CEVA Inc (CEVA) 2002 Q2 法說會逐字稿

Good afternoon ladies and gentlemen and welcome to today's Parthus conference call, I would now like to hand over to , please go ahead and I shall be standing by for questions.

Good afternoon ladies and gentlemen and welcome to the Parthus second quarter inter results conference call today, I would just like to advise you before we start that the presentation for this conference call is available on our web site at www.parhtus.com if you care to download it or open it up now. Before we start I would like to talk about but I'd like to introduce the team firstly, online today is Brain Long, Chief Executive, Kevin Fielding, President and Elaine Coughlan, Chief Financial Officer.

Before we start this conference call and presentation today, I would like to remind you that it may contain forward looking statements and these statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those dated. These include uncertainties relating to the ability of management to complete the plan merger with Ceva Inc. and to successfully integrate the operations of the two top companies.

Uncertainties relating to the acceptance of the semi conductor intellectual property offerings, expansion of our business, quarterly variations in results and other uncertainties that are discussed in amendment number one to our 2001 annual report on form 20F filed with the SEC on July ninth of this year. I would now like to hand you over to Brian Long to open up the conference call, thank you.

Thank you Lorraine, good morning and good afternoon everybody and welcome to our second quarter, first half results. Firstly as you know this is our ninth quarter now announcing results of the public company and our ninth quarter to reason these expectations in the market place, what particularly takes this quarter to announce that we've hit a key objective of the company, which is the return to pro-former profitability over, ahead of schedule. And really the promise of the quarter is resulting from three key elements, firstly we continue to see sustained strong license and royalty growth licensing of 29 percent year over year, licensing.

And royalty of 39 percent, 37 percent which we think is a strong performance on the pin by seven new deals in the quarter a good performance against the back drop of Ceva industry at the moment, the second highlight really is the royalty performance of 193 percent sequentially and really we are seeing the benefit there of some of our key customers moving into early volume shipment of product using our technology, and thirdly we continue to have very tight controls on our costs and you'll see from our results costs down sequentially 20 percent and that's really against the back drop that we have not reduced in any significant way our key investments in R and D.

So we continue, the company to see strong demand for technologies and we've seen licensing in the first half of the year against all our platforms so we're happy that we're seeing good revenue flows from each platform but the thing that's really exciting for the company is the stream technology firstly where we're seeing our GPS solution NAS stream being deployed not just in cellular but also in defense of security applications and you'll see that three of our seven licenses for the quarter are in the NAS stream area, secondly new technology that was announced in the quarters we see again very strong uptake again for that technology and Kevin will talk in some detail about that later in the call.

We're also continuing to strengthen, and broaden our customer base. We now have seven of the top ten semiconductor companies licensing our technology up from six last quarter, and we had 55 global customers in total today. Strategically also the company we think is very well positioned. We announced, as you know the merger with Ceva the leading DSP supplier of licensable DSP's to the industry, and we announced on Monday that the IRS has approved that merger, and we're on track. We expect as we had previously guided to close their transaction in Q3, so in terms of the outlook for the company and for the sector.

Firstly the sector, then we talk about industry remains a challenging industry. The forecast for the industry in general for a flat year to maybe a down year with some recovery perhaps next year, so we have factored that into our outlook going forward, but against that backlog we continue to have sustained strong licensing royalty growth. We have now returned to profitability. We believe we have one of the most comprehensive portfolios of technology in the industry for licensing, and in addition we have now positioned ourselves with what we think is a very, very strategically important merger with Ceva giving us the leading DSP technology in the industry. So we think parts of Ceva is extremely well positioned for strong growth going forward, and very well positioned also to take advantage of any market upturn when it happens.

So with that I'll hand over to Kevin and Elaine. I think Kevin first and then Elaine to go through more details with you.

Thanks Brian it's Elaine here. I'd just like to maybe go through some of the financial detail supporting the performance of the company in the quarter.

As Brian said our return to profits is obviously significant given the challenging environment that we're still in. If you'd like to move to slide four, one of the three factors that Brian outlined is obviously the performance of the licensing business within the quarter, and the fact that despite that challenging environment, and the fact that it still remains difficult in terms of signing licensing deals, and also the time to sign, to signature, to closure is still slow.

We manage to sign seven licenses across the spectrum of our technologies in the quarter. As Brian pointed out GPS really did have a stellar performance in the quarter. Three of those seven deals were GPS related, and all of the GPS deals were in excess of a million dollars. We also though continued to license the other technologies in our portfolio, and managed as Brian said to add another top-ten semiconductor company to or customer base.

