Valens Semiconductor Ltd. (VLN) Earnings Call Transcript & Summary

Good morning. My name is Yoni, 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 2024 Earnings Conference Call and Webcast. [Operator Instructions] 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 2024 and Full Year Earnings Call. With me today are Gideon Ben-Zvi, 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 26, 2025, for a discussion of the factors that could cause actual results to differ materially from those expressed or implied. We do not undertake any duty to revise or update such statements to reflect new information, subsequent events or changes in strategy. We will be discussing certain non-GAAP measures on this call, which we believe are relevant in assessing the financial performance of the business, and you can find reconciliation of these metrics within our earnings release. With that, I will now turn the call over to Gideon.

Thank you, Michal. Hello, everyone, and thank you for joining us. 2024 was a challenging year for many companies around the world, including semiconductor companies in many markets, and these challenges affected Valens as well. However, although our sales were slowed by continued inventory digestion and weakness in our customer markets, we believe that we are emerging from the bottom of the cycle and that 2025 will prove a turnaround year for our company. I want to start by giving you some highlights for 2024. First, we announced 3 design wins in the automotive industry for ADAS platforms. Second, we successfully completed our first acquisition, Acroname, which will enable Valens to expand its position in the industrial market with a holistic USB-focused offering. Third, we released the VS6320 chipset, the first ASIC-based USB 3.2 high-performance extension solution on the market. Fourth, we defined a goal to penetrate a new market that has high growth potential, industrial machine vision and established specific cooperation with companies in this space. Fifth, we announced an ambitious 5-year plan that, if achieved, could see us more than quadruple our top line revenues over the coming years. As part of the 5-year plan, we reorganized our corporate structure in order to maximize our ability to reach new high-growth potential markets. Over the next few minutes, I will walk you through the details of this plan and explain why I expect that we will achieve our goals. But before I do, I want to provide a quick overview of our fourth quarter financial performance. We reported revenues of $16.7 million, which exceeded the top end of our guidance. GAAP gross margin for the fourth quarter came in at 60.4%, above the midpoint of the guidance and adjusted EBITDA loss was $3.7 million better than the guidance range. Importantly, we have a robust balance sheet of $131 million of cash and cash equivalents. Now let's turn to the 5-year plan, and I'll start with the cross-industry business unit or CIB, and I'll bring down into the various subverticals included within it. First and foremost, the professional audio-video vertical. This is the bread and butter of Valens. It's where we got our start all those years ago with the HDBaseT standard. And to this day, it accounts for the bulk of our revenues. We have set clear goals for ProAV. As part of our 5-year plan, we shared that the video conferencing vertical alone represents a large opportunity for the company, which we estimate will signify a TAM $350 million by 2029. Although this market is currently addressed by our legacy HDBC solutions, we believe that there are significant additional growth opportunities here, fueled by a variety of market dynamics, including increased demand for video and video peripherals inside meeting rooms as well as the growing popularity of USB as the interface of choice for meeting rooms. We are well positioned to capitalize on these trends with our newest chipset, the VS6320, which we believe is the most reliable and cost-efficient extension solution for USB 3.2 on the market today. Last quarter, inventory digestion continued to impact our ProAV sales. However, we believe we are emerging from the bottom of the cycle. As such, we are seeing increasing interest in our solutions, which are set to be integrated into products that are expected to hit the market in the next few years. We are thrilled with the positive market feedback following the launch of the latest chipsets. This was most recently evident at IFC, the industry's most renowned international conference for innovations in video conferencing, education, digital signage, entertainment and more. There, we showcased a variety of meeting room setups enabled by 2 of our newest chipsets, the VS6320 and the VA 7000, and we announced that our solutions are powering the latest generation of products for some of ProAV largest manufacturers. For example, we recently announced that our technology for the extension of USB empowered was officially endorsed by audio-video leader, Sennheiser, and that our solution can be used to extend the company's popular TeamConnect Bar product line. In addition, we demonstrated that Valens's cutting-edge chipsets can power Logitech's innovative Rally Camera Streamline Kit and Logitech's XL product, which enables unmatched flexibility for advanced video conferencing and hybrid learning applications. Both of these products illustrates how our chipsets can capitalize on important trends we see playing out within the video conferencing space. More conference room of all sizes from small huddle rooms to large corporate conference rooms, more displays, more cameras, more video bars, all of which are opportunities for Valens to broaden its presence in this market. I would like to remind you that our technology is already embedded within all major projectors brands, including