CEVA Inc (CEVA) 2013 Q1 法說會逐字稿

Good morning, and welcome to the CEVA, Inc. Q1 2013 earnings conference call. All participants will be in listen-only mode. (Operator Instructions). After today's presentation, there will be an opportunity to ask questions. (Operator Instructions). Please note that this event is being recorded.

I now would like to turn the conference over to Richard Kingston. Mr. Kingston, please go ahead.

Thank you, and good morning, everyone. Welcome to CEVA's first quarter 2013 earnings conference call.

I am joined today by Gideon Wertheizer, Chief Executive Officer of CEVA, and Yaniv Arieli, Chief Financial Officer of CEVA. Gideon will cover the business aspects and the highlights from the quarter. Yaniv will then cover the financial results for the first quarter of 2013 and supply guidance for the second quarter. I will start with the forward-looking statements.

Today's conference call contains forward-looking statements that involve risks and uncertainties as well as assumptions that, if they materialize or prove incorrect, could cause the results of CEVA to differ materially from those expressed or implied by such forward-looking statements and assumptions.

These forward-looking statements include financial guidance for the second quarter of 2013, market data from [Canalysis] and Strategy Analytics incorporated herein, optimism about our business outlook and growth opportunities, including with respect to the CEVA XC family of products in the 3G, LTE, and mobile infrastructure spaces, and CEVA's strong foothold in the 2G space.

The risks, uncertainties, and assumptions include the ability of the CEVA DSP cores and other technologies to continue to be strong growth drivers for us; our success in penetrating new markets and maintaining our market position in existing markets; the ability of products incorporating our technologies to achieve market acceptance; the effect of intense industry competition and consolidation; global chip market trends; the possibility that markets for our technologies may not develop as expected or that products incorporating our technologies do not achieve market acceptance; our ability to timely and successfully develop and introduce new technologies; and general market conditions and other risks relating to our business, including but not limited to those that are described from time to time in our SEC filings.

CEVA assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

With that said, I would now like to turn the call over to Gideon.

Thank you, Richard, and welcome, everyone. Total revenue for the first quarter was $12.1 million, down 20% compared to the first quarter of 2012. Our financial results for the first quarter of the year came in at the lower end of our guidance range.

Royalty revenue was in line with our expectation, while licensing and related revenue were slightly lower than we forecasted, primarily due to recognizing partial revenue from an important licensing deal, which I will elaborate on shortly.

During the first quarter, we concluded eight new license agreements. Five of the agreements were for CEVA DSP cores, platform, and software. Two were for our SATA/SAS technology and one for our Bluetooth technology.

Geographically, one of the license agreements was in the US, five were in Asia, including Japan, and two were in Europe.

Key DSP technology agreements signed during the quarter were with new customers operating in growing market that we were targeting to help CEVA and reach its market reach beyond handsets, among which are mobile infrastructure, advanced Wi-Fi access point, and broadband satellite communications.

During our fourth quarter conference call, we reported that large companies with whom we have had no prior business relationship are discussing with us a framework for a long-term engagement to use our DSPs.

We are very pleased to announce that we concluded one of these agreements during the first quarter. The customer is a major player in the mobile infrastructure market and has signed a comprehensive and strategic agreement to deploy our CEVA-XC4000 DSP architecture for its next-generation products.

This agreement will present a key strategic milestone and affirm the technological superiority of our CEVA XC DSP in a market that is widely acknowledged to have high barriers to entry.

This strategic customer win has broader context as it paves the way for the CEVA XC to become the predominant DSP in the mobile infrastructure space across all major segments, such as macrocell, small cell, backhaul, digital frontend, and more.

As part of this agreement, we agreed to extend the feature set of our existing CEVA XC technology base, based on customer requirements. As a result, the revenue recognition method for this agreement is based on the progress of the design work rather than our usual practice of upfront recognition of the licensing.

This impacted our license revenue for the quarter and caused higher expense allocation from R&D to cost of goods.

In general, across our licensing business, although there is some caution stemming from the economic uncertainty that has protracted the decision-making process among our existing and potential customers, we are experiencing new design cycles and licensing interest, in particularly in LTE, where our customers are handing over the first generation of chips to their customers and about to start next-generation LTE development.

