Valens Semiconductor Ltd (VLN) 2025 Q4 法說會逐字稿

Good morning. My name is Ylla, and I will be your conference operator today. At this time, I would like to welcome everyone to Valens Semiconductor's fourth-quarter and full-year 2025 earnings conference call and webcast. (Operator Instructions) Opening remarks by Valens Semiconductor management will be followed by a question-and-answer session.

I will now turn the call over to Michal Ben Ari, Investor Relations for Valens Semiconductor. Please go ahead.

Thank you and welcome, everyone, to Valens Semiconductor's fourth-quarter and full-year 2025 earnings call. With me today are Yoram Salinger, Chief Executive Officer; and Guy Nathanzon, Chief Financial Officer. Earlier today, we issued a press release that is available on the Investor Relations section of our website under investors.valens.com.

As a reminder, today's earnings call may include forward-looking statements and projections which do not guarantee future events or performance. These statements are subject to the Safe Harbor language in today's press release. Please refer to our Annual Report on Form 20-F filed with the SEC on February 25, 2026, for our discussions of the factors that could cause actual results to differ materially from those expressed or inside. We do not undertake any duty to revise or update such statements to reflect new information, subsequent events, or changes in strategies.

We have been discussing certain non-GAAP measures on this call which we believe are relevant in assessing the financial performance of this business, and you can find reconciliations of these metrics within our earnings release.

With that, I will now turn the call over to Yoram.

Thank you, Mikey. Hello, everyone, and thank you for joining us. I'd like to begin this call by introducing myself to you all. My name is Yoram. I come to Valens with over 25 years of leadership experience in global high tech companies. My background is in building and scaling technology companies with key growth phases, and that's exactly what I intend to do here at Valens. I'm really excited to have joined this company I've only been here a few months, but it's already clear to me that Valens has exceptional technology, a strong executive team, dedicated and professional employees, and very compelling opportunity ahead.

Before I dive into Q4 numbers and our annual overview, I want to take this opportunity, my first Valens earnings report, to present you with my initial thoughts about the company and to set expectations around Valens' growth in the years ahead.

This company has delivered some remarkable achievements over the years. We created the HDBaseT standard and founded the HDBaseT alliance, which boasts over 200 members companies. We sell to nearly all of the leading players across the audio/video industry, supporting their innovation across various vertical bases.

In the automotive market, we are a longtime supplier of chips for Mercedes Benz, powering the state-of-the-art MBUX infotainment systems. We were a key contributor to the MIPI A-PHY standard, and we've become a pillar within the growing AFI ecosystem, achieving full design wins for the next generation ADAS systems. We feel confident that both the audio/video and automotive industries represent significant long-term growth pillars for the company. And the first number I want to share with you is the new growth projection.

We expect that in 2026, our revenues would reach between $75 million and $77 million. The midpoint reflects both approximately 8% over last year. While we expect to maintain growth in 2026, the pace and extent of the growth may be affected by microeconomic conditions and the pace of adoptions of new technologies which could continue to reduce visibility and increase uncertainty. Given the current environment and reduced visibility beyond the near term, we will provide single -year growth projections going forward.

My outlook and my strategy for achieving our growth target is as follows: From now on, we are concentrating our resources on our core businesses, audio/video and automotive. Those are the markets where Valens brings unmatched technology leadership and where we see sustained profitable growth opportunities.

That said, we remain proactive, focusing on seizing large revenue-generating opportunities that arise in additional verticals that require high-performance connectivity solutions in challenging environment. But our priority will be to ensure disciplined execution, profitability, and innovation within our core markets.

With that as the starting point, I'd like now to dive into our Q4 and 2025 full-year performance. We are pleased to report a strong fourth quarter well above our initial expectations. We delivered revenues of $19.4 million exceeding our guidance range of $18.2 million to $18.9 million. As customer demand exceeded expectations in the audio/video market, this marked the seventh consecutive quarter of growth for our company.

