PR Newswire | Nov 11, 2021 06:00AM EST

11/11 05:00 CST

Valens Semiconductor Reports Third Quarter 2021 Results HOD HASHARON, Israel, Nov. 11, 2021

HOD HASHARON, Israel, Nov. 11, 2021 /PRNewswire/ -- Valens Semiconductor Ltd. (NYSE: VLN), a premier provider of high-speed connectivity solutions for the audio-video and automotive markets, today reported financial results for the third quarter ended September 30, 2021.

Third Quarter 2021 Highlights

* Record revenue of $19.1 million in the third quarter of 2021, an increase of 48.8% from the third quarter of 2020 * Audio-video revenues reached $17.1 million, up 38.5% from the third quarter of 2020 * Automotive revenues reached $2.0 million, an increase of more than 300% from the year-ago quarter, and representing 10.4% of third quarter revenue

* Gross profit increased from $9.5 million from third quarter 2020 to $13.8 million * Gross margin was 72.4% compared to 74.4% last year, primarily driven by an increase in automotive revenues that incur lower gross margin than audio-video products

* Record quarterly bookings of $36.0 million, up more than 200% year-over-year * Record backlog of $73.4 million as of September 30, 2021 * Closed Business Combination with PTK Acquisition Corp. (the "Merger"), raising $155 million in gross proceeds (before deal-related expenses) and listed on the NYSE on September 30, 2021 * Substantially strengthened the balance sheet with $205.6 million of cash, cash equivalents and short-term deposits with zero debt

* Introduced fourth quarter guidance and increased guidance for the full year 2021

"Valens Semiconductor delivered strong quarterly results, demonstrating solid business execution and reflecting our continued momentum," said Gideon Ben-Zvi, CEO of Valens.

"We reported record quarterly revenue exceeding $19 million, and a robust backlog that will support Valens' continued growth. We ended the quarter with a fortress balance sheet following the closing of our business combination with PTK and the PIPE investment," continued Mr. Ben-Zvi.

"Valens is well-positioned in our industry with our unique standard-setting technology and our leadership position in the large and growing automotive and audio-video markets we operate in, powered by our high-speed digital connectivity solutions. We are excited by the opportunities we have as a newly public company, and we are focused on creating value for our shareholders," concluded Mr. Ben-Zvi.

Fourth Quarter 2021 OutlookValens is introducing fourth quarter 2021 revenue guidance of an expected $19.4 million to $20.6 million with expected gross margins of approximately 70%-72%. This guidance reflects an increase of previous full year 2021 revenue guidance from $69 million to an expected range of $69.4 million to $70.6 million.

Conference Call InformationValens will host a conference call today, Thursday, November 11, 2021, at 8:30 a.m. Eastern Time (ET) to discuss its third quarter 2021 financial results and business outlook. To access this call, dial (at least 10 minutes before the scheduled time) +1 (855) 979-6654 (U.S.), 072 258 7959 (Israel) or +44 20 3936 2999 (all other locations). The conference call access code is 365140.

A live webcast of the conference call will be available via the investor relations section of Valens' website at https://investors.valens.com/. The live webcast can also be accessed by clicking here. A replay of the conference call will be available on Valens' website shortly after the call concludes.

Forward-Looking StatementsThis press release includes "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 the use of words such as "estimate," "plan," "project," "forecast," "intend," "will," "expect," "anticipate," "believe," "seek," "target" or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding the anticipated transaction and future economic and market conditions. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of Valens' management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Valens.

These forward-looking statements are subject to a number of risks and uncertainties, including changes in domestic and foreign business, market, financial, political and legal conditions; failure to realize the anticipated benefits of the proposed business combination; future global, regional or local economic and market conditions; the development, effects and enforcement of laws and regulations; Valens' ability to manage future growth; Valens' ability to develop new products and solutions, bring them to market in a timely manner, and make enhancements to them; the effects of competition on Valens' future business; the outcome of any potential litigation, government and regulatory proceedings, investigations and inquiries; the effects of health epidemics, such as the recent global COVID-19 pandemic, have had and could in the future have on Valens' revenue, its employees and results of operations; the cyclicality of the semiconductor industry; Valens' ability to adjust its supply chain volume due to changing market conditions or failure to estimate its customers' demand, including during any downturn in the automotive or audio-video markets; disruptions in relationships with any one of Valens' key customers; difficulty selling products if customers do not design Valens products into their product offerings; Valens' dependence on winning selection processes and ability to generate timely or sufficient net sales or margins from those wins; political conditions in Israel; and those factors discussed in Valens' Form F-1 filed with the SEC on October 20, 2021 under the heading "Risk Factors," and other documents of Valens filed, or to be filed, with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that Valens does not presently know or that Valens currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Valens' expectations, plans or forecasts of future events and views as of the date of this press release. Valens anticipates that subsequent events and developments may cause Valens' assessments to change. However, while Valens may elect to update these forward-looking statements at some point in the future, Valens specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Valens' assessment as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.