Moving then to the second aspect which is really the acceleration in the royalties within the quarter on slide five you can see that royalties grew from $260,000 to just a little under $800,000 sequentially so that's almost growth which was quite an impressive performance again given the environment, and that increase is driven by a number of factors. One is obviously is the number of customers shipping.

We now have five customers shipping products in the quarter, and that's up from two customers, and we also saw a very good performance from obviously the product in the quarter feeding through to royalties. Again the pipeline for products coming to production remains good and strong particularly on the Bluetooth front but we'd remain reasonably conservative and cautious on our forecast outlook for royalties just given the limited visibility we have given the limited visibility that we have, and the fact pattern that we have is quite short on royalties.

Moving to slide six looking at the impact that the lining of royal performance has had on our overall mixed and gross margins, you will see on slide six that gross margins expended from 76 percent up to 80 percent sequentially and again that is driven principally as the result in the change mix 91 percent of the business now lining on royalties. Royalties are now seven percent of overall revenues that is obviously from a provability point of view, given that they carry effectively 100percent gross margin. And that gross margin of 80 percent is ahead of where originally would have expected overall gross margins. As you know we have talked previous about a 70 percent overall gross margin target.

And then finally looking at third component that Brian outlined which is obviously the cost base. On slide seven you can see the total operating expenses year on year have declined 24 percent and amount to about $9 million in the quarter. We have had a cost management program ongoing in the company scene July 2001 and sequentially each quarter scene then we have being delivering results. Obviously in Q2 the impact of the transfer of the team and and the investment we have made in two and a half to counted for most of the reduction in the R&D line. R&D is about, between 60 and 70 percent of our spend so obviously this is the area where you see the biggest impact and also from a R&D prospective within the quarter we have obviously ramped up other product developments which Kevin will talk about, particularly in the area eight zero two point 11. And we have done that principally to R&D base Ireland in partnership with on the software side. So what we are seeing is our run rate going forward in and around $6 million R&D spend that you see Q2.

So moving on to slide eight. In summary graphically you can see you can see the impact of the combination of licensing holding up well, really delivers the profitability as I said 91 percent now of the business is a high margin revenue stream. And alongside cost control has delivered profit ahead of schedule would have expected to originally to break even in Q3. Looking on the balance sheet on slide nine.

Cash remains strong we have $114 million cash on hand, cash out flow on the operating line in the quarter within our pervious range of guidance one point nine million that also includes about $6 thousand of related expenses so the operating was probably closer to one point three million. Deferred revenue grew nine percent sequentially and accounts receivable reflecting the activity within the quarter. DSO did increase from 36 days to 46 days really a factor, a result rather of two factors one the signing of deals, which was similarly towards the back end of the quarter. And this is the level of activity within the quarter. And two the timing of payment.

And then finally slide 10. Looking at the outlook I think we are obviously cautious on our outlook giving the picture. The feedback from our customers is that there are expecting flat to modest increases in the short term. And obviously Brain has outlined the SIA growth forecast, which are range of plus three to minus six percent for the year. So on those circumstances we're obviously a lining our forecast in line with that macro picture, and we expect in the short term for flat revenues with our profitability intact. So with that I'd like to hand over to Kevin for some of the operational and technical details.

OK, thanks Elaine. Really I want to hit on three points very quickly. First one we've been asked to try and explain a little bite more where some of our technologies are on the adoption curve in terms of product life cycle and also the relationship to royalty, so we will try and do that over a couple of slides. Secondly, to just give a quick update on 802.11 which is an exciting new opportunity and finally to rap up with a status report on the Ceva merger.

So if we look, if I can direct you first of all to slide 12, and what we tried to do here is put in prospective that there really three different phases for the technology that we're licensing. Platforms like Media Stream and Blue Stream have been around for quite a while. We did our first Media Stream license at the very end of '98, and it peaked in '99. And these are the platforms that today very much as we refer to as cash out there, there high margin licensing business and there very much driving the royalty stream that Elaine referred to earlier. For the product like the X box, and the XG product and so on are now generating royalty streams for process . But also its important to point out that these platforms are still licensing and for example Bluetooth and Media Stream contributed I think four of the licenses that we've done so far this year, so there's still contributing both on the royalty and licensing side.

