial – Machine Vision 2024, Yole Intelligence; custom research, PwC, Apr 2024 3 D imaging and AI in machine vision and medical will require higher - performance connectivity solutions Market Drivers ▪ Rise of machine
Slide 20: ‘Valens
‘Valens Pushing t Uundaries of co Ivity
Slide 21: Single-use Medical: An Industry on the Verge of Transformation
Market Drivers ▪ Disposable endoscopes eliminate risk of infection (#2 health hazard, 2024, ECRI) ▪ Sterilization is timely, expensive and generates toxic waste (ESG) ▪ Single use will enable procedures to be performed in outpatient clinics $625M TAM - Assuming 50% shift to single use (*3% Today) Si
Slide 22: One Technology. Infinite Possibilities.
One Technology. Infinite Possibilities. VS3000 Series The only uncompressed copper solution for HDMI 2.0 4K@60 4:4:4 extension VS2000 Series Addition of USB opens new applications for Industrial and Medical connectivity VS6320 Chip The market’s only high - performance, single chip solution for USB3.
Slide 23: Financial Overview & Guidance
23 Financial Overview & Guidance
Slide 24: Annual Revenues and 2024 Guidance
$59 $54.8 $62.8 $74.5 $57.4 $1.0 $2.1 $7.9 $16.2 $26.8 $16.6 $41.2 $24.6 2019 2020 2021 2022 2023 YTD Sep 2024 $41.2 $56.9 $70.7 $90.7 $84.2 $60.0 Millions Revenues Audio - Video Automotive 2029 Growth Opportunities 2024 Guidance: $ 57.2 - $57.5 Million AV $32.8 – $33.0 Million Automotive $21.4 - $2
Slide 25: Revenues
Revenues *Audio - Video revenues defined as Professional Audio - Video markets (Entertainment, Digital Signage, Education, Video Conferencing) plus Industrial and Medical $11.6 $15.5 $17.1 $18.6 $16.7 $18.4 $19.4 $20.0 $16.4 $15.5 $9.7 $15.8 $7.2 $8.1 $9.4 $1.7 $2.0 $2.0 $2.2 $4.9 $4.1 $3.7 $3.5 $7.
Slide 26: Gross Margin and Revenue per Segment
79.0% 76.4% 71.6% 69.9% 62.5% 58.8% 2019 2020 2021 2022 2023 YTD Sep 2024 80.8% 79.5% 77.9% 78.4% 77.1% 73.9% - 26.4% - 6.3% 21.2% 30.7% 31.1% 36.2% 2019 2020 2021 2022 2023 YTD Sep 2024 Gross Margin Gross Margin Per Segment Company’s Gross Margin Annual Revenues Per Segment (% of total revenue) 98.
Slide 27: Revenue Diversity Across Customers
Revenue Diversity Across Customers YTD SEP 2024 FY - 2023 Customer A 17% Customer C 8% Customer D 8% Other 35% Customer A 16% Customer B 6% Customer C 8% Customer D 8% Customer E 1% Customer F 7% Customer G 13% Customer H 7% Other 34% Customer F 5% Customer B 11% FY - 2023 | 197 YTD Sep 2024 | 179 T
Slide 28: Key Financial Data
Key Financial Data YTD SEP 2024 Q3 - 2024 Q2 - 2024 Q1 - 2024 Annual 2023 US$ Millions $41.2 $16.0 $13.6 $11.6 $84.2 Company Revenue $24.6 $9.4 $8.1 $7.2 $57.4 Audio - Video $16.6 $6.6 $5.5 $4.4 $26.8 Automotive 58.8% 56.4% 61.4% 59.0% 62.5% Company GAAP Gross Margin % 78.0% 70.2% 75.4% 77.2% 77.1%
Slide 29: Cash Balance, Working Capital and Inventory Level
174.4 148.4 142.0 133.1 - 20 40 60 80 100 120 140 160 180 200 Millions 9.3 23.8 13.8 11.7 - 5.0 10.0 15.0 20.0 25.0 30.0 Millions 183.3 163.7 158.8 136.1 - 120.0 100.0 80.0 60.0 40.0 20.0 140.0 160.0 180.0 200.0 Millions Inventory Level Working Capital 2 Cash Balance 1 1 Cash Balance is defined as c
Slide 30: Sales & Product Life Cycle
