What Valens Semiconductor (VLN) Said on Its Q3 Earnings Call

Key Points

• Q3 results beat guidance: Revenue rose 27% year over year to $21.9 million, led by automotive sales climbing to $7.9 million. The GAAP net loss narrowed to $5.5 million, and adjusted EBITDA loss of $2.7 million was better than forecast.
• Valens is broadening its growth strategy: It plans to embed connectivity technology in more audio-video equipment and sell finished products such as dongles and active cables. Its collaboration with onsemi aims to make lower-cost automotive cameras, with production from four A-PHY design wins expected to start in 2027.
• 2026 outlook reaffirmed: Valens expects revenue of $78 million to $81 million, with results trending toward the upper end, and an adjusted EBITDA loss of $12.9 million to $14.9 million. It ended the quarter with $74.7 million in cash and no debt.

Valens Semiconductor NYSE: VLN reported third-quarter revenue above its guidance as automotive sales rose sharply, and outlined a strategy to expand beyond premium connectivity applications into higher-volume audio-video and automotive markets.

Revenue rose to $21.9 million from $17.3 million a year earlier, exceeding the company’s forecast of $21.3 million to $21.7 million. The GAAP net loss narrowed to $5.5 million, or $0.05 per share, from $7.3 million, or $0.07 per share, in the prior-year quarter.

Chief Executive Officer Yoram Salinger said the company plans to embed its connectivity technology in more types of video conferencing equipment and sell finished connectivity products, rather than relying solely on chipset sales. In automotive, Valens is working with onsemi on a lower-cost camera solution using the MIPI A-PHY connectivity standard.

Automotive Growth Drives Revenue Increase

Automotive revenue reached $7.9 million, up from $4.1 million a year earlier and $5 million in the second quarter. The cross-industry business, which includes audio-video, contributed $14 million, compared with $13.2 million a year earlier.

Chief Financial Officer Karine Pinto-Flomenboim said Valens technology is used across Mercedes-Benz passenger vehicle models, making its automotive revenue dependent on demand for those vehicles. She said the company expects revenue at the recent level to continue, subject to Mercedes-Benz demand, while noting seasonal variation between quarters.

GAAP gross margin was 62.2%, above the company’s 60% to 62% guidance range but below 63% a year earlier. Automotive gross margin increased to 53.9% from 41.5% in the second quarter, primarily because of lower testing facility expenses and a change in product mix. Cross-industry gross margin fell to 66.8% from 69.2% sequentially, which Pinto-Flomenboim attributed mainly to product mix.

Adjusted EBITDA was a loss of $2.7 million, better than the company’s forecast for a loss of $3.4 million to $2.8 million. The loss improved from $4.3 million a year earlier, mainly because of higher revenue, partly offset by chip tape-out costs.

Expansion Beyond Premium Audio-Video Products

Salinger said Valens’ new VS6310 chipset is designed for lower bandwidth, shorter distances and lower power consumption than its premium solutions. The company intends to work with equipment manufacturers to embed the technology in products such as cameras, video bars and touch controllers.

Valens also plans to sell system-level products, including dongles, extender boxes, active cables and adapters, to distributors and, in some cases, installers and integrators. Salinger said the company is drawing on capabilities acquired through its 2024 purchase of Acroname, including its BrainStem technology and product engineering expertise.

Asked about the potential effect on margins, Salinger said he did not expect the two audio-video growth initiatives to affect gross margin in 2027. He added that Valens believes it can maintain margins on products such as active cables and dongles, with any overall impact unlikely to be substantial.

Salinger also pointed to recent customer product launches, including Jabra’s Reach, which uses Valens’ HDBaseT technology to connect a laptop to meeting-room equipment through a single USB-C cable.

Onsemi Collaboration Targets Mainstream Cameras

Valens and onsemi are developing a solution that integrates A-PHY connectivity into a three-megapixel image sensor, eliminating the need for a separate serializer chip. Salinger said the approach is intended to reduce component count, simplify camera designs and lower costs for applications such as surround view, side and rear driver-assistance systems, and electronic mirrors.

The resulting chip will be an onsemi product manufactured using onsemi’s facilities and marketed by both companies, Salinger said. He described the collaboration as a way to offer automakers a second source for A-PHY technology and help address barriers to broader adoption.

Valens has secured four A-PHY design wins, with production expected to begin in 2027, according to Salinger. He said the company’s existing VA7000 technology addresses higher-end applications, including eight-megapixel front-facing driver-assistance cameras.

Full-Year Outlook Reaffirmed

Valens reaffirmed its 2026 revenue forecast of $78 million to $81 million and said it expects results toward the upper end of that range. It forecast a full-year adjusted EBITDA loss of $12.9 million to $14.9 million.

The company ended the quarter with $74.7 million in cash, cash equivalents and short-term bank deposits, down from $83.4 million at the end of June, and no debt. Pinto-Flomenboim said the decline primarily reflected the timing of collections on revenue recognized toward the end of the quarter.

She also said Valens expects more significant tape-out costs after completing development of its VC500 product, with those costs to be included in next year’s guidance. The CFO cautioned that future supply-management expenses are difficult to forecast and could affect segment margins.

About Valens Semiconductor (NYSE:VLN)

Valens Semiconductor Ltd. is a fabless semiconductor company headquartered in Hod Hasharon, Israel. Founded in 2006, the company develops high-speed connectivity solutions for the audio-video and automotive markets, with an emphasis on transmitting data reliably over longer distances and through challenging environments. Valens is best known for its HDBaseT technology, which enables the distribution of high-definition video, audio, power and control signals over standard cabling. Its products serve professional audio-video applications such as conference rooms, classrooms, digital signage and residential entertainment systems.

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