GAAP gross margin for Q4 2025 came in at 60.5%, better than the guidance, and adjusted EBITDA loss was $4.3 million within the guidance range. Our full-year revenues for 2025 were $70.6 million, also exceeding our guidance range of $69.4 million to $70.1 million. GAAP gross margin for the full-year 2025 came in at 62.4% and adjusted EBITDA loss was $16.9 million, both above our guidance. Looking ahead to Q1 2026, we expect revenue to be in the range of $16.3 million to $16.7 million.

Beyond the numbers, I want to begin our quarterly discussion with a review of one of our core growth engines, audio/video. Valens is offering two unique and cutting-edge chipsets that fill market gaps for this industry, the VS3000 and the VS6320.

Let's start with the VS3000, the only chip on the market that can extend uncompressed HDMI 2.0 over a widely used category cables. Our chip is the solution of choice for products that need to reliably send high-resolution video over long distances, think projectors; think lecture halls and auditoriums; think ballrooms, warehouses, sports bars, casinos. Anything that requires multiple display and high-quality video, our VS3000 is basically the most suitable option.

In 2025, our VS3000 finally transitioning from high-end only to more mainstream products. Major companies bought state-of-the-art VS3000 products to market, including leaders Creston, Extron, (inaudible), and Atlona. This translated into (inaudible) that year, marking a nearly 100% increase in VS3000 sales from 2024.

This is great news for Valens as the VS3000 is the most advanced HDBaseT chip we offer and is a pillar of our growth opportunity in our core audio/video market. As 4K video becomes more mainstream and its lower quality solutions become less viable for professional deployment, we expect VS3000 sales to continue to ramp up as we move further into 2026 and beyond.

The second cutting-edge chip I want to discuss in relation to the audio/video market is our newest the VS6320. As a reminder, this is the first and only high-performance USB 3.2 extension solution built on a dedicated chip.

While USB 2.0 has long been sufficient for extending basic peripherals such as keyboards, mice, audio devices, and early-generation cameras, USB 3.2 is increasingly being used in this market to enable a new generation of products, high-resolution USB cameras, interactive displays, and more. Applications include digital signage in airport, interactive kiosks in museums, video walls in retail stores, telemedicine setups in hospitals, or high-end conference rooms.

Released in 2024, sales of the VS6320 grew nearly 25% during 2025. Last year, many market leaders released products based on this chipset, including (inaudible), Inogeni, and ProITAV.

In January 2026, one of the world's top three (inaudible) manufacturers, whose name I cannot reveal at this time, released to market a new series of USB 3 extender, targeting meeting rooms based on this chip. We expect the VS6320 to be another growth engine for us in 2026 and beyond, as the market continues to break past the limitations of USB 2.

Now, I'd like to turn to our other core business, automotive. Our opportunity in automotive is dominated by the VA7000 chipset which offers high-performance connectivity for cameras and radars used in autonomous driving. It is the first chipset on the market to comply with the MIPI A-PHY standard for high-speed sensor connectivity.

Needless to say, when we're talking about ADAS and autonomous systems, errors could lead to catastrophic consequences for drivers, passengers, and pedestrians alike which is why our VA7000 offer best-in-class noise immunity, reaching (inaudible) that are orders of magnitude lower than what our competition can support.

MIPI A-PHY had achieved important milestone over recent months. We secured a new design win for the VA7000 chipset which will be integrated into an ADAS system of a premium global automotive OEM serving the Chinese market. The deal brings Valens to four VA7000 A-PHY design wins globally and reinforces the connectivity standard as a forerunner for next-generation ADAS and autonomous systems.

We also announced our partnerships around our VA7000 A-PHY chipsets. Mobileye, a global leader in ADAS systems, selected our chips for their sensor to compute connectivity infrastructure underpinning their most advanced ADAS product. We successfully completed interoperability testing with seven vendors of A-PHY silicons.