About ValensValens (NYSE:VLN) is a leading provider of semiconductor products, pushing the boundaries of connectivity by enabling long-reach, high-speed video and data transmission for the audio-video and automotive industries. Valens' Emmy(r) award-winning HDBaseT technology is the leading standard in the professional audio-video market with tens of millions of Valens' chipsets integrated into thousands of HDBaseT-enabled products. Valens Automotive is a key enabler of the evolution of autonomous driving, providing chipsets that are on the road in vehicles around the world. The underlying technology has been selected to become the basis for MIPI A-PHY, the global standard for automotive connectivity. Founded in 2006, Valens is based in Israel, with offices in the US, Europe and Asia. For more information: www.valens.com.

VALENS SEMICONDUCTOR LTD.

SUMMARY OF FINANCIAL RESULTS

(U.S. Dollars in thousands, except per share amounts)

(Unaudited)

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Revenues 19,071 12,815 49,945 42,787

Gross Profit 13,813 9,546 35,812 33,190

Gross Profit Margin 72.4% 74.4% 71.7% 77.6%

Net loss^1 (8,487) (8,752) (18,561) (13,624)

Cash, cash equivalents and short-term deposits^2 205,614 67,547 205,614 67,547

Net cash used in operating activities (578) (6,221) (10,229) (13,238)

Non-GAAP Financial Data

Adjusted EBITDA^3,4 (2,728) (7,165) (9,147) (11,774)

Loss per share^5,6 (0.19) (1.17) (1.08) (2.35)

^1 The three and the nine months ended September 30 2021, include one-timeissuance costs in the amount of $5,969 thousand (of which $3,396 thousandderived from Stock based compensation related to options' vestingacceleration).

^2 As of the last day of the period.

^3 Adjusted EBITDA is defined as net profit (loss) before financial income(expense), net, income taxes , equity in earnings of investee and depreciationand amortization, further adjusted to exclude share-based compensation, whichmay vary from period-to-period. We caution investors that amounts presented inaccordance with our definition of Adjusted EBITDA may not be comparable tosimilar measures disclosed by other issuers, because not all issuers calculateAdjusted EBITDA in the same manner. Adjusted EBITDA should not be considered asan alternative to net loss or any other performance measures derived inaccordance with GAAP or as an alternative to cash flows from operatingactivities as a measure of our liquidity. Please refer to the appendix at theend of this press release for a reconciliation to the most directly comparablemeasure in accordance with GAAP.

^4 The three and the nine months ended September 30, 2021 include one-timeissuance costs in the amount of $2,100 thousand.

^5 The loss per share in the three and nine months ended September 30, 2021, iscalculated as the net loss for of $8,487 thousand and $18,561 thousand,respectively excluding the one-time issuance cost of $5,969 thousand, resultingin a non-GAAP loss of $2,518 thousand and $12,592 thousand respectively,divided by the weighted average number of shares used in computing the net lossper ordinary share in the applicable period, 13,164 thousand and 11,673thousand respectively.

^6 Following the listing of the Company on the NYSE, the outstanding sharecount was 98,094 thousand (including 1,006 thousand ordinary shares subject toforfeiture).

VALENS SEMICONDUCTOR LTD.CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

(Unaudited)

September December 30, 2021 31, 2020ASSETS

CURRENT ASSETS 191,108 26,316Cash and cash equivalents

Short-term deposits 14,506 35,254

Trade accounts receivable 7,580 8,679

Inventories 7,622 3,159

Prepaid expenses and other current assets 4,245 2,969

TOTAL CURRENT ASSETS 225,061 76,377



LONG-TERM ASSETS:

Property and equipment, net 2,149 2,353

Other assets 524 435

TOTAL LONG-TERM ASSETS 2,673 2,788

TOTAL ASSETS 227,734 79,165

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED SHARESAND EQUITY (DEFICIT) 34,479^7 11,164

CURRENT LIABILITIES



LONG-TERM LIABILITIES:

Warrants liability - 568

Forfeiture shares 4,485 -

Other long-term liabilities 38 45

TOTAL LONG-TERM LIABILITIES 4,523 613

TOTAL LIABILITIES 39,002 11,777

- 149,611REDEEMABLE CONVERTIBILE PREFERRED SHARES

SHAREHOLDERS' EQUITY (DEFICIT) 188,732 (82,223)

TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED 227,734 79,165SHARES AND SHAREHOLDERS' EQUITY (DEFICIT)

^7 Include accrued issuance costs in the total amount of $22,148 thousand.

