Last week, Israeli company Valens Semiconductor (NYSE: VLN), which provided connectivity solutions for the audio-video and automotive markets, joined the list of technology companies laying off employees. The company reported plan to improve operating efficiency by cutting its workforce by 15%. The move is supposed to save $9 million annually, and to be completed by the end of the third quarter.
At the end of 2022, Valens had 313 employees, most of them at its Hod Hasharon headquarters, which means that almost 50 people will be laid off. It should be pointed out that the company’s workforce grew by 50 people in 2022.
The layoffs come as Valens cuts its guidance. The company has reiterated its second quarter 2023 guidance provided on May 10, when it projected revenue of $23.9-24.1 million and negative EBITDA of $3.7-4.3 million. For the third quarter, the company says that "revenues are now expected to reach a bottom, and to range between $14.0 million and $14.2 million, with recovery expected in the fourth quarter."
Full year 2023 revenue, which was projected at $97-100 million, is now expected to range between $83.8 million and $84.2 million, with automotive revenues contributing approximately 30%. This means that instead of revenue growth of 7-10% in 2023, the company now expects revenue to be 7.2-7.6% smaller than in 2022. Gross margin for the full year 2023 is now expected to range between 61.9% and 62.5%. The adjusted EBITDA loss in 2023 is now expected to be in the range of $16.5-$18 million, which compares with previous guidance of a loss of $13.6-15.4 million, and a loss of $14.9 million in 2022. The company reiterates its forecast that it will reach EBITDA breakeven by the end of 2023.
"Today we are launching a plan to improve Valens Semiconductor's operational efficiency. The more efficient use of our R&D and other operational resources will allow us to improve our progress toward profitability in the continued uncertain macroeconomic environment," said Valens CEO Gideon Ben-Zvi. "As we approach mass production availability of several new products for automotive and audio-video, we can now benefit from streamlining our development platforms."
"Looking at the second half of 2023, in the last several weeks we have been witnessing a significantly slower than anticipated pace of bookings and additional customer requests to push out delivery, due to their delayed inventory digestion. As a result, we are reducing our revenue expectations for the second half of 2023. Valens Semiconductor's long-term growth opportunities remain strong, as we leverage our core technology across the business segments we serve."
Valens became a public company on Nasdaq in 2021 when it was merged with a SPAC at a valuation of $1.1 billion. Like most companies that underwent SPAC mergers at that time, it has since lost a large part of its value, and it currently has a market cap of $241 million.
Published by Globes, Israel business news - en.globes.co.il - on June 12, 2023.