Axon, Panasonic and NEC Sharp, and it is the extension solution of choice for all major audio/video distribution equipment companies such as Crestron, Extron, [ Acclona ] and Kramer. We are the de facto providers of comprehensive meeting room connectivity solutions. We estimate that in 2025, we will return to growth given the following factors. Our customers are entering 2025 with much healthier inventory levels, and they report increased activity with more new bids and installations in their end markets. Staying with the cross-industry business unit, we are going to move to our new high-growth markets, industrial machine vision and medical endoscopes. We are long been active in industrial and medical, offering IPC connectivity in the former and medical imaging connectivity in the latter. Additionally, as outlined in our 5-year plan, we believe the industrial machine vision and medical endoscopy vertical represents new and exciting opportunity with high potential upside. In the industrial machine vision vertical, we are heavily promoting our VS6320 and VA7000 chipsets, which extend the commonly used USB 3.2 and CSI 2 interfaces, respectively. We are actively engaged with leading camera module manufacturers, including Teledyne e2v, Framos, Leopard Imaging and D3 Embedded among others, and these collaborations are developing quickly. For example, in Q4, D3 officially began selling camera modules based on the VA7000 A-PHY chipset offering half a dozen A-PHY models. We will be showcasing these chipsets among others at the Embedded World Conference taking place in November next month. There is really no substitute for seeing live demonstrations of our chipsets and this premier machine vision event will be an excellent opportunity to further broaden our customer base. In total, our 5-year plan anticipated our potential TAM for the industrial machine vision vertical can reach $460 million by 2029, and I believe that we are well positioned to capture a significant share of this market. Our goal for 2025 is to achieve new design wins based on our advanced chipsets with expected commercialization starting from 2026 and beyond. A couple of words about Acroname, the company we acquired in May 2024. We believe that Acroname has the potential to expand our position in the professional audio/video and industrial markets. Just last month, Acroname announced a new product based on the Valens VS6320 for point-to-point USB3 and USB2 switch extension with advanced power delivery. The product allows AV installers and OEM product manufacturer to control, manage and extend USB devices, streamlining product deployment for the machine vision, corporate and education industries. This is the result of significant synergies between Valens and Acroname and is precisely what we envisioned when we purchased Acroname. Rounding out the cross-industry business units, our 5-year plan envisions that our medical vertical could provide long-term potential upside as our VA7000 chipset [ A-PHY ] used in endoscopes. I'm talking about more reliable, uncompressed video with high resolutions suitable for computer-aided detection and AI applications. We have a variety of projects with companies in this space, some in the stage of preparing for clinical trials, while others are readying to seek FDA approval. To be clear, this is currently a small market, and our solutions are only now starting to gain traction. However, in the long term, we are excited about how this vertical could evolve. I would like to turn now to the automotive industry. Our 5-year plan clearly highlights this industry as a key component in our long-term vision. This is a vast long-term opportunity with an estimated TAM of $4.5 billion per year by 2029 with significant upside during the following years when there is wide market adoption of sophisticated ADAS systems. And once again, I am confident that we will capture a significant share of this market, primarily through our flagship automotive chipset, the VA7000, which is the first to comply with the MIPI A5 standard for high-speed sensor connectivity. My confidence was bolstered during 2024 when we achieved 3 design wins with leading European OEMs for the VA7000. As you know, our ability to meet our ambitious 5-year targets in automotive depends on how quickly the MIPI A-PHY standard takes hold within the industry, and these design wins provide a strong foothold for A-PHY within the OEM community. We are eager to build on these wins to promote A-PHY across the industry, and we will use the validation we received from these OEMs as a springboard to convince other of the superiority of the technology. We are currently in the midst of several evaluation processes at various stages with multiple OEMs. I would like to highlight one particular evaluation process we are undergoing with a top 5 global OEM. This OEM recently benchmarked our VA7000 A-PHY compliant chipset against competing solutions. As a result of intensive testing, which took place over the span of months, our technology won by knockout and was found far superior across the majority of testing parameters, including resilience to EMC, satellite reception, noise injection, latency and more. We believe that this testing gives our solution a significant competitive edge. Our goal in automotive for 2025 is to achieve new design wins based on the VA7000 chipsets with leading OEMs with expected commercialization within a few years. As you may recall, our first generation of automotive chipsets, the VA6000 has been in mass production since 2021 in Mercedes-Benz. This contract has generated $21.6 million of revenues during 2024, and we expect it to account for most of our automotive revenues during 2025 as well. With that, I will turn the call to Guy to discuss our financial performance in more detail.