The current kind of stars of our portfolio I guess would be info stream and especially the product as Brian mentioned three out of seven of the quarter licenses were done Nap stream, and these are performing exceptionally well for us. We have a very well product obviously in info stream with unique in building capability, and also there's huge demand for out there from both the cellular industry but also for defense and security.

And then finally we have what we would classify as the kind of new entry or earlier stage licensing products 802.11 is a very good example there where we're just starting to see the early stage of licensing business. In fact today about 25 percent of our sales pipeline is made up with 802.11 opportunities that we're working aggressively right now.

If you move on to the next light, what we've tried to do here is that when graphically, a little bite where the relationship between the early licensing of these products and the actual royalty flow. As you see this quarter our royalty revenue actually tripled over last quarter, and what your starting to see is the early ramp now in royalty revenue stream from products that are shipping based upon license deals that were properly done back in '99 or early 2000. So for example in '99 we executed about five deals, royalty baring deals, we did a further 26 in 2000.

And today we have, we've just gone from two to five of our customers actually shipping product, so we're very much at the early stage in terms of this ramp. Media Stream which was the first product that we've licensed to count for four out of the five of our customers that are shipping today. And Bluetooth repeat in 2000 as a licensing platform and we expect to see a significant contribution to royalty at the end of this year from Bluetooth script. So you'll see obviously than a similar kind of trend with the infra stream and answering products which really went through first licensing, grand it's a little bite misleading both for infra-stream and Nap stream in 2000 and you expect to see the royalty stream from those, flow from some where between 18 months and properly two and half years, depending on the speed of adoption there.

OK, so hopefully that helped to explain a little bit you know why we are suddenly seeing this ramp-up in terms of royalty stream.

The second topic I wanted to address, site 14, just talk to you a little bit about 802.11 and many of you have talked to us offline about the sudden surge in interest in 802.11 and indeed we are seeing this very much in the licensing sector, as I say it accounts for 25 percent of our sales pipeline today. It is a very tremendous news out in the market there, in terms of adoption of technology. have suggested that there will be 20 million PCs, really from about one and a half million last year going into the market and that number would double in '04. So great expectations on this market.

Now of course 802.11 is a natural successor to Bluetooth and Parthus has been the number one provider of Bluetooth technology into the industry and so we are looking to really take on that same mantle in the 802.11 area with our innate stream platform. as I say with a very strong pipeline, we are also looking to invest a lot of R&D in the areas of co-existence between Bluetooth and 802.11. One of the key areas which is hampering adoption right now as well as security issue. So we will talk a little bit more about that probably when we do our next analyst teach-in.

On site 15, just to put things in prospective, obviously we are going through very much a semiconductor industry downturn today and everyone involved in semiconductor, be they equipment manufacturers, semiconductor providers, or the IT providers into the semiconductor industry are impacted, but I am glad to say that we have been able to consolidate our position within the industry over the past couple of years. The first column there is basically a ranking of the IP providers in terms of overall revenue and you can see that as it coming out of the 2001 book and Dataquest rank us as fourth largest IT company. But also I think quite telling is that we have also been the number one growing IT company over the past three years. So within the IT industry itself that is growing at somewhere in excess of 20 percent we think that we can keep up this kind of positioning in the top three or four of the industry and in fact at current run rates we are probably the third largest IT company in the industry. So it is probably a good into our merger with merger with Ceva, if you move on to slide 16.

Again motivation for this deal was pretty obvious, from a technology point of view, we are bringing together a company that has leadership in the (SP) core into the industry, a clear market leader with over 70 percent market share, with partners which of course has been the pioneer but also the market share leader in the area of application level platform IP. So from a technology point of view I think it is quite obvious the motivation here. From a financial point of view we have now two companies that obviously with extremely strong net operating profit and anyone who seen their results, they just came out a short while ago, will see tremendous bottom line performance. With partners which has, while we have reached bottom line profitability has had a tremendous track record in terms of growth. So the financial and technical motivation for this deal I think are quite obvious.

The next slide, I just want to very quickly point out to you some maybe obvious advantages also of this deal. Today both the Ceva unit and Parthus are actually involved in a number of negotiations, but one in particular with the same client for an end application that will require the DSP technology from Ceva and also require some technology from Parthus. And today that negotiation or negotiations around have to happen serially they're not going in parallel. The technical discussion around performance and functionality are a lot more complex because the customer is obviously dealing with two separate companies. There's no commonality in terms of tools and also they don't have the advantage of one stop shop obviously. So we see some significant advantages of even today in terms of this example of where we can accelerate our performance.