We supported Japanese company, Sakae Riken, as they unveiled a 7000 base e-mirror with an order of magnitude more imaging data than other solutions on the market. And in Q1 2026, a major Korean supplier, MCNEX, launched the industry-first automotive-grade QHD front-and-rear cameras over low-cost channels based on our chipset.

MIPI A-PHY reached other milestones as well. A different silicon vendor announced its own A-PHY design win with a major Chinese OEM. Sony Semiconductor Solutions introduced to the market the first sensor in the world which integrated A-PHY extension, and the A-PHY ecosystem continued to grow with new products and integration being developed by major players such as Omnivision, Panasonic, and Qualcomm. The industry is running into A-PHY standard, and Valens is recognized as the go-to leader within the ecosystem, positioning us well for future design wins.

Of course, our first generation of automotive chipsets, the VA 6000, has been in mass production since 2021 with Mercedes-Benz. The contract generated revenues of $18.4 million during 2025, a 12% drop from 2024 revenues, derived from the decline in the number of product units sold by us to full installation in Mercedes-Benz cloud, coupled with an erosion in the average selling price.

I would like to conclude by mentioning the difficult but necessary decision to reduce our workforce. In late January, we announced that we will be reducing our workforce by approximately 10% across various departments, which is expected to save around $5 million annually in operating expenses. The reduction was targeted and disciplined, designed to optimize our cost structure, streamline our operation, and sharpen execution across the company.

This was not a decision I took lightly. Valens was built by exceptional people, and I'm grateful for the contributions of those who are leaving the company. At the same time, this step allows us to continue to invest in our core business segments with clarity, urgency, and confidence while maintaining the flexibility to capitalize on the right opportunities as they arise.

With that, Guy, please go ahead and discuss our financial performance in more detail.

Thank you, Yoram. I'll start with our fourth-quarter and full-year 2025 results and then provide our outlook for the first quarter and full year of 2026.

We generated quarterly revenue of $19.4 million which exceeded our guidance range of $18.2 million to $18.9 million. This compared to revenue of $17.3 million in Q3 2025 and $16.7 million in Q4 2024. The Cross-Industry Business or CIB accounted for $13.9 million or approximately 70% of total revenues. While Automotive contributed $5.5 million or approximately 30% of total revenues this quarter. This compared to Q3 2025 revenue of $13.2 million from CIB and $4.1 million from Automotive which represented approximately 75% and 25% of total revenues, respectively.

In Q4 2024, revenues from CIB were $11.7 million, and $5 million were from Automotive or approximately 70% and 30% of total revenues, respectively. Q4 2025 gross profit was $11.7 million compared to $10.9 million in the third quarter of 2025 and compared to $10.1 million in the fourth quarter of 2024.

Q4 2025 gross margin was 60.5% compared to our guidance range of 58% to 60%. These compared to the Q3 2025 gross margin of 63% and 60.4% in Q4 2024. On a segment basis, Q4 2025 gross margin for the CIB was 66.4% and gross margin from Automotive was 45.9%. These compared to Q3 2025 gross margin of 69.1% and 43.2%, respectively. And for Q4 2024, gross margin of 64.7% and 50.5%, respectively. The decrease in gross margin of the CIB compared to Q3 2025 was due to a change in product mix. The increase in Q4 2025 in Automotive growth margin compared to Q3125 was due to cost optimization.

Non-GAAP gross margin in Q4 was 63.9% which compares to 66.7% in Q3 2025 and 64.5% in Q4 2024. Operating expense in Q4 2025 totaled $20.9 million, compared to $19 million in Q3 2025 and $18.5 million in Q4 2024.

Research and development expense in Q4 totaled $11.1 million, compared to $10.8 million in Q3 2025 and $10.1 million in Q4 2024. SG&A expenses in Q4 were $10.1 million, compared to $7.4 million in Q3 2025 and $8.3 million in Q4 2024. The increase compared to Q3 2025 is mainly due to lower income from a certain batch production incident in amount of $1 million in higher payroll expense.