Thank you, Gideon. Let me start with our fourth quarter and full year 2024 results, and then I'll provide our outlook for the first quarter of 2025. We achieved quarterly revenue of $16.7 million, the fourth consecutive quarter of revenue growth, which exceeded our guidance of between $16 million to $16.3 million. This compares to revenue of $16 million in Q3 2024 and $21.9 million in Q4 2023. The cross-industry business or CIB, accounted for $11.7 million or approximately 70% of total revenue, while automotive contributed $5 million or approximately 30% of total revenue this quarter. This compares to Q3 2024 revenue of $9.4 million from CIB and $6.6 million from automotive, which represented 60% and 40% of total revenue, respectively. It also compares to Q4 2023 revenue of $15.8 million from the CIB and $6.1 million from automotive, representing 70% and 30% of total revenue, respectively. Q4 2024 gross margin was 60.4% compared to our guidance of between 58% and 62%. This compares to a Q3 2024 gross margin of 56.4% and Q4 2023 of 61.7%. On a segment basis, Q4 gross margin from the cross-industry business was 64.7% and gross margin from automotive was 50.5%. This compares to a Q3 2024 gross margin of 70.2% and 37%, respectively, and Q4 2023 gross margin of 76.6% and 22.6%, respectively. The increase in Q4 automotive gross margin was due to an optimization of our product cost. The decrease in gross margin of the cross-industry business, CAB, was due to a product mix shift and lower fixed cost absorption. Non-GAAP gross margin in Q4 was 64.5%, which compares to 60.7% in Q3 2024 and 63.1% in Q4 2023. Operating expense in Q4 2024 totaled $18.5 million compared to $21.3 million at the end of Q3 2024 and to $15.3 million in Q4 2023. Research and development expense in Q4 totaled $10.1 million compared to $10.3 million in Q3 2024 and $8.6 million in Q4 2023. The increase compared to Q4 2023 is mainly due to payroll-related expenses of Acroname's workforce in the amount of $0.9 million. SG&A expenses in Q4 were $8.3 million compared to $10.7 million in Q3 2024 and $6.6 million in Q4 2023. The quarterly decrease was mainly driven by a $2.2 million expense resulting from a certain batch production incident expense recorded in Q3 2024. GAAP net loss in Q4 was $7.3 million compared to a net loss of $10.4 million in Q3 2024 and a net profit of $2.8 million in Q4 2023. Adjusted EBITDA in Q4 was a loss of $3.7 million, lower than the guidance range of loss between $4.9 million and $4 million. This compares to an adjusted EBITDA loss of $5.1 million in Q3 2024 and an adjusted EBITDA profit of $2.2 million in Q4 2023. GAAP loss per share in Q4 was $0.07 compared to a GAAP loss per share of $0.10 for Q3 2024 and a GAAP profit per share of $0.03 for Q4 2023. Non-GAAP loss per share in Q4 2024 was $0.02 compared to a loss per share of $0.03 in Q3 2024 and a profit per share of $0.06 in Q4 2023. The main difference between GAAP and non-GAAP loss per share was due to stock-based compensation, depreciation and amortization expense and expense relating to a certain batch production incident. I will now turn to the full year 2024 results. Total revenue for the year 2024 were $57.9 million, exceeding our guidance of between $57.2 million to $57.5 million. This compared to full year revenue from 2023 of $84.2 million. Revenue from the cross-industry business were $36.3 million, of which Acroname contributed $3.4 million compared to $57.4 million in 2023. This decrease was due to customer working through excess inventory, which slowed the pace of orders as well as the weakness in their end markets. Automotive business revenue was $21.6 million, down 19.4% from $26.8 million in 2023 due to gradual price erosion and a reduction in the number of units sold to Mercedes-Benz. GAAP gross margin was 59.2% for the full year 2024 compared to 62.5% in 2023. On a segment basis, 2024 