Sales & Product Life Cycle Evaluation Process Customers Product Development Customers Product Mass Production 36 - 60 6 - 9 6 Pro AV 120 108 96 84 72 60 48 36 24 12 0 Months 60 - 72 9 - 12 6 - 12 Industrial Machine Vision 120 108 96 84 72 60 48 36 24 12 0 Months 60 - 72 24 - 30 12 - 18 Automotive 12
Slide 31: Long Term Growth Drivers
Long Term Growth Drivers ▪ Video Conferencing ▪ Signal Distribution ▪ Projectors ▪ Display Pro AV ▪ Machine Vision ▪ Industrial ▪ Medical Imaging Industrial Machine Vision ▪ ADAS Initial Ramp Up ▪ Infotainment ▪ Long Vehicles Automotive $57.2 - $57.5 Million Revenue 2024 $220 - $300 Million Revenue
Slide 32: Long-Term Financial Goals – Pro AV
Long - Term Financial Goals – Pro AV 2024 Guidance 2029 Revenue $90 - $100 Ramp up from 2025 Gross Margin 65% - 75% $31.8 - $32 1 Assumptions: ▪ End of inventory digestion cycle ▪ Adoption of the VS6320, mainly in the video conferencing vertical ▪ Growth of the video conferencing market – hybrid wor
Slide 33: Long-Term Financial Goals – Industrial Machine Vision
Revenue Millions Long - Term Financial Goals – Industrial Machine Vision $35 - $50 $1 2024 Guidance 2029 Ramp Up from 2026 - 2027 Gross Margin 55% - 65% Assumptions: ▪ Adoption of the VS6320 and the VA7000 in the Industrial Machine Vision Market
Slide 34: Long-Term Financial Goals – Automotive
Revenue Millions Long - Term Financial Goals – Automotive $21.4 - $21.5 $65 - $110 2024 Guidance 2029 Ramp Up from 2027 - 2028 Gross Margin 35% - 45% Assumptions: ▪ Commercialization of ADAS based models ▪ Adoption of the A - PHY standard
Slide 35: Recent Acquisition and M&A Strategy
Recent Acquisition Pioneer in advanced automation and control technologies Applications: M&A Strategy $133 million cash to execute on our M&A strategy Focus on companies generating revenue with clear path for profitability, mainly in the ProAV and Industrial and Machine Vision markets 2029 revenue g
Slide 36: Long Term Financial Goals - Summary
Long Term Financial Goals - Summary (*) During June 1 st to Dec 2024 Gross Margin Profile Ramp Up Year Revenue (Millions) 2029 Revenue (Millions) 2024 Pro AV 65% - 75% 2025 $90 – $100 $31.5 - $31.6 55% - 65% 2026 - 2027 $35 – $50 $1.0 Industrial Machine Vision 35% - 45% 2027 - 2028 $65 – $110 $21.4
Slide 37: 2025 Guidance and Goals
2025 Guidance and Goals Revenue Guidance $71 - $76 Million ~25% - 33% growth ProAv Partial recovery from the inventory digestion cycle Adoption and commercialization of VS6320 based products for the video conferencing market Industrial Machine Vision Design Wins announcements based on the VS6320 and
Slide 38: Summary
Summary Revenue Growth Target of X 4 - 6 within 5 years Diversification Among different verticals and industries Design Wins Cycles Long sales and products life cycle provides long term customer engagement and good visibility Profitable Business Model Goals: Gross Margin >50% Adjusted EBITDA Margin
Slide 39: Thank You!
39 Thank You!
Slide 40: Appendix - GAAP to Non-GAAP Reconciliation
40 Appendix - GAAP to Non - GAAP Reconciliation Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 15,793 14,934 8,338 13,527 6,815 8,344 9,045 GAAP gross margin 58 118 114 121 116 180 446 Depreciation and amortization 187 197 198 207 231 243 238 Share - based compensation 16,038 15,249 8,650 13,855 7,162 8,