Change in earnout liability in Q4 was an income of $0.3 million, compared to an expense of $0.7 million in Q3 2025 and an expense of $0.1 million until Q4 2024. The change compared to Q3 2025 is mainly due to reassessment of the earnout demand to be paid to (inaudible) shareholder.

GAAP net loss in Q4 was $8.8 million, compared to a net loss of $7.3 million in Q3 2025 and a net loss of $7.3 million in Q4 2024. Adjusted EBITDA in Q4 was a loss of $4.3 million within the guidance range of a loss between $4.6 million to $4.2 million. This compared to an adjusted EBITDA loss of $4.3 million in Q3 2025 and an adjusted EBITDA loss of $3.7 million in Q4 2024.

GAAP loss per share for Q4 was $0.09, compared to a GAAP loss per share of $0.07 for Q3 2025 and a GAAP loss per share of $0.07 for Q4 2024. Non-GAAP loss per share in Q4 2025 was $0.04, compared to a loss per share of $0.04 in Q3 2025 and a loss per share of $0.02 in Q4 2024. The difference between GAAP and non-GAAP loss per share was mainly due to a stock-based compensation, changing earnout liability, depreciation and amortization expense, and certain batch production incident income.

I will now turn to the full-year 2025 results. Total revenue for the year 2025 was $70.6 million, exceeding our guidance of between $69.4 million to $70.1 million. This compared to full-year revenue from 2024 of $57.9 million.

Revenues from the Cross-Industry Business were $51.6 million, representing 73% of the total revenue, compared to $36.3 million in 2024. This increase was due to the recovery in the market of the audio/video. Automotive business revenue was $19 million, representing 27% of total revenue, down 12% from $21.6 million in 2024 due to gradual product (inaudible) and reduction in the number of units sold to Mercedes-Benz.

GAAP gross margin was 62.4% for the full-year 2025, compared to 59.2% in 2024. On a segment basis, 2025 gross margin from the Cross-Industry Business was 68.1%, and gross margin from Automotive was 47%. This compared to gross margin of 71% and 39.5%, respectively in 2024. The increase in 2025 Automotive gross margin was due to an optimization of our product cost. The decrease in gross margin of the CIB was due to a product mix shift.

Non-GAAP gross margin was 66.1% for the full-year 2025, compared to 62.9% in 2024.

Full-year 2025 operating expenses were higher, reaching $78.1 million compared to $75.6 million in 2024. The current increase in operating expense was related to R&D expense which increased by $2.2 million mainly due to increased payroll expense that was driven by two factors: the US dollar (inaudible) currency influence and additional headcount in 2025 due to the acquisition of Acroname in May 2024.

GAAP net loss for the full-year 2025 decreased to $31.6 million from $36.6 million in 2024. Adjusted EBITDA loss for the full-year 2025 was $16.9 million, a decrease compared to $21.1 million in 2024. GAAP net loss per share for 2025 was $0.31, a decrease compared to $0.35 in 2024. Non-GAAP loss per share for 2025 was $0.14, a decrease compared to $0.15 in 2024.

Turning to the balance sheet. We ended Q4 with cash and cash equivalent in short-term deposits, totaling $92.6 million and no debt. This compares to $93.5 million at the end of Q3 2025 and $131 million at the end of 2024. The decrease in cash from the previous year is attributed to large part of our share repurchase program which totaled $24 million in 2025. This means that the company consumed $14.4 million in ongoing operations during 2025.

Our working capital at the end of Q4 was $95.7 million, compared to $98.9 million at the end of Q3 2025 and $133.6 million at the end of 2024. Our inventory end of December 31, 2025, was $10.1 million, a decrease from $11 million on September 30, 2025; and $10.2 million on December 31, 2024.

Now I would like to provide our guidance for the first quarter and full year of 2026. We expect Q1 revenues to be in the range of $16.3 million to $16.7 million. We expect gross margin for Q1 to be in the range of 57% to 59%, and we expect adjusted EBITDA loss in Q1 to be in the range of $7.9 million to $7.5 million loss. For the full-year 2026, we expect revenues to be in the range of $75 million to $77 million. The midpoint reflects growth of approximately 8% compared to the annual revenue of 2025.