Of course we've talked previously about obvious examples of where we can apply a lot more sales than with which Parthus has today to what has been a very good product on the market from the DSP core side.

OK slide 18 is of a very quick update of where we're at in the process. Many of you will have an announcement, a joint announcement on Monday, which has confirmed that we have now received IRS approval on the merger. Though where we're at in the process is we're now pulling together the information to go in a circular to our shareholders and have a date already penciled in to go to court and after we've had our AGM and hopefully shareholder approval of this deal we would expect to close this deal after a court date sometime in September and close the deal ultimately before the end of Q3 as we had anticipated in April when we announced.

So finally just to wrap up on slide 19 just a couple of highlights again I think the three areas that have helped us return to profitability a quarter head of schedule is obviously continued licensing growth despite the downturn in the industry. Probably the faster than anticipated growth in the royalty stream which is delivering very high margin revenue to Parthus high costs management which has been a factor of our operations over the past 12 to 18 months. From the technology point of view we feel pretty confident, Brian mentioned that in addition to you know doing very well with platforms like actually all of our platforms have been licensed during the first six months of the year so regardless of whether they're early stage platforms or more mature all of them are still actually generating both a licensing stream.

We're quite excited about the prospects of and I think the next couple of quarters we'll be reporting back on progress within that market. And finally in terms of the merger we're making good progress there. We've received the approval so we believe we are well on track to hitting the timetable that we discussed in April and overall we believe that you know with this sustained licensing and royalty growth with now bottom line profitability and with what we believe is a very compelling product portfolio we're well positioned to take advantage of whatever industry upturn happens over the next couple of quarters. So thanks for your time we'll hand you back to the moderator and take your questions.

Thank you sir, ladies and gentlemen we'll now take questions. If you wish to register a question please press the number one on your telephone touch-pad, if you wish to withdraw your question simply press the hash sign. Once again it's the number one if you have a question and the hash sign to cancel. Please standby gentlemen while participants register their questions.

Thank you our first question comes from , please go ahead please state your company name.

Yeah hi everyone it's Phil Sparks here from HSBC. I had a couple of questions on competition firstly to do with the product and secondly on DSPs could you just run us through who your main capacities are in terms of licensing out technology. I mean, is it more competitive, less competitive than was?

It's broadly similar . First of all from a macro point of view there are generally two potential solutions for anyone in the market rate of 2.11.. One is to do with in-house and the alternative is to liscense. Though, that's a constant trade off that people make between . In terms of when people then decide that they are going to license there really I guess, three potential licensees in the marketplace today. One of those is Parthus.

One of those is the licensing division of and the third one is a small company in . So, that's generally who we ran into one of the other two now as it turns out that division of is rumoured to be involved in an acquisition situation by a major semi-conductor company. So that will probably reduce it to the two players, and ourselves.

In the main, the decision comes down to: Do we do it ourselves? Or do we licence in? If it does come to a licensing decision you know, we have proven in the Bluetooth space that we can dominate the market and you know,we did, we did an exceptionally good amount of business in Bluetooth. We hope that we can build upon that success with having proven ourselves in the the earlier stage.

Thanks for that. And on in terms of DSP, Motorola and there were going to make their call DSP available for licence in the future recently. Is that going to have any impact on DSP Group?

No. We, we don't think so, and quiet genuinely so this is a. First of all it is a little misleading. It is not a real licensing business per se. It's an ability to allow some of the larger players to consolidate their R&D spend in DSP's. So, you know, for example this is not going to be made generally available as a license core in the same way as the group family of is made available. Secondly, you have to look at where the target applications are and in the past Motorola.

And have been quite public in terms of the where does this target? It is much more targeted infrastructure high in . The DSP is from the line have generally been priced in excess of $200. So, this is not targeted at hand-held devices. It is not targeted at consumer or digital entertainment type application. It is very much the large infrastructure applications like playstations and so on. So no we don't really concern, have concerns there.

Great. Thanks very much.

Thank you. Our next question comes from . Please go ahead clearly stating your company name.

Yeah. That's a good question and it is something I didn't address and I should have in the earlier slides. The main reason why you do see continuous licensing of products like Media Stream or Blue Stream, you know, two years after the initial licensing is because we generally upgrade, improve, add new features, for example, in Bluetooth we've been moving from the initial implementation of Bluetooth to Bluetooth 2.0. In Media Stream we have moved from the initial and audio de-code type application on to other applications, for example the box uses the de-code capability but also uses sound capability, speak synthesis capability and so on.

