DALLAS, TX -- February 26, 2026 -- Valens Semiconductor Ltd.(NYSE:VLN): Stonegate Capital Partners Updates Coverage on Valens Semiconductor Ltd. (NYSE:VLN). Valens Semiconductor posted 4Q25 revenue of $19.4M, significantly above guidance of $18.2–$18.9M, marking its seventh consecutive quarter of growth and up from $17.3M in 3Q25 and $16.7M in 4Q24. GAAP gross margin was 60.5% (nonGAAP 63.9%), exceeding guidance while easing slightly from 63.0% in 3Q25. Adjusted EBITDA loss of $(4.3)M was within guidance of $(4.6)-$(4.2)M range. While momentum remains solid, near-term results are being modestly affected by tariffs in automotive and some FX pressure. Visibility remains mixed, but we expect steady growth through 2026 as ProAV normalizes, machine vision and medical ramp, and automotive stabilizes with continued A-PHY progress. Support also comes from share repurchases, a $5M annual opex savings plan, and a new automotive win tied to the Chinese market.
Cross-Industry Business: Revenue of $13.9M (~72% of total revenues) increased from $13.2M in 3Q25 and $11.7M in 4Q24. 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 66.4%, down from 69.1% in 3Q25 due to product mix.
Automotive Segment: Valens’ Automotive segment reported revenues of $5.5M, reflecting a sequential increase from 3Q25 of $4.1M and a y/y increase from $5.0M, supported by an increase in product prices. We expect that the near term will experience typical seasonal softness in Q126 as customers work though inventory followed by sequential growth through the year. Automotive gross margins increased to 45.9%, primarily due to cost-optimization efforts.
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 fourth quarter with a solid financial standing, holding $92.6M in cash, cash equivalents, and short-term deposits, despite $14.4M spent 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 1Q26 revenue to range between $16.3M and $16.7M, and adjusted EBITDA loss to range between $(7.9)M and $(7.5)M with gross margins expected between 57.0% and 59.0%. Full year 2026 revenue guidance of $75.0M to $77.0M is a y/y gain of 8% 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 $3.58 to $4.55 with a midpoint of $4.00. Our EV/Revenue valuation results in a range of $3.54 to $4.42 with a mid-point of $3.98.
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