Valens Semiconductor (NYSE: VLN) March 2022
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Valens Semiconductor (NYSE: VLN) March 2022
Disclaimer
Forward-Looking Statements
Certain statements in this presentation (this "Presentation") are forward-looking statements. “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 20-F
filed with the SEC today, March 2, 2022 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.
GAAP and non-GAAP Measures
This presentation includes GAAP and non-GAAP measures. 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.
Although we provide guidance for Adjusted EBITDA, we are not able to provide guidance for projected Net profit (loss), the most directly comparable GAAP measures. Certain elements of Net profit (loss), including share-
based compensation expenses and warrant valuations, are not predictable due to the high variability and difficulty of making accurate forecasts. As a result, it is impractical for us to provide guidance on Net profit (loss) or to
reconcile our Adjusted EBITDA guidance without unreasonable efforts. Consequently, no disclosure of projected Net profit (loss) is included. For the same reasons, we are unable to address the probable significance of the
unavailable information.
Industry and Market Data; Trademarks, Service Marks and Copyrights
In this Presentation, we rely on and refer to certain information and statistics obtained from third-party sources which we believe to be reliable. We have not independently verified the accuracy or completeness of any such
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the property of their respective owners. Solely for convenience, some of the trademarks, service marks, trade names and copyrights referred to in this Presentation may be listed without the TM, SM, (c) or (r) symbols, but the
Company will assert, to the fullest extent under applicable law, the right of the applicable owners, if any, to these trademarks, service marks, trade names and copyrights.
2
Pushing the Boundaries of Connectivity. Everywhere.
Leading Provider of
Semiconductor Products
in the Large and Growing
Automotive and Audio-
Video Markets
Enabling Resilient, Ultra
High-speed Connectivity
Over Simple, Low-Cost
Infrastructure
3
Valens at a Glance
Significant Standard-Setting Automotive Audio-Video
first mover < and First-mover Critical Technology for ADAS Superior Connectivity,
Benefiting From the
advantage Adopted by Industry Leaders and Autonomous Cars
New Hybrid Normal
Impressive
growth track
record in the >$500M 30M >115
< Cumulative Revenue as
Audio-Video of YE2021
Chips Sold as of YE2021 Patents Granted
and Automotive
markets
Compelling $9B
financial < $83M-$85M/~66.4% ~$175M
2026 Estimated
2022E Revenue/Gross Margin2 Fortress Balance Sheet 3
profile Addressable Market 1
(1) Source: IHS, Strategy Analytics, Yole, Management Estimates; combined SAM for Automotive and Audio-Video
(2) Guidance provided on March 2, 2022 - annual and quarterly revenue range, and gross margin mid-point
(3) Cash, cash equivalents and short-term deposits as of December 31, 2021, without debt
4
Investment Highlights
Large, fast-growing addressable markets
Automotive
› One-stop-shop offering for high-speed connectivity solutions
› Rising number of sensors for ADAS1 requires smart high-speed connectivity
› Automotive SAM expected CAGR of 35%, reaching $8B by 2026
Audio-Video
› Demand for video-conferencing driving strong growth
› Opportunities in new verticals – such as hybrid education, industrial, and medical imaging
Significant first-mover advantage
› Disruptive connectivity technology – unmatched speed, performance, latency, distance and EMI2 resilience
› Inventor of HDBaseT technology, the leading industry standard in Audio-Video connectivity
› First-in-industry to ship MIPI A-PHY Standard Chipsets to Leading Automotive OEMs and Tier 1s
Track record of market leadership
› Shipped ~30 million chips to industry leaders
› On the road in Mercedes vehicles
Compelling financial model
› 2022E revenue at mid point: ~$843 million, with high gross margins of ~66.43%
› Strong near-term and longer-term revenue visibility
(1) ADAS – Advanced Driving-Assistance Systems
(2) EMI – Electromagnetic interference
(3) As per average annual and quarterly revenue and gross margin guidance provided on March 2, 2022
5
Go-to Market Strategy:
Gain First-Mover Advantage, Set the Standard in Every Industry we Operate
Invented Disruptive Connectivity Technology in Fast Growing Markets
Audio-Video Automotive A-PHY
1 Inventor of HDBaseT technology – an audio-video
industry standard 1 Valens’ technology selected as the baseline for
MIPI A-PHY standard (September 2020)
2 Co-Founder of the HDBaseT Alliance, with Samsung, LG and Sony
