CEVA Inc (CEVA) 2003 Q4 法說會逐字稿

Thank you for standing by and welcome to the Ceva Q4 results conference call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (OPERATOR INSTRUCTIONS).

I must advise you this conference is being recorded today on Wednesday the 28 of January, 2004.

I would now like to hand the conference over to your speaker today, Barry Nolan. Please go ahead, Mr. Nolan.

Thank you, Christina. Good morning and good afternoon, everybody. Welcome to our Q4 and full-year conference call.

Two speakers this morning -- Chet Silvestri, our CEO. Chet will be talking about some of the highlights of the quarter and profiling some of the new technologies to expect from Ceva in the next quarter or so. Christine Russell, our CFO, will be going through financial highlights and Chet will conclude with outlook.

Before we commence, I must state that various statements in this presentation concerning Ceva's future expectations, plans and prospects are forward-looking statements which are subject to certain risks and uncertainties that could cause actual results to differ materially from those stated. Any statements that are not statements of statements of historical fact, including without limitation statements to the effect of the Company or its management, believes, expects, anticipates, plans and similar expressions should be considered forward-looking statements.

These statements are subject to a number of risk and uncertainties that could cause actual results to differ materially from those described, including the following -- (indiscernible) in which we license our technology (indiscernible) are experiencing a challenging period of slow growth that has negatively impacted and could continue to negatively impact our business and operating results; the market in which we operate are highly competitive and as a result, we could experience (indiscernible) sales, lower prices and lower revenues; our operating results fluctuate from quarter-to-quarter due to a variety of factors, including our (indiscernible) sales cycle and are not a meaningful indicator of future performance. We rely significantly on revenue derived from a limited number of licensees; and other risks discussed in Management's Discussion and Analysis of financial condition and results of operation factors that could affect our operating results in our quarterly report on Form 10-Q for the third period of 2003, which is on file with the U.S. Securities and Exchange Commission on November 13, 2002.

So with that, I'll hand over to Chet.

Thank you, Barry. During this call, I will be reviewing highlights of Ceva for the year 2003 and for the fourth quarter. I will also discuss some of the new product initiatives you can expect from Ceva in the coming quarter and provide some financial guidance for the coming year. Christine Russell, our CFO, will review our Q4 and 2003 financials in more detail.

To begin, we are pleased to report that revenues in the fourth quarter increased to $9.6 million, compared with $9.3 million in the third quarter.

Total revenues for the year 2003 were $36.8 million. In achieving this revenue for 2003, we executed 25 new licensing agreements and established or further enhanced our partnerships with industry leaders such as IBM, ST Microelectronics, Renaiss (ph), Infineon, Via, Broadcom and (indiscernible). We believe these accomplishments are solid evidence of the success and continued industry adoption of our DSP architecture.

Turning specifically to the fourth quarter, we completed eight new licensing agreements, six of which were for our DSP technologies and two for our application IP technology. This drove a record performance in DSP licensing for us. Our DSP revenues were up 40 percent sequentially over the third quarter, 50 percent over the second quarter and up 150 percent over the first quarter of 2003. This gives a general idea of the continued growth in our DSP core business.

Two of the licensing agreements in the fourth quarter were for our newly launched CEVA-X DSP architecture. The first licensee is a leading wireless handset manufacturer, and the second is a leading semiconductor manufacturer. The industry momentum behind our DSP architecture continued in the quarter with Broadcom and Spectrum (ph) both announcing wireless chipsets powered by Ceva DSPs.

A key part of our strategy is to expand our sales channel. In the fourth quarter, we launched our foundry program and signed our first agreement in this program with UMC. This will enable Ceva to reach a much broader pace of customers, most notably in the Asia region, where customers can now utilize our DSP cores and achieve a much quicker time-to-market with reduced risk by incorporating these so-called hard-cores that have already been ported to the UMC process. As many of you know, UMC is one of the world's leading semiconductor foundries.

Also in the quarter, the unit volumes shipped by our licensees and the royalty dollars paid to Ceva continued to grow, reflecting our customers' continued success in their end markets, most notably in wireless handsets, digital multimedia and communications controller products.

Our Xpert integration division, which provides design and deployment consulting to our licensees, represented about 20 percent of our revenue in the quarter. The ability to offer our expert integration services is an important differentiator for Ceva.

So we close out 2003 with growth in our DSP business, expanded customer relationships, a new management team in place, key new products and a solid balance sheet.