In addition to LTE, we are encouraged by the trend of OEMs moving to internalize development of multimedia processing chips for handsets and tablets. We see this as a positive development for CEVA, presenting us with licensing opportunities directly with OEMs customers, who are looking to leverage our DSP platforms to support advanced users in audio, digital photography, and embedded vision.

Within the next-generation devices, utilizing our DSPs and software strategies provide them an easy and quick way to introduce differentiated products which takes advantage of their in-house developed expertise and IP.

Coming to royalties, fourth quarter shipments, which are recorded in our first quarter royalty revenue, reflect softness in the consumer electronic space, in line with our expectation for seasonal -- for the seasonal trend in handsets.

Volume of 2G chips, which continue to represent the majority of our products, were down slightly. 3G HSPA shipments declined, primarily due to the regular practice of inventory and product refresh by a key OEM during the fourth quarter.

3G TD-SCDMA shipments outpaced the seasonal trend and exhibited a noticeable sequential growth. Overall, 3G shipments continued to grow up 64% compared to the fourth quarter of 2011 shipments and up 12% sequentially.

In the consumer electronic space, the fourth quarter, which traditionally is the high season, experienced softness, which may have been attributed to the economy or consumer preference to spend their disposable income on smartphone and tablet purchases.

At this point and before handing over the call to Yaniv, I'd like to highlight a few key developments in our market and with our key customers.

Smartphone shipments are dictated by two different dynamics. In developed economies, such as the US, smartphone penetration is 65%. And future growth will be driven by a replacement of 3G smartphone with more advanced high-end LTE-based smartphone.

In emerging markets, growth is driven by first-time users of smartphone switching over from the traditional feature phone. This transition is now taking place in the low-cost 3G TD-SCDMA smartphone market in China, as evident in our shipment growth in this market segment. We expect the low-cost 3G wideband CDMA smartphone market to follow [suite] as the white box manufacturer begin to enter this market at lower price points and compete with the branded OEMs that dominate the sector today.

Market research firm analysts predicted that China will take the lead during 2013 as the world's largest smartphone market, with the nation expecting 240 million smartphone users.

These market dynamics are evident by a recent announcement of our customers. Broadcom unveiled its first LTE chip, manufactured at 28-nanometer, the BCM21892 runs a full feature baseband along with world-band radio in a footprint Broadcom claims is about 35% smaller than the current industry solution and saves up to 25% power typically consumed during data transmission.

Enabled by CEVA DSP technology, the BCM21892 support the latest LTE features, including Category 4 speed of up to 150 megabit per second, carrier aggregation, voiceover LTE, and provides seamless handoff between 4G LTE, 3G, and 2G networks.

Also, we recently announced an important license agreement for our latest DSP with Leadcore of China. Leadcore is one of the comembers of Datang Telecom Technology and Industry Group, which developed the China 3G standard TD-SCDMA and also the main driver for China's standardization of [TDSD].

Leadcore is one of the largest supplier of LTE and TD chips today and a beacon for other Chinese companies to follow.

In the smartphone segment, Samsung continues to grow its smartphone sales, especially in the low- and the mid-end models, which is also a sweet spot for CEVA.

Our key customers such as Spreadtrum, Broadcom, and Intel continue to gain high-profile socket wins, including Galaxy Grand, Fame, [Premiere], [Pocket New], and [POP].

Spreadtrum is focusing on the low-cost segment of the TD-SCDMA, in which it dominates with more than 50% market share. The SC8825, which is recently introduced to the market, is a single-chip TD-based (inaudible) application processor that contains a dual ARM core graphical and a 3G modem that is based on CEVA DSPs. [Spreadtrum] it is the lowest-cost dual-core chip in the space.

In the other (inaudible) of the very low-end smartphone and high-end feature phone, competition is fierce. Per Strategy Analytics, there is a potential of around EUR1 billion for such devices.

Nokia and Samsung are active in this space, Nokia with Asha product line and Samsung with its new Rex platform. Both are making use of our DSPs extensively in this segment.

So, in summary, licensing and related revenue was slightly below our expectations, mainly related to the accounting treatment of revenue related to important new agreements signed with a key player in a strategic target market segment.

Overall, we are comfortable with the competitiveness of our products and our potential to expand our customer reach and footprint in existing and new market.

In royalties, the dynamic landscape is playing out in line with our expectations. And we are enthusiastic about our strong momentum in the 3G space, the progress that our customers are making in the LTE space, and our strong foothold in the high-volume 2G space.