So constant upgrading and improvement of the platform is an important element in maintaining the licensing stream of that platform.

OK. And how is that price going then, if they took a license in media stream originally as you add things like , what's the deal then with the customers-do they pay a small incremental fee each time or?

To be honest , what it tends to do is maintain the price point rather than necessarily grow it. The deal that we've concluded on Bluetooth over the first half of this year have been in part of-you know- about a half a million dollars each as an average price, which has helped to sustain the value of Bluetooth because we're adding a lot more . A straight Bluetooth license today would come in well below that figure, but now we're adding a lot more capability, we're adding the profile capability so, for example,-you know-depending on your application whether it's a handset or a headset or a PC application, we will actually a lot of the software that actually takes on that application for you, but what it does is helps maintain the licensing high point risk rather than necessarily increase it.

OK. Thanks very much.

Thank you. Once again ladies and gentlemen, if from number one, if you have a question council. Our next question comes from . Please go ahead please stating your company name.

: Hello. Could I just ask about average deal sizes in the quarter just gone.

Sure Paul. I think-we haven't disclosed specifically, but I think if you look at the three areas that Kevin outlined, GPS, as I said, has been particularly strong performer and all of the deals that we did in that area are all in excess of a million dollars. In terms of the deals that we do in some of the areas that Kevin just spoke about that has needed or Bluetooth, they are effectively 90 percent plus in follow-up, but typically they will be of a smaller deal size, they would be somewhere between 500 and 750K. New technology that we introduced some, typically started off in excess of a million dollars, but obviously 802.11 will be in that as typically as we start to sign licensees on that platform.

: OK. Thanks. Just on the royalties, could you just give us a bit more understanding as to how we actually define product shipping, I mean, is it defined in terms of the level of royalty and also specifically, if you have product shipping, does that mean a customer with most of the products or does it mean a customer with one product?

Well, first of all, the definition of shipping, Paul, usually in our contract we would give our licencees the right to distribute without triggering royalty payments up to probably a few hundred prototype, so the definition of a trigger event is generally when they go into volume production. Now, the second part of your question then was ...

remind what.

Well, if you have a product shipping does that mean you have a customer with one product, or does it mean that a customer may actually have multiple products.

It could mean-it could mean both, I mean if you look at the technology like Bluetooth, and most of our licensees, actually have at least one and several applications probably going in parallel. Certainly, the likes of and have already publically talked about several products using our technology. However, in the area of and in , generally they are more complex capable products and they would probably have only one such engagement going at a time.

: And just finally, on the outlook for royalties-you know- obviously, you are cautious and you have to be careful. We have seen some very, very strong growth now in the last couple of quarters. Could you just repeat, maybe, your sort of general views about the outlook for royalty in the short to medium term and indeed on the product shipments? Thanks.

OK, Paul, I think in the short term we would be cautious of giving the macro picture, but clearly, we have had a very good ramp and it's been quite a dramatic ramp sequentially from Q2 to Q3, and our expectation, although we genuinely won't know what the royalty as our customers report 45 days in arrears, so we will find out Q2 in the next month or two.

But we would expect given the fact that there has been more diversity there, five customers shipping five products, that we should be able to maintain royalties at the level they're at, at the moment. I think in terms of the downside risk that is always there in forecasting royalties because it's not something within our control and obviously the macro picture is still quite clouded, and as Kevin said, there is still obviously upside potential there in terms of other product introductions in the area of Bluetooth, but that's not something we would factor in at this stage.

OK, thanks very much and by the way congratulations on the achievement of your May 2000 target of cash break even.

: Thanks Bob.

Thank you. Our next question comes from . Please go ahead stating your company name.

Hello, it's here from & . This question really follows on and repeats some of the points made on royalties from the last person, but I remember you saying in the past that you were guiding for between ten and fifteen people shipping products by the end of the year. Is that something you still stick to, and if so, do you have any visibility on how quickly we will ramp from five up to the ten to fifteen? Also Ceva has a significant upfront prepaid royalty element under its current licensing agreements, is it likely that you are going to harmonize the royalty agreements going forward once the goes through.