Pictures. 200+ members developing HDBaseT enabled products 2 Adopted by the IEEE (July 2021), making A-PHY the
connectivity-solution of choice
3 Market leader with unmatched technology for the distribution
of ultra high-resolution video and audio 3 Significant first-mover advantage with first MIPI A-PHY
compliant chipsets on the market
6
Empowering Millions of Audio-Video Products Globally
Samsung’s “The Wall” Logitech Rally PLUS Samsung “Terrace”
Digital Signage Ultra-HD System Outdoor TV
Dräger Evita® V800 Crestron FLEX Video Siemens Healthineers Epson BrightLink Interactive
Ventilator Conferencing 3D Imaging Mobile C-Arm Ultra Short-Throw Projector
7
New Business Opportunities in Audio-Video Connectivity
The New Hybrid Normal – Set to Conquer New and
a Trend that is Here to Stay Untapped Segments
• Video Conferencing – in Corporates • Industrial
and Education Significant growth as Industry 4.0 increasingly relies on
camera sensors and computer vision systems
• Accelerated demand for seamless video-conferencing
experience in every aspect of our lives
• Classrooms will undergo a significant connectivity infrastructure
upgrade
• Medical Imaging
Integrated in diagnostic equipment, assisted surgical
equipment, and operating room video distribution
• Command and-Control and Signage
Commercial advertising on public buses;
Municipalities and governments seeking new ways
to convey public safety information
8
Successfully Addressing Key Pain Points of the Automotive Industry,
Offering a Unique and Holistic Offering
Industry Pain The Valens Value
Points Proposition
Insufficient bandwidth to support growing data The most resilient, industry-leading
processing requirements bandwidth with zero latency
Safety-critical applications raise the stakes for
ensuring flawless link quality in the Unprecedented error-free links
harsh automotive environment
Cars are running out of space – there
is a pressing need to reduce the amount Simple infrastructure with lowest total
and weight of cabling system cost
Legacy connectivity solutions are hitting a wall Superior DSP-based PHY technology supports
the transition from analog to digital
9
Providing a One-Stop-Shop for All in-
Vehicle High-Speed Connectivity Links
› Valens provides multiple connectivity solutions
that can, and should co-exist in cars
› Well-positioned with a holistic symmetric and
a-symmetric offering
› Symmetric - Superior solutions › A-Symmetric - Fastest-growing segment
for infotainment and next-gen of › sensor-to-ECU video connectivity supporting ADAS
telematic units
• VA7000 chipset family, MIPI A-PHY compliant
• VA6000 and VA6003
10“One of Daimler’s strategic focuses is to be a technological
Validated By Automotive Leaders leader in ‘green’ technologies, safety, autonomous driving
and connectivity. Valens Automotive is a perfect fit as its
architectural benefits, reliability and robustness lead to a
superior driving experience for our customers.”
Daimler
‘Valens and Daimler Partner to Optimize In-Car Connectivity’
Enabling Superior Infotainment
Connectivity in Mercedes Vehicles
• On the road and fully operational with VA6000, 1st-generation
automotive chipsets
• Collaborating on multiple next-gen platforms across many models
• Estimated contracted value of several hundred million dollars
• Selling through leading automotive Tier-1s
11Validated By Automotive Leaders
Valens Partnered with Stoneridge,
a Leading Truck Technology Manufacturer to Solving a Critical Safety Hazard and
Solve a Tractor Trailer Connectivity Challenge Reducing Fleet Operating Costs
Tackle Visibility Limitations
• Provide video connectivity between truck’s tractor and trailer while
protecting lives
• Valens supports high-speed data links of up to 130ft in a very rough and
noisy environment
Business Opportunity
• Foothold in profitable, high-margin truck market
• Automotive aftermarket potential
Monitor
Up to 40m
Industrial PC
12Setting Standards, Enjoying First-mover Advantage in Automotive
First-mover Advantage
VA7000
Standard-Setter – A-PHY Connectivity • Shipped VA7000 samples
First-in-Industry to Ship to more than 25
A-PHY Compliant Chipsets prospective customers
to Leading Automotive and partners
OEMs and Tier-1s • 4 Leading Automotive
IEEE adopted OEMs
A-PHY as an • >10 Automotive Tier 1s
automotive standard
Valens’ technology
selected as the baseline
for MIPI A-PHY standard
2020 2021 Q4 2021
13Valens is Leading the Growing “We at Mobileye are working closely with Valens to make sure
our next-generation platforms will comply with the MIPI A-PHY
MIPI A-PHY Ecosystem architecture.“
Amnon Shashua, Founder & CEO
“We’re happy to be early adopters of this automotive
connectivity standard. Valens is in a leading position with A-
PHY, which is why it is so important for us to start this
collaboration.”
