DALLAS, TX -- November 12th, 2025 -- Valens Semiconductor Ltd.(NYSE:VLN): Stonegate Capital Partners updates their coverage on Valens Semiconductor Ltd. (NYSE:VLN). Valens Semiconductor posted 3Q25 revenue of $17.3M, significantly above guidance of $15.1–$15.6M, marking its sixth consecutive quarter of growth and up from $17.1M in 2Q25 and $16.0M in 3Q24. GAAP gross margin was 63.0% (non- GAAP 66.7%), exceeding guidance while easing slightly from 63.5% in 2Q25. Adjusted EBITDA loss of $(4.3)M was better than the expected $(7.4)–$(6.8)M range. While momentum remains strong, tariff impacts, most notable in automotives, continue to pose a headwind for the Company. Overall, we see mixed visibility into year-end but expect steady growth through 2026 as ProAV normalizes and as machine vision and medical programs ramp, with automotive stabilizing alongside ongoing A-PHY ecosystem progress.
Company Updates:
Cross-Industry Business: Revenue of $13.2M (~75% of total revenues) increased from $12.8M in 2Q25 and $9.4M in 3Q24. Growth was supported by strong adoption of the VS3000 chipset in ProAV. In parallel, Valens advanced growth vectors beyond ProAV, announcing the market’s first end-to-end camera-to-processor MIPI A-PHY platform with D3 Embedded for industrial machine vision and marking initial medical wins with three VA7000-based endoscopy products, including a first single-use 4K colonoscope. CIB gross margin was 69.1%, up from 67.8% in 2Q25 due to product mix.
Automotive Segment: Valens’ Automotive segment reported revenues of $4.1M, reflecting a sequential decrease from 2Q25 of $4.3M and a y/y decrease from $6.6M. Continued weakness in the automotive market due to the current tariff environment was the primary driver of this decrease, though we expect gradual improvement over the coming quarters. Automotive gross margins decreased to 43.2%, primarily due to product version mix and operational expenses related to a manufacturing line transition.
Growth Strategy: Valens expanded its presence in industrial machine vision through integration of the VA7000 chipset, enabling next-generation factory automation and inspection systems. In the medical market, the Company advanced its endoscopy initiative with the first three VA7000-based product launches, including a single-use 4K colonoscope, demonstrating reliability and image-quality advantages as programs progress through evaluation and development. Given typical qualification timelines in medical, we still expect several quarters before meaningful revenue contribution, but the long-term headroom appears significant. In ProAV, customer demand exceeded expectations and the portfolio continued to broaden across VS3000 and VS6320 use cases, reinforcing ecosystem strength and positioning the business for sustained growth.
Strong Financial Position: VLN ended the third quarter with a solid financial standing, holding $93.5M in cash, cash equivalents, and short-term deposits, despite a $3.6M expenditure on share repurchases. Valens maintains zero debt, underscoring strong financial resilience and readiness to pursue growth opportunities, including strategic acquisitions. We are encouraged by the Company’s balance sheet and expect management to outline further capital priorities as the broader macro backdrop becomes clearer.
Guidance: The Company expects 4Q25 revenue to range between $18.2M and $18.9M, and adjusted EBITDA loss to range between $(4.6)M and $(4.2)M with gross margins expected between 58.0% and 60.0%. Full year 2025 revenue guidance of $69.4M to $70.1M is a y/y gain of 20% at the midpoint.
Valuation: We use a DCF Model and EV/Revenue comp analysis to guide our valuation. Our DCF analysis produces a valuation range of $4.36 to $5.63 with a mid-point of $4.92. Our EV/Revenue valuation results in a range of $4.06 to $5.62 with a mid-point of $4.84.
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