We go into 2004 with an efficient, streamlined company focused on the fast-growing DSP market.

Now, let me take a few minutes to review the status of our product programs. There are four elements to our product strategy; first, to provide a portfolio synthesizable DSP course; second, provide a common, reusable plug-and-play framework that builds ground this DSP course. We brand this framework our Xpert Open Framework; third, we provide a portfolio of application IP solutions, which we branch as Xpert applications; fourth, our Xpert Integration Services help our licensees achieve better time-to-market and are a key differentiator for us, as compared to our licensing competitors.

During this quarter, the first quarter of 2004, we will launch three new Xpert applications solutions, Bluetooth, GPS and Multimedia. Our Xpert applications consist of full verified system solutions in both hardware and software which are pre-integrated with our Ceva DSPs. Delivered as a complete solution, they fundamentally reduce the complexity, cost of ownership and time-to-market for new-generation system on chips, or SOCs.

This week, we have announced Xpert-Blue, a fully compliant Bluetooth version 1.2 communications platform. We've already signed two licensees for Xpert-Blue, one in wireless handsets and the other for hands-free cell phone application in automobiles.

Later this quarter, we'll announced our Xpert GPS and Xpert Media products. Xpert Media, which we will be launching at the CAN (ph) 3GSM (ph) Congress at the end of this month, is a total digital audio and video application solution. Xpert Media delivers the complete multimedia solution for audio processing, video processing, including MPEG and the fast emerging H.264 standard and JPEG image processing. Xpert Media is targeted at markets such as wireless, multimedia processing and home entertainment systems, including digital TV.

Finally, we will also be launching our latest GPS technology called Xpert GPS. This will be a DSP-centric solution that will deliver performance and cost advantages over our existing GPS technology. We already have a strong pipeline of Xpert GPS opportunities.

Now, from a corporate standpoint, in this quarter of 2004, we have completed -- we will complete the final unified strategy and consolidation after the merger.

In Q4 of last year, we changed the name of the company to Ceva as part of an effort to streamline and consolidate our product naming and branding. We began the process of converting our stand-alone IP products to DSP-centric products. This impacted our GPS, WI-FI and Bluetooth products that were not DSP-centric. We have reengineered these solutions to be DSP-centric and eliminate the elements that were not DSP-centric.

So in Q4 of last year, we began the process from exiting from these stand-alone product businesses. These combined stand-alone businesses had a quarterly revenue rate of around $1 million and will no longer be contributing to our revenue, starting in this first quarter of 2004.

Having said that, with the growth that we're seeing in our DSP course, we expect to more than make up for the elimination of this revenue in 2004.

So with that, I will now handover to Christine to discuss in more detail our financials.

Thank you, Chet. Ceva reported a solid fourth quarter with total revenues of 9.5 million, up from 9.3 million the previous quarter. Licensing revenue for the fourth quarter was at its highest level this year at 6.6 million with eight new contracts signed in the quarter.

We grew our DSP business in 2003. DSP product sales increased 40 percent over the third quarter of 2003 and 150 percent compared to the first quarter of 2003. Our royalty revenues were up 23 percent to 1.4 million over the third quarter.

In volume terms, our licensees reported a total of 17.5 million units shipped, up 20 percent from the 14.5 million in the previous quarter.

Within the quarter, we had 17 customers shipping, which is one more than in the third quarter. These customers are primarily addressing the multimedia and wireless market.

While we expect royalty revenues to continue to grow on an annualized basis in 2004, they may not experience linear growth quarter-over-quarter.

Services and other revenues were stable at 1.6 million. We posted a gross margin of 85 percent, which is comparable to our prior quarter.

Excluding the restructuring charges, total operating expenses were up $900,000 to 6.6 million to reach 7.7 million in the third quarter. This plan to increase in operating expenses was driven primarily by R&D costs associated with the CEVA-X launch and one-time costs related to the rebranding of Ceva Incorporated, the company.

As Chet mentioned, in the fourth quarter, we realigned our resources with our long-term business strategies. We reduced headcount from 240 to 205 during the fourth quarter and correspondingly incurred severance charges. We also wrote off some intangibles and reserves for building leases that have become impaired due to underutilization.

We also exited certain stand-alone product lines that were not strategic to our DSP-centered focus. In total, we took a restructuring and asset impairment charge of 9.1 million, of which approximately 3.1 million was cash.