Kenji Onishi, General Manager, Automotive Business Department
“We acknowledge the momentum that the MIPI A-PHY standard
is gaining in the industry… We’re thrilled to partner with Valens,
the leading supplier of A-PHY-compliant chipsets.”
Leader in Bob Zhang, General Manager
A-PHY
“The automotive market is racing towards standardization,
and A-PHY is far and away the leading connectivity solution…
Valens [is] an early pioneer of A-PHY technology.”
Insoo Ryu, VP, Head of the Automotive Components &
Electronics Business
“At Sumitomo Electric, we view A-PHY as the connectivity
Valens is positioned to provide the infrastructure underlying the cars of tomorrow, so it was
important
underlying connectivity solution in every car for us to make sure our cables meet this standard’s channel
sensor system that requires an A-PHY link requirements.”
Hiroki Hirai, Sumitomo Electric General Manager of CAS-EV
Development Promotion Division
14Automotive Connectivity Market - Key Drivers
1 2 3
High-speed data Simplified car ADAS & autonomous
processing architecture driving
151 Transforming Vehicles into Data Centers on Wheels
High-speed
data
processing 1990s Present Future
Data Center
on Wheels
Sensor: 1-3 sensors, Sensor: ~10 sensors, 3-5 cameras, Sensor: >20 – cameras, radars, lidars,
0-1 displays, 2G 1-5 displays, 4G/LTE >8 displays, 5G/connected cars
Speed: 25Mbps Speed: Up to 1Gbps Speed: Up to 16Gbps
“Connectivity is the basis technology for making data work for you. As an entrepreneur, I've invested in Valens
because
I believe in the team, and I believe that their technology solutions will drive the ADAS and the autonomous market.“
Eyal Valdman, Founder & CEO of Mellanox (acquired by Nvidia) 162 Car Architecture has Been Pushed to its Limits –
Space, Weight, and Complexity
Simplified
car The Challenge The Valens Solution
architecture
>2x Bandwidth
Fewer Cables/ Lower
Weight
Lower Cost
Less Complexity
Valens Simplifies Less Power
In-Vehicle Architecture Consumption
Increased Resilience
Embedded Link
Diagnostic and
Analytics
Reduced Risk of Recall
173 Valens is a Key Enabler for ADAS & Autonomous Driving
Prerequisites for ADAS connectivity
ADAS &
autonomous High Speed Zero Latency Long Reach
driving
No matter the sensor type, Valens will
provide the underlying connectivity solution
Lane Departure Warning
Lane Keep Assistance Speed Limited Autonomy
Fully Autonomous
System Sign Recognition
Blind Spot Warning
Emergency Braking
Pedestrian
Collision Park Assistance
Surround View
Radar LiDAR Camera
Rear Collision
Cross Traffic Alert Warning
18Valens’ Current Addressable Market Will be Further Fueled by
the Growing Adoption of ADAS and Autonomous Driving
Valens High Speed Connectivity
Automotive SAM(1) ($B)
2026
Number of
Sensors Today Future
Level 2 Level 3 Level 4 Level 5 2021 $0.9
Feet Off Hands Off Eyes Off Mind Off
$0.6 $0.6
Camera 2-7 5-8 5-12 5-12
$2.5 $4.3
Radar 1-3 3-5 4-10 4-10
$0.4
Lidar 0 1-2 2-5 2-6
Display 1-4 2-8 2-8 8+
Total 4-14 11-23 13-35 19-36+
$1.6 $7.6
>35% CAGR
Infotainment Sensors Displays
(1) Strategy Analytics Automotive Ethernet Market Projections, December 2019, Yole Automotive Interior Market and Technology Report 2020 and Strategy Analytics ADAS Demand Forecast, May 2020, and uses Management estimates.