I now turn the call back to Yoram for his closing remarks before opening the call for Q&A.

Thank you, Guy. We believe that Valens is in a strong position. We have a healthy balance sheet; we are market leaders in audio/video; and we are well-positioned to take a leadership position in automotive as well. We are reusing our newest chipsets to open up new growth opportunities while focusing now more than ever on our core businesses. We expect good things ahead in 2026 and beyond.

With that, I'll now open the call to answer your questions. Operator?

(Operator Instructions)

Suji Desilva, Roth Capital.

Hi, Yoram. Hi, Guy. Congrats on the progress here. The fourth quarter, Guy, just to review that, what were the drivers of the upside on the fourth quarter versus the prior guidance?

Thank you for your question. Usually, Q4 is categorized by end-of-year budget to be consumed within the the Q4. This is what drove our customers to increase their orders with us and this is what drove the Q4 results.

Helpful. And then as we look ahead to '26 and the full-year revenue guide, any thoughts on how that might break out between the AV business and the Auto business or maybe you can talk qualitatively about what you expect in the Auto business in the coming year with the three OEM wins you have out there?

I think when you refer to the wins, you mean the four wins that we have with the --

The four. Not three. Sorry, four, yes.

Yeah. Basically, we're not splitting our guidance between the different business units, so we're not going to go into that today. But having more design wins in Automotive is obviously something that we're striving towards and maintaining our very strong position within the audio/video business is something that we'll be focusing on in 2026 and beyond.

Okay. And then my last question, Yoram, can you talk maybe about how you would leverage the channel and partnership success and the ecosystem that Valens had to try to drive further growth? And maybe touch on the incremental areas like medical instruments and industrial factory automation as how you'll ramp those. Thanks.

Valens has been known for years for establishing the HDBaseT standard and the HDBaseT alliance. I think that calculating 200 leaders in the audio/video market is an amazing tool for us to drive our products into the market for the years to come. So we will be focusing on that and enhancing our relations -- quote, closer relations, with the channel.

When we speak about Automotive, I think there are two distinct partners that we need to focus on. One is Mobileye and Mobileye is a very strong and close partner for Valens. And the other one is the announcement of the Sony Sensor supporting A-PHY. Those two are marking the road for us for looking for more partnerships in order to drive our success in the automotive ADAS business. Was there other process question that I missed?

Just the medical -- the newer areas, medical, industrial, any thoughts on driving the growth there?

I think that Valens is relevant for any market that is looking for high-performance connectivity solutions in challenging environment. This is a larger category. We announced some deals in both industrial and medical over the past year. We will continue pursuing larger opportunities in those markets. But the emphasize is that we've got two very strong anchors that we're going to be extremely focused on, and this is why we kind of outlined the two other than the Automotive and ProAV. But we would obviously chase large opportunities -- significant opportunities both in industrial and medical.

All right. Okay. I appreciate all the details there, Yoram. Thanks.

Quinn Bolton, Needham & Company.

Hi, Yoram. Welcome to Valens. I guess I wanted to follow up on Suji's last question there. It was a little confusing to me where it sounds like you're trying to refocus Valens' efforts on your two core markets of ProAV or the AV market in general as well as Automotive. And so isn't entirely clear. Are you deemphasizing the machine vision and medical opportunities? Will you be more selective with opportunities you pursue in those markets? Or are you still focused on the machine vision and medical markets leveraging the technologies you've developed in the AV and automotive market?

That's actually a very good question and I'm happy to clarify our position. Being in the AV market for so long, having so many achievements, so many large and good customers, is something that a company shouldn't look in a light way. So by saying that, we're just stating pretty much the obvious that we're going to focus on that.

A company like ours having the Mercedes-Benz deal for, I think, sixth year now and having four design wins in the ADAS market, it's something of significance for us. We're going to focus on the automotive, trying to leverage our partnerships in order to win more deals in the automotive.