In the first quarter, we anticipate the remainder of restructuring cash usage to be approximately $1 million related to the fourth-quarter charge. As a result of this streamlining activity, we expect operating expenses will be reduced to a range between 7.7 million and 8 million per quarter, going forward.

Including the restructuring and impairment charge, we reported a fourth-quarter net loss of 9.6 million, or 53 cents per share. Excluding restructuring and impairment charges of 9.1 million in the fourth quarter, we recorded a net loss of 500,000, or 3 cents loss per share.

Now, looking back at 2003, the revenues were 36.8 million. We completed 25 new licensing agreements in the year with some of the world's leading semiconductor and electronic components companies.

Licensing revenue was 25.7 million, 70 percent of total revenue. Royalties for the year were 4.1 million for the full year, representing about 11 percent of total revenue. The $7 million remainder of revenues and 19 percent comprises services and maintenance agreements and integration consulting.

The gross margins were 84 percent for the full year.

Total operating expenses in 2003, excluding restructuring and impairment of 11.9 million, were 30.7 million. Including the restructuring and asset-Internet charges, we reported a 2003 bottom-line loss of 12 million, or 66 cents per share. Excluding restructuring and asset-impairment charges of 11.9 million in 2003, the Company was profitable at the operating line with net income of 98,000.

Now, looking at the balance sheet, cash at the end of the quarter was 59.1 million, down 4.4 million from the previous quarter. Of that 4.4 million cash used, 1.3 million was used in operations, including capital expenditures. The remainder of the 3.1 million cash used was in connection with the restructuring.

Our Days of Sales Outstanding increased from 77 days to 97 days in the fourth quarter due to the timing of sales within the quarter. The quarter was non-linear with about 60 percent of the sales booked in the last month of the quarter. This makes it extremely hard to collect on sales intra-quarter.

Basic shares outstanding were 18.2 million. Now, when the Company posts a profit, the fully diluted share count used to calculate EPS will be approximately 24 million shares.

Chet will now give you the outlook for the first quarter of 2004.

Thank you, Christine. So, the guidance for quarter one -- as I previously mentioned, exiting our stand-alone businesses has effectively removed approximately $1 million per quarter of revenue. Given that, we expect first-quarter revenues to be in the range of 9 million to 9.5 million. Gross margins are anticipated to be around 85 percent, and operating expenses should be between 7.7 million and $8 million. We are targeting breakeven in the first quarter.

For all of 2004, we are targeting topline, year-over-year growth of 10 percent. Fueling this revenue increase is the anticipated, continued strong growth of our DSP business. Gross margins should remain approximately 85 percent and we target to be profitable for the full year.

So in summary, I believe we're well positioned to achieve our topline and profitability goals for 2004.

With that, we would be happy to take some questions.

We will now begin the question-and-answer session. (OPERATOR INSTRUCTIONS). Matt Robison from Ferris Baker Watts.

Congratulations on the progress you're making.

Thank you.

I have got quite a few questions. I won't ask them all at once. I will let someone else take a shot at you guys. First of all, how many of the new licenses that you signed up were recognized in the quarter as revenue?

Well, we did eight licenses in the quarter and as you know, we do defer some of our revenue associated with the contracts to beat such deliverables as things like integration work and customization.

I know that there wasn't a big uptick in deferred revenue. Do you have to wait to invoice some of these new licenses or --?

Actually, the deferral of the revenue goes into two places -- not only deferred revenue on the balance sheet, but we also carry a backlog. When we can invoice for the integration and customization work and produce our deliverables, then we take the revenue out of our backlog and recognize it.

So we did have a couple of CEVA-X deals in the quarter, and some substantial portion of that was deferred either into backlog or deferred revenue.

Can you talk about backlog at all and book-to-bill and that sort of thing -- (multiple speakers)?

Backlog isn't a number that we discuss.

The two Xpert-Blue licenses you mentioned, were they included in the eight, or were they this month?

One was (indiscernible).

One of the two.

I will let somebody also have the floor for now.

Gerry Hennigan from Goodbody Stockbrokers.

In terms of the eight deals, were they single-use licenses (indiscernible) or were they multi-use? Can you give us some idea on the size of those deals?

We don't really break out the deal size individually. Those eight deals were single-use deals.

Okay. I kind of missed the metrics you gave in terms of your royalties. Units shipped and also the average royalty rate -- what was that during the quarter?

