Valens Semiconductor Exceeds Q3 Revenue Expectations Amid Automotive Tariff Challenges

Valens Semiconductor Ltd. posted third-quarter revenue of $17.3 million, significantly exceeding guidance of $15.1–$15.6 million and marking the company's sixth consecutive quarter of growth. The performance represents an increase from $17.1 million in the second quarter and $16.0 million in the same period last year, demonstrating sustained momentum despite ongoing challenges in the automotive sector.

The company's GAAP gross margin reached 63.0%, exceeding guidance while easing slightly from 63.5% in the previous quarter. Adjusted EBITDA loss of $4.3 million was better than the expected $7.4–$6.8 million range, indicating improved operational efficiency. However, tariff impacts, particularly in automotive applications, continue to present headwinds for the semiconductor manufacturer.

Valens' cross-industry business segment generated $13.2 million in revenue, representing approximately 75% of total revenues and showing growth from $12.8 million in the second quarter and $9.4 million in the third quarter of 2024. This growth was supported by strong adoption of the VS3000 chipset in professional audio-visual applications. The company advanced its diversification strategy by announcing the market's first end-to-end camera-to-processor MIPI A-PHY platform with D3 Embedded for industrial machine vision applications.

In the medical sector, Valens marked initial successes with three VA7000-based endoscopy products, including what the company describes as the first single-use 4K colonoscope. The cross-industry business segment achieved gross margins of 69.1%, up from 67.8% in the previous quarter, attributed to favorable product mix.

The automotive segment reported revenues of $4.1 million, reflecting a sequential decrease from $4.3 million in the second quarter and a year-over-year decline from $6.6 million. Continued weakness in the automotive market due to tariff environment was identified as the primary driver of this decrease. Automotive gross margins declined to 43.2%, primarily due to product version mix and operational expenses related to manufacturing line transitions.

Valens expanded its presence in industrial machine vision through integration of the VA7000 chipset, enabling next-generation factory automation and inspection systems. The company's medical market advancement includes the first three VA7000-based product launches, with the single-use 4K colonoscope demonstrating reliability and image-quality advantages as programs progress through evaluation and development phases.

The company maintained a strong financial position, ending the third quarter with $93.5 million in cash, cash equivalents, and short-term deposits, despite $3.6 million in share repurchase expenditures. Valens maintains zero debt, underscoring financial resilience and readiness to pursue growth opportunities, including potential strategic acquisitions.

For the fourth quarter of 2025, Valens expects revenue between $18.2 million and $18.9 million, with adjusted EBITDA loss projected between $4.6 million and $4.2 million. Gross margins are anticipated to range between 58.0% and 60.0%. Full-year 2025 revenue guidance of $69.4 million to $70.1 million represents a year-over-year gain of approximately 20% at the midpoint.

The company's diversification beyond its traditional automotive focus into medical devices and industrial automation positions it for sustained growth as these markets typically offer longer qualification cycles but significant long-term revenue potential. While automotive market stabilization remains a near-term challenge, the expansion into medical and industrial vision applications provides multiple growth vectors for future quarters.