At this stage, I'll hand over the call to Yaniv for financials and guidance.

Thank you, Gideon. I'll start by reviewing the results of our operations for the first quarter of 2013.

Revenue for the first quarter was $12.1 million, at the low end of our guidance and a 20% decline compared to last year. The revenue breakdown is as follows. Licensing and related revenue was $5 million, reflecting 42% of our total revenue, 6% higher sequentially, and down 16% on a yearly basis. Royalty revenue was $7.1 million, reflecting 58% of our total revenue, down 14% sequentially, and 22% lower on a yearly basis.

Our gross margin was 87% on US GAAP base and 88% on non-GAAP basis. The non-GAAP quarterly gross margin excludes approximately $69,000 of equity-based compensation expenses.

Gross margins were lower than forecasted due to higher third-party cost associated with a deal executed during the quarter as well as higher allocation of cost of R&D from R&D to the COGS for design work associated with the strategic deal Gideon referred to earlier.

Total operating expenses for the quarter were $9.2 million, at the lower end of our guidance, which includes an aggregated equity-based compensation expense of approximately $1.2 million.

Total operating expense for the first quarter, excluding equity-based compensation expenses, were $8 million, reflecting the lower end of our guidance. These lower expenses are, again, due to cost of allocating from R&D to cost of goods for this design work.

US GAAP net income for the quarter decreased 65% to $1.7 million, and fully diluted net income per share decreased 60% to $0.08. This compares to $4.9 million and $0.20, respectively, for the first quarter of 2012.

On a non-GAAP basis, net income decreased 51% to $2.9 million as compared to the same period year over year. Non-GAAP fully diluted net income per share decreased 46% to $0.13 per share as compared to the same period for the prior year.

These figures exclude approximately $1.2 million and $1 million of equity-based compensation expenses net of taxes for the first quarters of 2013 and '12, respectively.

Other related data. Shipped units by CEVA licensees during the fourth quarter was 283 million, down 6% sequentially and up 19% from the fourth quarter shipments of 2011.

Of the 283 million units shipped, 264 million units or approximately 93% are for baseband chips, reflecting a sequential decrease from 275 million units baseband shipped and 4% year-over-year growth in volume shipments.

As of March 31st, this year, we had 27 licensees who are shipping products incorporating our technologies, same as the prior quarter, and this represents 35 shipping customers under licensing agreements, like the prior quarter.

As for the balance sheet highlights, as of March 31st, CEVA's cash, cash equivalent balances, marketable securities, and long-term bank deposits were $157 million.

During the first quarter, we generated positive cash flow of about $2 million offset by $2 million used for our buyback program and additional $1 million in advanced payment for EBA tools for this year.

Our DSOs for the first quarter were 55 days as compared to 44 days in the prior quarter.

As previously disclosed, we have a share repurchase program of up to 2 million shares. We continue to actively exercise this plan. And during the first quarter, we repurchased approximately 130,000 shares of our common stock at an average prices of $15.50 for a total contribution of approximately $2 million.

We have additional 350,000 shares available to repurchase under our existing 10b-18 plan. We believe the continued execution of our buyback program illustrates our confidence in the long-term growth opportunities for CEVA, its strong fundamentals, and earnings leverage.

Now for the guidance. As we have stated in the past conference call, we will continue to provide detailed guidance for the upcoming quarter but will refrain from giving annual guidance.

Second quarter royalty revenue reflects first quarter shipments, which is traditionally slow. ARM Holdings stated on the earnings call that there was about 10% decline in the overall semiconductor industry during the first quarter. Historically for CEVA, the royalty decline was approximately 17% and 10% in 2012 and '11, respectively.

From the royalty reports we've received thus far, we see sequential growth in 3G shipments and minor decline in 2G shipments. There is also an additional customer that started to ship CEVA-enabled LTE chips, although still in small volume.

In the consumer electronics space, as Gideon explained, we're experienced softness in additional to the known seasonal weakness of the first quarter. We are therefore forecasting that the net effect of both cellular and consumer electronic royalties will lead to approximately 5% overall sequential decrease in our second quarter royalty revenues versus the historical higher double-digit percentage declines I mentioned earlier.

On the licensing and related revenues, we're expecting to be in our traditional revenue range.