OK Robert, first of all, yes we had previously guided that we had hoped to by exiting the year be up to ten to fifteen customers shipping. Now ten to fifteen customers shipping wouldn't necessarily mean we would have ten to fifteen paying us royalty checks because as Elaine explained we do gather this stuff in arrears but we are still quite confident in that. Right now we haven't started collecting Bluetooth royalties and so we have several of our licensees that signed up to us in 2000 and have yet to ship product and so that's where we have come in anticipation of growth in terms of the number of customers and the number of products.

Yeah.

We're holding guidance on that. The second part to your question is a very valid one. Ceva tend to organize their royalties around, first of all, a prepaid element, and a AA debit card that you ease into before you then start paying us on every , which is a very good concept. We haven't actually done that and it is an area where once the two companies do come together, yes certainly we will be discussing harmonization on that and whether it actually makes good business sense to have a uniformed licensing approach across the whole company.

OK, can we just have another question on the practicalities of the actual merger; obviously Parthus will be listed on initially. How quickly will you seeking a listing in London, is that going to be simultaneously or a matter of days, weeks or months? I don't know if you could comment on that.

Well, will be simultaneous. We will on the date for the transaction closed, link the on both exchanges on both and on London.

OK, and then finally, this is exactly a question about a recent product launch from Ceva, but I'm hoping that probably one of you, especially Kevin, will know a little bit about it. The expert silicone platform, the integrated solution was launched over the last couple of weeks. It was mentioned in the press release that went out that this would be both licensed and sold as a chip, does this mean that your moving into the area, it's just the, you know being talked about being sold as a chip, what does what exactly does that mean can you try and clarify that?

Yes, first of all, I'm not close enough to see the two to give an insider opinion on this but let me tell you what they've discussed with us, their development of Expert Stream followed very much what we have been doing around many of our platforms, where we take a generic piece of I.T and actually add a lot of the application specific technology around it and bring to a point where it's ready to actually go into production, we've done this ourselves with our media stream platform, we've done it with our platform and we've found that customers especially in Asia are actually wiling to pay a premium to get the design to complete to finish done, so that's really the approach that Ceva have taken here and again they think it's demand fro Expert stream they tell me is in Asia also, so that's really been the approach it is not so much a set up for a opportunity as much as helping the guys to get their product into market that much sooner because they're licensing in something that's ready to actually go into production.

Yeah, OK, fine, thanks very much.

Thank you once again ladies and gentlemen, it's the number one if you have a question. There appears to be no further questions Mr. Fielding, sorry we have a question from please go ahead.

It's with English and Capital, I apologize if this question sort of came up in the beginning because I just had trouble getting through to you but I just wanted have a quick word in terms of the outlook paragraph where you where talking about the saying that the second half would be flat and that your short term outlook would reflect that , is that effectively telling us something or should we be reading anything into that in terms of your own performance?

Andy hi! Elaine here, I think in terms of outlook what we're actually saying is we're looking at both the actual picture of what the industry is saying and one of the critical pieces of research as to where people think 2002 will end up is from the and they've effectively said that the range for this year is probably the maximum growth of six percent and perhaps a down year of three percent.

Listening to our customers we would effectively look at 2002 as being a flat year that's seems to be the feed back that is coming back and I think particularly in the short term we will just be very cautious of the fact and enjoy our outlook in terms of revenue growth in the short term it's going to be flat but with the profitability point stated in Q two our efforts and focus will be on maintaining those profits intact, in that kind of environment.

Is that essentially a bit of a shift from where you where maybe a couple of months ago?

I wouldn't think it's anything significant of a shift because really in terms of growth expectations it was always going to be, if you look back at quarterly trends recovery was all packaged to the second half of the year particularly strong in Q four and I think seasonally now Q three traditionally is always also our softest quarter, so it's probably back a few shakes but nothing substantial, I don't think it's material change in our outlook.

OK. Thanks.

There appears to be no to other questions, Mr. Fielding, I'll hand it back to you for any closing remarks.

OK. Actually Brian maybe you would do a quick rap up.

OK, Kevin, thank you, and thank you for your questions. Just to maybe summarize, we think, in terms of, given the backdrop of the industry right now, in terms of the licensing momentum we have got on the royalty growth, the company is extremely well positioned. We think in terms of our offering, we are very well positioned also, and we are particularly excited about the Parthus Ceva merger, which we think will really strengthen the company, and enable us to offer the leading DSP technology against the licensing market. So with that thank you very much for joining our call and we look forward to talking to you again.

Thank you. That includes today's conference, ladies and gentlemen. You may now disconnect your line.