The units shipped were 17.5 million, compared to 14.5 million in the previous quarter. The average royalty rate was 8 cents.

One other question, if I can? I noticed, for example, on an absolute basis, your revenues in the U.S. have been declining while the revenues of EMEA and Asia-Pacific have been pretty strong. Is there any reason behind that?

We expect, as we've been saying, that Asia will continue to be a larger and larger percentage of our worldwide revenue.

Can you give us a breakdown, on a geographic basis, percentage, as to what the revenues were from the various areas?

Yes. The U.S. grew this quarter, so the U.S. is about 43 percent of the business. (indiscernible) was 30 percent, Asia, 27 percent.

Michael McCormick (ph) from Guilder, Gagnon, Howell (ph) Company.

Good morning, everybody. You were kind enough to break out the revenue into three components for the year. I was wondering if you could take those three components and tell us what the revenue would be if you just had your DSP or continuing business that you're focusing on today.

We don't break out our revenues by product line.

But this is not by product line; it's only your operations that are going to be core to going forward is what I'm thinking about. You discontinued some business.

We discontinued and we said that that was about $4 million worth of business in 2003 that --.

Right, Chet, but I'd to possibly break it out, that $4 million between the three product lines that you disclosed. You said 25.7, 4.170.

I think the best metric, Mike, that we use internally is continuing operations. What is the health of those continuing operations? The continuing operations in Q4 was the vast bulk of revenues in Q4. There is obviously going to be discontinued elements in that.

As Chet mentioned, that where all the growth is -- 40 percent sequentially over Q3, I think 50 percent over Q2 and 150 percent over Q1.

But if we were just going to look on an annual basis and we just said $4 million, we would take it out of the license line or would we take it out of the consulting line?

Half and half. It's pretty much half and half.

Could you kind of clarify -- the DSP revenue grew 40 percent sequentially. Could you give what percent was license and what percent was kind of consulting business there? License and royalty, compared to consulting?

I don't think there's much consulting necessarily in that line, that 40 percent growth. The 40 percent figure that Chet mentioned is the license and royalty. License and royalty, as you know, is 80 percent of our business.

And you gave it on a -- and on a year-over-year basis, what was the DSP growth, revenue-wise?

Q4 to Q4, it's actually --.

year-over-year that gets -- because now you're back into the merger. It's hard to separate what was kept and what was eliminated. It's not a very convenient comparison, I don't think.

The real metrical this year is when the organization was fully up and running. Q1 to Q4 is 150 percent. The figure is even higher for Q4 but that's not really a GAAP figure -- (Multiple Speakers).

There wasn't a stand-alone business before the merger; it was a division (indiscernible) and so the breakdown in revenue is not really apples-to-apples.

Do you anticipate being cash flow positive in the first quarter?

I expect that we will use about $1 million of cash to complete the restructuring, and we may use up to a million in operations and capital expenditures.

The million on the restructuring has already been reserved for, correct?

Right, but that's the difference between the P&L and a cash charge. So, we have certainly accrued properly for all of the restructuring. What we simply have is some delayed cash payments.

In the press release, you said that the DSP units grew 23 percent sequentially. Some of your competitors have reported more robust growth in the last couple of quarters. I know you record in arrears, so do you still think you are taking share in the market?

We believe we are. I'm not sure exactly the most recent results from TI; it's something less than 20 percent growth -- 18 to 20 percent growth.

I was referring to the prior quarter where they did in the high 20s because you guys report in arrears. That's what I was thinking about.

Yes, the numbers that you're looking at are Q3 shipments by our licensees. As Christine mentioned, volumes are up 20 percent and revenues are up 23 percent. So you know, it's certainly tracking in terms of the royalty line. As Chet mentioned, the licensing line is growing at a higher clip.

My last question and then I'll get back in the queue is how many of your current agreements that you have -- you had 17 in a mode of paying royalties -- but how many now are still in the prepaid mode?

Eight.

When will those eight be concluded in their prepaid mode? Do you have an idea?

It's very difficult to say. They all have different sort of volume thresholds. On average, we've been having one a quarter slip in to paying per-unit but it's hard to say, going forward.

(OPERATOR INSTRUCTIONS). Doug Whitman from Whitman Capital.

I apologize. You may have covered this already when you covered the linearity of the quarter. What's the expectation for DSO days, going forward, and particularly in the first quarter?