Our guidance for the first quarter -- for the second quarter of 2013. Revenue for the second quarter is expected to be in the range of $11.5 million to $12.5 million. Gross margin is expected to be approximately 91% on GAAP and 92% on non-GAAP basis, excluding 123R-related expense.

Our operating expenses, including equity-based compensation expense, are expected to be in the range of $9 million to $10 million. Of the anticipated total expenses for the second quarter, $1.1 million is expected to be attributed to equity-based compensation. And our non-GAAP OpEx is expected to be similar to the prior-quarter range of in the range of $7.9 million to $8.9 million.

Net interest income is expected to be approximately $700,000. Our tax rate for the second quarter is expected to be approximately 16% for GAAP and 15% for non-GAAP.

Share count for the second quarter is expected to be in the range of 22.5 million to 22.7 million shares.

Our US GAAP EPS is expected to be in the range of $0.07 to $0.09. And our non-GAAP EPS forecast, excluding an aggregate $1 million of equity-based compensation expenses net of taxes, is expected to be in the range of $0.12 to $0.14 per share.

Operator, you can now open the floor for questions.

Thank you. We will now begin the question-and-answer session. (Operator Instructions). The first question come from Gary Mobley from Benchmark.

Good morning, gentlemen.

Morning.

Good morning, Gary.

Good afternoon I guess in your case. I was hoping to delve a little bit deeper into your long-term agreement with a cellular infrastructure provider for the CEVA XC.

First, I'm wondering why that wouldn't help elevate your license revenue for the June quarter above the normal range. And then I guess more importantly, what are the long-term implications for the adoption of XC by this OEM? And is it primarily for ASIC-type development work for the OEM? Does it have broader implications which would include the FPGA suppliers and any other merchant supplier for this particular market?

So, Gary, let me start with the financial [part] and give Gideon to [strategy]. Overall, this deal is recognized over the next couple of quarters, and it all depends on the percentage completion of our R&D team to adopt the feature set for the XC.

If we would have recognized it all upfront, it would be above the high end of our guidance. So, this is going to be just over time.

We don't know exactly what the pace of the work would be. We believe it should end by the end of the year. So, it gives us some leverage and some buffer. But, we don't know exactly the pace.

So, it's out there. It's in sort of the backlog for the next couple of quarters. And we'll see how it does, although we do not want to take a specific dollar amount because it all involves the R&D progress at the end of the quarter.

Gary, let me take the strategic implication. What is important to note about this deal that this specific customer is not just a big customer. Indeed, it's a big customer. It's also an influencer, meaning that I believe that any company, whether it's semiconductor OEMs that plan to be in the newcomers coming into this market to the small cell or backhaul or other form factors in the mobile infrastructure, will know that this customer, this influencer is using CEVA in a very big way.

So, I think that's important to notice. And that's the reason that we were -- we agreed to basically take the CEVA XC and extend it further based on customer require. It's not an ASIC project. But, we are taking the XC, and we are changing it.

Okay. Last question I have relates to the royalty rate per unit. We saw another decline in the quarter. I think that might mark about seven or eight sequential decreases in the royalty rate per unit. For the -- for specifically the March quarter, was the decrease driven by a lower mix of consumer electronics or Nintendo-related royalty units?

And then if you could just maybe break out the trends in cellular, did you see an increase in the royalty rate per unit on the cellular side, given an increase in mix of 3G-related units?

Yes, so, overall, you're right with your answer to the question. The mix this quarter is really associated to the consumer stuff. Although it's about 10% of our volume base, speed for the consumer is much higher. And the main reason on the price, the overall price, is the consumer side. You mentioned one of the products, the gaming console. There are some other legacy products, like DVDs, set-top box, that were just weaker in Q -- in the Christmas season, the Q4. And this is what we reported today.

And so, but, that explains the overall mix. On the handset side, you're absolutely correct that the 3G is progressing well with higher ASPs. And I'm not sure if you mentioned, but this is the fourth sequential quarter that we see increasing volume of 3G. And that also improves the overall ASP trend.

Thanks, guys.

Thank you.

Thank you. And the next question comes from Anil Doradla from William Blair.

Hey, guys. Had a couple questions. Can you give us a sense into the breakdown between 2G and 3G on volumes that you're experiencing right now?

Sure. I believe that we had about 72% 2G and EDGE and about 28% 3G and LTE. So, as we see in the last couple of quarters, gradually growing from the 20-80 to now it's 72-28.