VALENS SEMICONDUCTOR LTD.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(U.S. Dollars in thousands, except share and per share amounts)(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

REVENUES 19,071 12,815 49,945 42,787

COST OF REVENUES (5,258) (3,269) (14,133) (9,597)

GROSS PROFIT 13,813 9,546 35,812 33,190

OPERATING EXPENSES:

Research and development expenses (10,631) (13,448) (31,985) (33,892)

Sales and marketing expenses (3,422) (3,047) (9,754) (10,237)

General and administrative expenses^8 (7,970) (2,143) (12,514) (5,430)

TOTAL OPERATING EXPENSES (54,253) (22,023) (18,638) (49,559)

OPERATING LOSS (8,210) (9,092) (18,441) (16,369)

Financial income (expenses), net^9 (227) 395 109 2,872

LOSS BEFORE INCOME TAXES (8,437) (8,697) (13,497) (18,332)

INCOME TAXES (59) (55) (238) (127)

LOSS AFTER INCOME TAXES (8,496) (8,752) (18,570) (13,624)

Equity in earnings of investee 9 - - 9

NET LOSS (8,487) (8,752) (18,561) (13,624)

BASIC AND DILUTED NET LOSS PER ORDINARY SHARE (0.94) (1.17) (2.56) (2.35)

WEIGHTED AVERAGE NUMBER OF SHARES 13,164,160 10,560,260 11,672,958 10,352,937USED IN CALCULATION OF NET LOSS PER ORDINARY SHARE

^8 The condensed consolidated statements of operations include issuance costsin the amount of $5,969 thousand ($5,496 thousand in General and administrativeexpenses and additional $473 thousand in Financial Income (expenses), net).

^9 See footnote 8.

VALENS SEMICONDUCTOR LTD.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(U.S. Dollars in thousands)(Unaudited)

Nine Months Ended September 30,

2021 2020

CASH FLOW FROM OPERATING ACTIVITIES

Net loss for the period (18,561) (13,624)

Adjustments to reconcile net loss to net cash used in operating activities:

Income and expense items not involving cash flows:

Depreciation 787 799

Stock-based compensation 8,507 3,796

Exchange rate differences 414 (2,486)

Interest from short-term deposits 248 530

Changes in operating assets and liabilities:

Trade accounts receivable 1,099 769

Prepaid expenses and other current assets (1,276) (236)

Inventories (4,463) 65

Long-term assets (89) 24

Trade accounts payable 2,041 (390)

Accrued compensation (928) (2,717)

Other current liabilities 1,999 234

Other long-term liabilities (7) (2)

Net cash used in operating activities (10,229) (13,238)



CASH FLOWS FROM INVESTING ACTIVITIES:

Investment in short-term deposits (19,062) (79,878)

Maturities of short-term deposits 39,547 98,449

Purchase of property and equipment (583) (806)

Net cash provided by investing activities 19,902 17,765



CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeded from Transactions related to the Merger, net 154,301 -

Exercise of options 1,217 301

Net cash provided by financing activities 155,518 301

(399) 1,008 Effect of exchange rate changes on cash and cash equivalents

INCREASE IN CASH AND CASH EQUIVALENTS 164,792 5,836

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 26,316 15,556

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 191,108 21,392



SUPPLEMENT DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for taxes 306 116

NON-CASH ACTIVITY

Unpaid issuance costs classified to APIC 20,203 -

Conversion of redeemable convertible preferred shares 150,179 -

VALENS SEMICONDUCTOR LTD.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(U.S. Dollars in thousands)(Unaudited)

The following table provides a reconciliation of Net loss to Adjusted EBITDA, a non-GAAP measure. Adjusted EBITDA is defined as net profit (loss) before financial income (expense), net, income taxes, equity in earnings of investee and depreciation and amortization, further adjusted to exclude share-based compensation, which may vary from period-to-period. We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers calculate Adjusted EBITDA in the same manner. Adjusted EBITDA should not be considered as an alternative to net loss or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity.

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Net loss^10 (8,487) (8,752) (18,561) (13,624)

Adjusted to exclude the following:

Financial income (expense), net 227 (395) (109) (2,872)

Income taxes 59 55 238 127

Equity in earnings of investee (9) - (9) -

Depreciation 265 277 787 799

Share-based compensation expenses 5,217 1,650 8,507 3,796

Adjusted EBITDA - before one-time (2,728) (7,165) (9,147) (11,774)issuance costs

One-time issuance costs 2,100 - 2,100 -

Adjusted EBITDA - after one-time (628) (7,165) (7,047) (11,774)issuance costs

^10 The nine months ended September 30, 2021 Include one-time issuance costs inthe amount of $5,969 thousand (of which $3,396 thousand derived from Stockbased compensation related to options' vesting acceleration).

For more information, please contact:

Daphna GoldenVice President Investor RelationsValens Semiconductor Ltd.investors@valens.com

Matthew Keating, CFA Financial Profiles, Inc.US: +1 310-622-8230ValensIR@finprofiles.com

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SOURCE Valens Semiconductor