I think in your question, you pretty much outlined our position. We are still looking at the medical and industrial. That being said, we are looking to find anchor deals, like sizable deals that could make an impact on the industry. Making our name as the newcomers into this industry, we need to see some large entry deals in order for us to become a player that could play the entire game of those two relatively new markets for the company.

Understood. Thank you for the clarification. And then just wanted to come back to the AV market. You highlighted both the VS3000 and the VS6320. And in your prepared comments, you mentioned both of those devices are expected to continue to grow year on year in 2026. Are there legacy businesses that you would expect to decline or the VS3000 and VS6320 the vast majority of the AV business? Just wanted to make sure, if there are some headwinds, that we identify those.

Just to be clear on that, we're not segmenting our revenues based on chipset families. The VS3000 and the VS6320 are the newest generation of our product. It takes time for products to ramp up into its entire capacity or -- Market adoption in the chipset industry takes time, right? Because we are introducing chips. They're being introduced to our customers which are building their products. And then launch to the market. It takes time for those to gain the momentum and actually be influential on the total result. Therefore, I highlighted those as growing factors in our business, not to say anything or don't conclude anything about the family of chips that we have in the market.

Got it. And then just last question for me. You mentioned that your year-end budget plus drove some of the upside in the fourth quarter. When I look at the March quarter guidance, it's down slightly on a year-over-year basis after some pretty healthy year-on-year growth in the past three quarters. Just wondering, is the first quarter guidance reflecting -- do you think this year-end budget plus created a little bit of an inventory accumulation in Q4 that you worked through in Q1?

And is that the reason for the down year-on-year guidance for March? Or are there other factors, macro, or just rate of new product adoption that you'd mentioned in the script that accounts for this year-on-year decline in the first quarter?

Guidance for the year represents yet another growth year for the company. The guidance is $75 million to $77 million for the year. Macroeconomics and instability and tariffs are things that are influencing our business like pretty much everybody else. So we see Q1 to be a little bit slower than the rest of the year. But as we said, we're still confident that this is going to be yet another growth year for the company. Q1 would be slower after a very strong Q4. Usually, what happens is that our customers would utilize what they've acquired from us and then as the year advance, it's going to ramp up.

Understood. Thank you.

Rick Schafer, Oppenheimer.

Hi. This is (inaudible) on the line for Rick. I wanted to welcome you and thanks for taking the question. So my first question is on the strategic vision of the company. I appreciate the commentary and the preparing marks and the questions about focusing on core businesses like audio/video and auto. But as you step into the CEO role and evaluate this company's position, where do you see the key strengths? Where are the biggest opportunities to sustain growth? I just wanted to ask and if you could help us better understand the long-term strategic vision and the competitive position of the company (inaudible). Thanks.

Actually, your question is kind of driving me to the core competency of this company, right? And we are a high-performance connectivity solution in challenging environments, right? This is what we are extremely strong when it comes to noise immunity and extenders. We're probably the leading technology in the world.

I think that the reason we're focusing on the two core businesses of the company is because we see great growth opportunity within those two markets. And I think that in order for us to be appreciating the opportunity, we're pretty much stating that those markets are not declining. And I know it's not something that we're going to shift our eyes from the bolts, so to speak. That being said, we would definitely seize opportunities within other markets in order to explore other opportunities in adjacent markets.

And I've been off the (inaudible) question about medical or industrial, yeah, we are pursuing some large opportunities with global care in both of those markets. And we hope that those markets would materialize for us in order to drive the growth of the company for the years to come. But I think that it's important to me and essential for me coming into this job to reemphasize the strengths of this company in the markets that we operate for years now.

I appreciate it. Thank you. My second question is on the four A-PHY design wins. Is there anything you can share with us on timing or the size of these wins? Does this win for the Chinese market provide a bigger revenue opportunity than the other earlier three wins? Any additional details would be great. Thank you.

