Valens Semiconductor Exceeds Q3 Revenue Guidance with Sixth Consecutive Quarter of Growth

Valens Semiconductor Ltd. (NYSE:VLN) delivered third-quarter 2025 revenue of $17.3 million, significantly surpassing 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 challenging market conditions in certain segments.

GAAP gross margin reached 63.0% during the quarter, exceeding company expectations while showing a slight moderation from 63.5% in the previous quarter. The non-GAAP gross margin stood at an impressive 66.7%. The company also reported an adjusted EBITDA loss of $(4.3) million, substantially better than the projected $(7.4)–$(6.8) million range, indicating improved operational efficiency and cost management.

The Cross-Industry Business segment generated $13.2 million in revenue, representing approximately 75% of total revenues and showing sequential growth from $12.8 million in the second quarter. This performance was largely driven by strong adoption of the VS3000 chipset in professional audio-visual applications. Valens expanded beyond ProAV by announcing the market's first end-to-end camera-to-processor MIPI A-PHY platform with D3 Embedded for industrial machine vision applications. The segment achieved a gross margin of 69.1%, up from 67.8% in the prior quarter due to favorable product mix.

In the medical market, Valens secured initial wins with three VA7000-based endoscopy products, including the industry's first single-use 4K colonoscope. These developments demonstrate the company's ability to leverage its semiconductor technology in high-reliability medical applications, though typical qualification timelines mean meaningful revenue contributions from this segment are expected to materialize over several quarters.

The automotive segment reported revenues of $4.1 million, reflecting sequential and year-over-year decreases from $4.3 million and $6.6 million respectively. Continued weakness in the automotive market, primarily driven by tariff impacts, contributed to this performance. Automotive gross margins decreased to 43.2%, affected by product version mix and operational expenses related to manufacturing line transitions. However, management expects gradual improvement in this segment over coming quarters as the A-PHY ecosystem progresses.

Financially, Valens maintained a strong position with $93.5 million in cash, cash equivalents, and short-term deposits at quarter-end, despite $3.6 million in share repurchase expenditures. The company carries zero debt, providing financial flexibility to pursue growth opportunities and potential strategic acquisitions. This robust balance sheet positions Valens to weather market uncertainties while investing in future growth vectors.

Looking ahead, the company provided fourth-quarter 2025 revenue guidance of $18.2–$18.9 million with adjusted EBITDA loss projected between $(4.6) million and $(4.2) million. Gross margins are expected to range between 58.0% and 60.0%. Full-year 2025 revenue guidance of $69.4–$70.1 million represents approximately 20% year-over-year growth at the midpoint, underscoring the company's sustained expansion trajectory despite automotive sector challenges.

The company's diversification strategy appears to be yielding results, with growth vectors expanding beyond traditional markets into industrial machine vision and medical applications. This broadening of addressable markets reduces dependence on any single industry while creating multiple pathways for future revenue growth. The continued strength in ProAV, combined with emerging opportunities in medical and industrial vision, positions Valens for steady growth through 2026 as these newer markets mature and automotive conditions stabilize.