DSOs are comprised of a couple of things, as you know. It's not only the linearity of the quarter; it's the collectibility. I think that we're going to be able to bring those DSOs down substantially because the issue we had was strictly non-linearity. Over 80 percent of our Accounts Receivable is 30 days or less. So, to the extent that we can generate more sales mid-quarter, we will be able to collect on those sales.

Okay, so there's an expectation in the first quarter to reduce the Receivable days? So, kind of what I'm wondering is, is not the cash from changing the lines of business but the cash from operations (sic), the forecast is for a negative cash from operations. So if you're able to reduce your receivable days, you would obviously get a positive cash flow from that. Can you give us a little guidance on why the operational -- since you're running pretty close to breakeven --?

Sure. Well, we also, from time to time, have purchases of tools, and we don't finance those tools. Because we have a substantial amount of cash, we pay out of our pocket for those tools. These are things like Greenhills or synopsis tools, those types of things. So a good portion of the cash will probably go towards purchase of some of those tools.

Okay, so that is a one-time event (indiscernible) normal operating (inaudible) you would probably have around breakeven cash flow if you weren't making -- (Multiple Speakers)?

If we were doing that, yes. (multiple speakers).

Gary Mobley from B. Riley & Company.

Hi. Could you give us a little more detail on your guidance for royalty growth for Q1? Chet, I think you hit it on the head in saying that TI is expecting, or did post 18 percent sequential growth in their DSP revenues. Are you at least expecting to match that in Q1?

In terms of our unit-volume growth, absolutely. So, the thing you have to think about -- or maybe I should describe for a minute -- is that our unit volumes will continue to grow and we think pretty strongly. But the way our royalty agreements are structured, there are price-break points when our licensees achieve unit-volume trigger points, if you will. That can actually creates some lumpiness in the amount of royalty payments we receive every quarter.

For example, if one of our licensees crosses a 10 million-unit cumulative barrier, (indiscernible) royalty amount might drop from 8 cents per unit to 6 cents per unit across all of their units. You have to be careful how you do the math on that.

I don't necessarily expect our royalties -- while they will grow for the year, I don't expect them to be linear.

A second factor that comes into thinking about the royalty payments is that some of our customers have nonlinear shipments too. So they have lumpiness in their shipments, which reflects in the royalties paid they report and pay to us.

Would you then care to provide any mix guidance for Q1 between royalties, license and services?

No. (LAUGHTER).

We haven't looked at it in enough detail to really have a good answer for you yet.

Just in summary, while we do expect our royalties to grow for the year, we do expect them to be lumpy from quarter-to-quarter.

Point taken. (indiscernible) new agreements, is the prepaid mix for those eight license agreements consistent with recent agreements? In other words, I just want to determine whether or not you guys are borrowing from future royalty to hit license numbers?

So, as we've always said, we are transitioning everybody to our new approach, which is deemphasizing prepays -- absolutely. Everything is consistent with that.

Since the launch of a StarCore's newest DSP course, have you seen a change in the competitive landscape for the better or for the worse?

We have not. Now, there's a lot of noise in the marketplace, in terms of PR, and we do see, at our prospects and licensees, continued discussion about StarCore, but we haven't lost any deals to them that I am aware of, not one.

The last question and I will it open back up -- as part of your foundry program -- you closed the deal with UMC;. What is the reporting fee that you are charging UMC?

We don't break it out, but there is a fee that more than covers our cost, let me put it to you that way.

Okay. Thanks, guys.

Matt Robison from Ferris Baker Watts.

To follow up, can you talk about concentration and royalties if you've got how many customers that might be delivering 20-plus percent of your royalties?

There are a few large royalty payers, around about four I think are what I would call significant royalty payers right now, much less than the others. The rest is (inaudible).

Can we use the 80/20 rule with those four?

Without looking at the actual -- (multiple speakers).

Not quite. There is a top four and then there's a, (indiscernible), I'd say another four again. The mix, in terms of where they are shipping to, is consumer multimedia, hard disk drives and wireless, wireless being the largest segment.

Within a six-month period, we have customers who enter the royalty-paying stage and other customers who exit it.

Sure. We've seen a lot of that in the last couple of years, I think, between the legacy business and (indiscernible).

(indiscernible) we've got four big, another four significant, and then all the rest.

How would you characterize it at the start of the year? Did you have that many big or was it more like one or two?

No, the four that are big now have grown throughout the year and they are ramping.

So they are early?