gross margin from the cross-industry business was 71% and gross margin from automotive was 39.5%. This compares to gross margin of 77.1% and 31.1%, respectively, in 2023. The increase in 2024 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 and lower fixed cost absorption. Non-GAAP gross margin was 62.9% for the full year 2024 compared to 63.9% in 2023. Full year 2024 operating expense were lowered, reaching $75.6 million compared to $79.5 million in 2023. The year-over-year decrease of $3.9 million in OpEx was driven by a decrease in R&D expense, mainly due to the efficiency plan we deployed at the end of Q3 2023. R&D expense decreased by $7.7 million due to a $2.2 million decrease in payroll expense, a $3.3 million decrease in IP-related expense and a $1 million decrease in chip tape-out expense. On the other hand, operating expense were negatively impacted by the increase in SG&A expense in the amount of $3.4 million year-over-year, mainly due to a $2.2 million expense relating to a certain batch production incident recorded in 2024. Moving to net loss and adjusted EBITDA. GAAP net loss for the full year 2024 increased to $36.6 million from $19.7 million in 2023. Adjusted EBITDA loss for the full year 2024 was $21.1 million, a decrease compared to $10.3 million in 2023. GAAP net loss per share for 2024 was $0.35, a decrease compared to $0.90 in 2023. Non-GAAP loss per share for 2024 was $0.15, a decrease compared to $0.05 in 2023. Now turning to the balance sheet. We ended 2024 with a strong balance sheet with cash, cash equivalents and short-term deposits totaling $131 million and no debt. This compares to $133.1 million at the end of Q3 2024 and $142 million at the end of 2023. Our working capital at the end of the quarter was $133.6 million compared to $136.1 million at the end of Q3 2024 and $158.8 million at the end of 2023. Our inventory as of December 31, 2024, was $10.2 million, down from $11.7 million on September 30, 2024, and $13.8 million on December 31, 2023. Maintaining a robust balance sheet allows us to execute our strategy, fund our growth plans and position us for sustainable profitability. During 2024, we completed the acquisition of Acroname for a total consideration of $7.8 million in cash and potential earn-out of up to an additional $7.2 million that should be paid during 2025, depending on the achievement of certain revenue, EBITDA and cash flow targets in 2024 and 2025 and the development of a certain product by June 2026. The company is actively looking for more acquisition opportunities with a focus on companies generating revenue with a clear path to profitability, particularly in the ProAV and the industrial machine vision markets. In addition, we recently announced another share repurchase program of up to $15 million following the completion of a $10 million program we announced in late 2024. The new share repurchase program reflects our confidence in the company's long-term growth and commitment to enhancing our shareholders' value. Now I would like to provide our guidance for the first quarter of 2025 and the full year of 2025. For 2025, we expect our annual revenue to be in the range of $71 million to $76 million, which represents a year-over-year growth of 23% to 31%. We expect Q1 revenue to be in the range of $16.3 million to $16.6 million. We expect gross margin for Q1 to be in the range of 60.8% to 61.3%, and we expect adjusted EBITDA loss in Q1 to be in the range of $4.5 million to $4.2 million loss. I would like to remind you that our 5-year plan, which we presented in November 2024, set our long-term financial goals. We are targeting that by 2029, our revenue will be in the range of $220 million to $300 million with gross margin in the range of 50% to 60% and EBITDA margin in the range of 15% to 20%. I'll now turn the call back to Gideon for his closing remarks before opening the call for Q&A.