Well, thanks for the question. We're not able to disclose the name, obviously, the sizes of those deals as those deals have been done with OEMs and partners that we have to be (inaudible) of privacy. So sorry for that, but that's teh nature of this business.

That being said, we could say that we assume that the start of revenue generation for those deals is going to be somewhere in the second half of 2027, and we need to put a kind of an asterisk on that because we know that automotive projects tend to be delayed somewhat at times. And the other thing that needs to be acknowledged is that the ramping up of model (inaudible) is taking some more years for this to get to its full capacity.

At that point, the only thing I could say, we're extremely proud to have those four design wins. We're extremely happy to have one in China which is obviously signaling a lot in what's happening in the automotive business. And what we're focusing on is actually achieving more design wins. Because when you actually achieve those design wins, it takes time. But when it materialize, it could be big business for us and the best example for us is obviously our long-lasting relations with Mercedes.

Great. Thank you. And maybe lastly, I wanted to ask about the cost cuts. One of the first actions taken was the $5 million cost reduction. I was wondering if you can expand on that a little bit. Will the cuts be equally between the -- I think, we called it the CIB or Cross-Industrial Business and the Auto business? And I believe previously, you talked about the top line revenues of around $100 million and $110 million in order to get EBITDA breakeven. Has the target or timing of this break ven changed? Thanks.

Okay. Talking about the cuts for the company in order to reduce OpEx and increase efficiency, this is the first part of the question. And with respect to the second part, we are still in the same ballpark of the breakeven in terms of revenue. Even with the same level of operating expenses and same level of gross margin, the company can be EBITDA positive anywhere between $110 million to $120 million revenue and there is no change on that subject.

Thank you.

Dave Storms, Stonegate.

(technical difficulty) circle back to some of the (technical difficulty) the remarks. Have you given a cadence (technical difficulty) those savings will take place? Will they be (technical difficulty) will they be more first half or second half weighted?

Sorry. It was extremely hard for us to understand the question. You are cutting off. Dave, are you there?

Apologies. The cadence for the cost savings, will they be evenly distributed for the year (technical difficulty) take place.

It's very hard for us to hear your full question. I assume you're asking how is the cuts conducted, right?

Yes.

Well, if I got the question right, it was cross-company. The cuts were done cross-company departments. So it was not one segment or the other that has been impacted. It was cross-company. And I think it's part of being an extremely responsible management team that looks at a very strong balance sheet and trying to optimize the operation of the company to ensure further growth in the years to come.

Understood. Thank you. For the cost acquisition environment, you had a lot of strong wins in 2025, how do you see the customer acquisition environment changing in 2026?

Are you referring to a specific segment or you're speaking in general regarding customer acquisition?

Primarily in automotive, but if you would like to map the automotive customer acquisition environment into maybe machine vision or medical and how you see those potentials to win more contracts there, that'd be helpful as well.

Obviously, in the automotive business, in order to have design wins, you need to be in connection with the ecosystem including the common factories, the Tier 1s, and the supplies of the industry. Being close to the entire chain is something that you need to be focusing on in order to be able to ensure customer acquisition in the short term, midterm, and long term. And this is exactly what we're working with. We're working with the partners I mentioned and others in order to be in a position to be considered for winning more business in the years to come. So that's on the automotive.

On the industrial and medical, as I've indicated earlier, we're focusing on larger opportunities which suggest that we're looking to to have wins with leading providers of those both industries. And that's exactly what we're doing. For obvious reasons, I cannot disclose names. But you could be rest assured that once we have something to share, we would definitely share with you, guys, how we're advancing those markets.

Understood. Thank you.

(Operator Instructions) There are no further questions at this time. Mr. Salinger, would you like to make a concluding statement?

Thank you. I would like to thank you all for joining us today for our fourth-quarter and full-year 2025 earnings call and for your continuous support and interest in Valens Semiconductor. I hope to meet you again in our next earnings call. Good-bye.

Thank you. This concludes the Valens Semiconductor results conference call. Thank you for your participation. You may go ahead and disconnect.