They were there early but consistently over the year, they have grown.

Sean Murphy from Noruma.

Could you step through the impact of currencies on revenues and costs, please?

Sure. What we have done is actually form a natural hedge, and so we take a look at our expected payables, in terms of euros, and we do have some in shekels as well. We made a purchase on our balance sheet of the euros and shekels and that has formed a pretty nice natural hedge, so we expect that FX will be minimized on our P&L.

Okay, thank you. Could I also ask about the likely sales cycle for the new architecture? Let's say, how long has it been from introducing the customer to the concept and then getting them to sign up? Is it a natural sales cycle? Does it happen fast because they were already adopting the old stuff? What's your experience there?

Well, we've got only one quarter of experience under our belt, but I don't see any difference in the sales cycle. So, it looks to be about the same sales cycle for CEVA-X that we've experienced for Teak and TeakLite.

One of the other things that I think is important as well is we don't see a dramatic fall-off in our Teak or TeakLite business either because today, we have customers that are actually evaluating whether to put two Teak cords on a single dye or to upgrade to CEVA-X for a more powerful Ceva core. The economics of that decision vary by customer to customer. Some actually will do both, you know, will go either way. So, the cycle will remain more or less the same and the product portfolio will-- all of the portfolio will remain vibrant, we believe, throughout this year.

Michael McCormick from Guilder Gagnon Howell (ph) Company.

In the last conference call, you started to give some idea about your pipeline of activity. Maybe you could kind of do the same -- kind of how you see trends in the pipeline.

How we see trends in the pipeline?

Yes.

Overall, I'll say that our sales pipeline is up significantly. In the pipeline are not only continuing interest in Teak and TeakLite products, but a significant number of CEVA-X prospects, as well as other of our application IP technologies, most notably GPS. They are all very strong in the representative pipeline.

Thank you.

(OPERATOR INSTRUCTIONS). David Funnery (ph) from Heartland Funds.

Yes, Chet, I was a bit confused by one of the comments you made. I think you said that, as certain people hit certain volume requirements, the royalty rate drops and you gave the example of from 8 to 6. But I thought you said also that it was retroactive -- i.e., you would have to give them a rebate on all of the 8 cents royalties they paid? Is that --?

No.

So it just drops from 8 to 6 on a go-forward basis?

They report and pay their royalties one quarter in arrears, so they haven't paid anything for the previous quarter. What they pay will be determined by the volumes they ship and any break points they might have crossed.

Okay, but there is no -- after they -- when the cross a breakpoint, you don't have to go back and reduce it for all of the prior units that they shipped? That was the impression I was left -- (Multiple Speakers) -- that didn't seem right.

No, it's only forward-looking.

Great. Secondly, with the write-off, or with the restructuring and asset impairment charges that you took, will that reduce the amount of intangible amortization?

Yes, we did write off a portion of our intangibles and it will reduce the intangible amortization.

Very good. Thank you.

Sean Murphy from Nomura.

Just on the revenue guidance for '04, you are out there with supposedly bright new architecture; analysts are arguing on the strength of the cycle. But a 10 percent revenue growth, I don't know, suggests some element of caution or certainly not as strong as I think we might have been hoping. So I am just wondering what your thought process is that says 10 percent revenue growth.

Remember, I also mentioned that we've eliminated stand-alone businesses, which represented about 10 percent, so that 10 percent growth makes up for the elimination of the businesses and adds the growth, so you're talking about more than 20 percent growth year-over-year in the businesses we remain in -- which is -- we feel is a significant growth and along the lines of the industry, and we are comfortable with it.

Okay, thank you.

(OPERATOR INSTRUCTIONS). Gary Mobley from B. Riley & Company.

Along the same lines as the last question, I just wanted to draw an apples-to-apples comparison from Q4 to Q1. How many dollars in revenue did you generate from noncore businesses in Q4? I would assume all of that will be eliminated in Q1.

Approximately $1 million in Q4.

It's a sharp drop into Q1?

Correct, which we will make up in DSP but we've given you the guidance that we expect will be as a result of that. (multiple speakers).

Had you not exited that business, then you would be reporting 10 to 10.5 million in guidance for Q1?

That's correct.

There are no further questions at this time. Please continue.

We will just wrap it up. Thank you all for participating in our call, and we look forward to communicating with you throughout the year. Thank you very much.

That does conclude our conference for today. Thank you for participating. You may all disconnect.