Thank you, Guy. We believe that Valens Semiconductor is well positioned for a return to growth in our target markets, leveraging our industry-leading technology and robust balance sheet. We remain committed to executing our long-term strategy to drive renewed growth and profitability. Before opening the call for questions, I want to express my gratitude to the entire Valens Global team for their ongoing commitment and dedication. With that, I will now open the call to answer your questions. Operator?

[Operator Instructions] The first question is from Quinn Bolton of Needham & Company.

It's Neil Young on for Quinn Bolton. So within the cross-industry business, which end markets are showing the strongest demand in the near term? Are there any showing weakness? And then also looking forward, how should we think about the growth trajectory for this segment throughout 2025? And then I have a follow-up.

Thanks for the question. And the answer is not simple. The answer is mixed, and I will try to simplify it. There is the -- we have the traditional audio-video market, which we are a strong player, and this was the market that suffered from weakness in the past year. Yet the market have new opportunities, which are very natural for us to continue such as the huddle room, the small conference room and all the traction that is to connect the cameras, which is just below the TV to the room. This is a market which is a growing market for us. And in a sense, it's a kind of a low-hanging fruit because it's a natural progress for our customers. When we speak about industrial market, we definitely speak about larger magnitude, but it's not as fast as not a natural growth because some of the customers are new customers. So on one hand, you have more demanding market. We answered a very painful need, but it's a market with a different characteristics. So if you look at the market, the traditional ProAV, the new AV opportunity, which is the conference room and the market of the machine vision, I believe there is -- the differences will be about the timing, about the magnitude and sometimes longer time is also longer magnitude, which is nature in this case. But in general, all 3 of them are very appealing to us, and we're very much looking forward for all the 3.

Okay. Great. And then could you walk us through the key drivers behind the gross margin guide for the first quarter? And then additionally, do you see this level sustaining beyond the first quarter? Or should we expect any fluctuations in the margin profile throughout the rest of the year?

So for the CIB, we've seen a product -- specific product shift. It might be changed in the following quarters. For the automotive, we think it will be more sustainable because we were able to optimize the cost structure of the device, of the chip, and this is why we believe it will continue in the following quarters as well. And the overall -- the average gross margin of the overall company is very much dependent on the ratio of the revenue between the CIB and automotive. So -- and it's yet to be seen.

The next question is from Rick Schafer of Oppenheimer.

This is Wei Mok on the line for Rick. Congrats on the results. For my first question, in your prepared remarks, you talked about emerging from the bottom of the cycle. I was wondering if you can expand on this. Anything you can share on customer demand today compared to 90 days ago? And what are you seeing that gives you confidence in this outlook?

Okay. Thank you very much for the question, Wei. And the answer here is as follows. We have some access and we speak with our customers to learn from them what they sense from the market. And we -- some of them have obviously suffered from the same weakness in the past year, and they are our sources to know the recovery of the market. So this is one source, and this is one of the reasons for this optimism. The other source of the optimism is that we're actually not looking only in the same market that we did before. And we add to the market we had before also the connecting the camera to the room and the USB-C connection, our product VS6320, which represents new opportunities for us. One of them we announced a few weeks ago about the collaboration with Sennheiser. And we hope -- and we are working on this market very hard. And this is a natural growth of this market, which I think we prepared ourselves well enough to be positioned well for this market. So the answer is both the source of our customers that share with us optimism about the recovery that they see. And this is actually the best way for us to know what happens in this market because they are the ones that are sensing their customers and their channel. And the other is the product road map that enable us to penetrate other segments of this market, which we didn't haven't been before.

Great. That's good to hear. And for my second question, I want to shift over to Auto. In December, there was an M&A announced for one of your competitors in the in-vehicle connectivity market. I was wondering if you could share your thoughts on this? How does it change the competitive landscape? And how do you see A-PHY positioned to compete against them?

Yes, we definitely sensed this M&A. We are not here to explain every M&A and the logic behind it. We are very persistent that whenever you go out with the resolution and the bandwidth, the problems are different, and we are very confident that A-PHY is the best and by far, the unique solution to cope with high bandwidth with unshielded cables. And the fact that one company been acquired or the second company being acquired that represents a derivative or what's supposed to be a derivative of Ethernet doesn't confuse us. I can tell you something we said it in the past. We could go with the standard very easily. For us, it's a definitely subset of complexity of what we chose to do. We chose to go on A-PHY not because we just look for the highest technological barrier. We chose on A-PHY because we predicted that the market when they go on higher resolution and the big higher bandwidth and the ADAS system wants to cover more potential accident cases, they would have no chance but to have more data and more data is more bandwidth and more bandwidth is more exposure to noise. And Valens' ability to do it is unbeatable in a big, big gap. And we're always welcoming companies to challenge my sentence here and my declaration here. And yes, here, we hear news and definitely, every company has to do to maximize their ability and their presence. At the end of the day, there is marketing and there are chips. And it comes chip against chip, semiconductor against semiconductor, we believe we are not winning in points. We are winning in knockout. And the 3 design wins we had are people who have far easier and more access to any other technology than to us, and it simply failed, and they came to us.

The next question is from Suji Desilva of ROTH Capital.