192021 Achievements
Record Revenues in Shipped first-in-industry Initial revenues from September 2021 –
both business segments MIPI A-PHY automotive Stello, our newest Audio- became a public
chipsets to potential Video product family. company
Met all customer customers and leading Already embedded in (NYSE:VLN)
demand, in a severely ecosystem players, designs of >100
supply constrained including 4 OEMs and products from leading
environment >10 Tier 1s manufacturers
20Fourth Quarter and Full Year 2021 Financial Highlights
Fourth Quarter 2021 Full Year 2021
› Revenue: $20.7 million › Revenue: $70.7 million
› Gross profit: $14.8 million › Gross profit: $50.6 million
› Gross margin: 71.2% (Non-GAAP 71.5%) › Gross margin: 71.6% (Non-GAAP: 71.8%)
› Adjusted EBITDA1: $(7.0) million › Adjusted EBITDA1: $(14.0) million
Cash as of December 31, 20212: $174.4 million, no debt
(1) Adjusted EBITDA net of issuance related costs. EBITDA 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. 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. Please refer to the appendix at the end of this press release for a reconciliation to the most directly comparable measure in accordance with GAAP.
(2) Cash, cash equivalents and short-term deposits as of December 31, 2021. Net cash raised as part of listing as a public company was $132 million
21Looking into 2022
Remain focused on Ultimate goal is to
Increasing revenues Optimizing Diligently managing achieve and then
delivering value to all
year after year margins our operations continue to amplify
our stakeholders by: our profitability
First Quarter 2022 Full Year 2022
› Revenue: $20.6-$21.0 million › Revenue: Raised to $83 million to $85 million
› Gross margin: 66.5%-67.2% › Gross margin: 65.5%-67.2%
› Adjusted EBITDA1: $(10.7)-$(9.7) million › Adjusted EBITDA1: $(38.4) million to $(37.6) million
(1) Guidance provided on March 2, 2022
(2) Adjusted EBITDA is a non-GAAP measure. See slide 24 of this presentation for a reconciliation of GAAP to non-GAAP measures.
22Summary
First-mover advantage - Setting industry standards as a go-to-market strategy
Track record of market leadership driving increased revenues
Large, fast-growing addressable markets in Automotive and Audio-Video
Compelling financial model with clear path to profitability
23Reconciliation of GAAP to non-GAAP Financial Measures
Three Months Ended Three Months Ended
December 31 December 31
2021 2020 2021 2020
Net Loss1 (7,973) (6,011) (26,534) (19,635)
Adjusted to exclude the following:
Financial income (expense), net (820) (428) (929) (3,300)
Income taxes 169 37 407 164
Equity in earnings of investee (1) (17) (10) (17)
Depreciation 312 294 1,099 1,093
Share-based compensation expenses 1,362 1,533 9,869 5,329
Adjusted EBITDA - before issuance-related costs (6,951) (4,592) (16,098) (16,366)
Issuance-related costs - - 2,088 -
Adjusted EBITDA - after issuance-related costs (6,951) (4,592) (14,010) (16,366)
The above 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.
Although we provide guidance for Adjusted EBITDA, we are not able to provide guidance for projected Net profit (loss), the most directly comparable GAAP measures. Certain elements of Net profit (loss), including share-based
compensation expenses and warrant valuations, are not predictable due to the high variability and difficulty of making accurate forecasts. As a result, it is impractical for us to provide guidance on Net profit (loss) or to reconcile our
Adjusted EBITDA guidance without unreasonable efforts. Consequently, no disclosure of projected Net profit (loss) is included. For the same reasons, we are unable to address the probable significance of the unavailable information.
1The year ended December 31, 2021, includes issuance-related costs in the amount of $5,958 thousand (of which $3,396 thousand derived from Stock based compensation related to options’ vesting acceleration).
24Thank you
www.valens.com
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