So maybe perhaps on the Auto side, you could update us on the 3 European OEMs. And just remind us of the L2 or L2+ the programs and what the time frame expectation is there? That would be helpful.

Okay. Suji, good to see you a while ago in the show -- in the show. And the answer is as follows. We have dates, and I will tell you what we predict it is. But I want to say a statement. We are working in the automotive industry. Automotive industry, sometimes there are delays which are dependent because of a different total component relating to a seat of the car and postpone the whole car. And we are subject to this. So we have the date, but to have the date, we have expected that we'll start to see chips shipped and embedded in the cars within end of 2026. It can be a little bit earlier or later, but that's what we're hitting for. But this is this market. And I guess everyone knows automotive, know that's very hard to predict the exact date. It has also an advantage. It also lasts more because of that. So actually, from the end of the day, what you think is actually will be out of the design win after several years, it also takes more time. So the long tail is also longer. So that's -- who wants to play in the automotive industry, that's the game, and we decided to play.

Okay. And the cars were L2, L2+, can you, just to clarify or L3?

I will tell you that you will be very happy to drive each of them.

Okay. Good to know. And then great. And then maybe switching over to the industrial side, the medical imaging, what's the timing of that opportunity? And are you using go-to-market partners there for -- to target that market?

Okay. Well, I must say that the medical, and I must admit is a market that came to us. We were not proactive in meeting this market, and we are very happy about the market been approaching us because the unique need that seems that we have here. When we had the meeting in New York with the investors, we were -- put it many, many years ahead. I'm today more optimistic that it will be earlier than I said, but it will be -- I don't have enough information to give a date, but I would say it's earlier than what we thought significantly.

Okay. Great. And then maybe lastly, Gideon, just -- you said acquisitions are an important part of the strategy. How is the environment for targets, valuations? Just any thoughts there as to how the opportunity is right now for you guys?

There are different opportunities. Some of the opportunities are around companies that made many M&As and found out that they are serving too much of debt and they are selling some of the activities that were not merged very good in them, which is one kind. And the other are companies which are -- might be good companies, but VCs, which are tired of being so many year as the company or family businesses that are -- there are no inheritance and no next generation to take it. So a lot of -- both the AV and the industrial are not VC backed and not private equity backed. It's a lot of family businesses and the nature of family business is different than those which we are far more aware on the public market and VC and all this chain. So -- and a lot has fluctuated. So we don't see very big change -- very large changes in the expectation for price or the willingness to sell. For good and for bad, it's the same market. It's less volatile than markets that are exposed to pension funds, stock market, VCs, private equity and so forth.

The next question is from Dave Storms of Stonegate.

I wanted to start by asking about maybe the cadence of your guidance for 2025. Should we expect a gradual ramp through the year? Or are there other variables that could lead to a step-up that we should keep in mind?

Can you -- I skipped some of the words. He's asking about design wins in 2025?

Cadence of your guidance in 2025?

Oh! our guidance. Okay. Let's guide, please.

So we did not provide -- we provide overall guidance for the year, and we provided the guidance, which is $71 million to $76 million of revenue. We provided the guidance for the first quarter, $16.3 million to $16.6 million. We did not provide on the following quarters. Generally speaking, I would say that we expect some ramp in the second half of the year because, for example, the 6320 designs that are expected to be matured and released to the market -- commercialized to the market during the second half of the year. But this is currently what we could say.

Understood. And then just on the CIB, curious as to what you're seeing in the new customer acquisition environment and maybe see how you see that evolving over 2025 as some of this inventory digestion takes its course.

Well, as I'm -- first, thanks for the question. And as I said before, the inventory digestion, we see it recovering. And we think 2025 will be between high part or almost not the total recovery of the market, but the market is recovering. And so we see the recovery, and we feel there are digestion of inventory in most of the customers, not with all of the customers, but with the majority. Some of them are at the level of 2019 now, some are not. But in general, we see that the inventory crisis is behind us and picking up back.

[Operator Instructions] There are no further questions at this time. Mr. Ben-Zvi, would you like to make your concluding statement?

Yes, please. I would like to thank you all for joining today and for the fourth quarter and full year of 2024 earnings call and for your continued support, interest in Valens Semiconductor. And I'm sure and hope that we'll meet again in our next earnings call and looking forward for this interest in Valens, and thank you all.

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