So, when you go look at the guidance and you're talking about 3G going up after seeing 3G coming down in the fourth quarter, is that both TD-SCDMA and UMTS, or is it one versus the other?

(inaudible) for the guidance you mean, Anil?

Yes, so, for the guidance, do you expect all flavors of 3G to grow?

Yes, I believe so. It was the numbers. In general, we see this as one chunk in the overall that 3G is growing. Yes, it's growing. When you look on the number, yes. Yes, everything is growing from Q4 to Q1 shipments. We see growth across all the 3G segments.

And finally, stepping back, if I look at the big picture, clearly, you're having some short-term pluses and minuses offsetting each other. But, if someone were to take a little longer-term approach and look at perhaps an inflection point where you see the 3G volumes start dominating, your customers really start shipping, are you -- do you think -- I mean, is it fair to say it's more like the fourth quarter of this year or maybe second half of this year, or do you think it's the first half of next year?

I wouldn't go into this level of detail. But, I explained the trend. And I think that's a key to understand. There is about 800 million 2G chips that still shipped with CEVA. And these 2G chips are in emerging markets. And this is going to switch to all eventually to 3G. It could be in the TD space. It could be the wideband CDMA.

So, these 800 chips come on top of what we are already shipping in 3G, which is also (inaudible). So, how this looks like, how -- which one will go to TD, which one will go to the wideband CDMA, it's hard to -- for us to know. But, you see the trends. It's consistently 2G is still the decrease -- I mean, right now, I think we have even a year-over-year increase, slight increase in 2G. So, still people are shipping -- .

-- Volume. In volume.

In volumes, right. Still people are shipping 2G chips in sizable volume, but it's a matter of time to change to 3G.

All right. Thanks a lot, guys.

Thank you. And the next question comes from Tavy Rosner from Barclays.

Hi, good morning. China Mobile recently added a significant 3G customer in the first quarter. What do you think CEVA's market share is at this carrier right now?

I don't -- we don't know exactly the -- our share in overall China Mobile shipment because, in China Mobile, there are different segments. And this is not accurately divide. If you take, for example, Spreadtrum, they're claiming that, in the low-end side of the TD, they have 50%.

But, let me just add, and I think we've stressed about this sometime in the past, China Mobile has about 725 million subscribers. Of them, 114 million are 3G customers. So, the potential for us, and this goes back to the -- Anil's question as well, the potential for CEVA over the next couple of years is hundreds of millions of 3G units in domestic China.

All right. Thank you. And just a last one about the share buyback, do you have any plans for more going forward?

So, for now, we still have the plan of -- in place about 350,000 shares. We still first need to execute them, and then our Board will determine what would be the next steps.

Okay. Thanks.

Thank you.

And the next question comes from Vijay Rakesh from Stern Agee.

Yes, hi, guys. Just a couple of questions here. On the ASP, what's your blending ASP running -- I mean, or the royalties running now on the 3G versus 2G side, and how much bump up do you get as your mix moves to 3G?

Yes, I don't think that's changed that much. In the IP business, like the ARM and (inaudible), ourselves, quite a few of the deals are a percent of the ASP of the chip. So, in Samsung, the 2G world is somewhere between on the lower end of maybe $0.01 to $0.02, $0.03, and the higher segment of 3G could be $0.04, $0.05 and slightly above that when you look at LTE. So, I think we have at least a 2X type of ratio between the different standard. And that is also true for LTE when that kicks in, in higher volume, in a more significant volume next year.

Got it. And in order -- 3G is picking up a little, picking up here nicely, better than seasonality. How do you see that mix between your 3G, 2G as you exit -- let's say exit 2013?

Well, that's the big question. We see the trend going more 3G, and we see some decline in 2G, but it's not stable. That's the question, how fast it's going to be. But, you see the activities from our customer. You see Broadcom going beyond Samsung. You know that Samsung is the only customer and then some Nokia. You see them going to India. They see them going to China to work with the white box manufacturers.

Spreadtrum had the announcement, general announcement, that they're going to have a wideband CDMA chip at the beginning of the second half of the year. All these companies, they take into assumption that the switch to 3G will be very fast.

Okay. Got it. Thanks.

Thank you, Vijay.

Thank you. And the next question comes from Matt Robison with Wunderlich Securities.

Hey, thanks for taking my questions, and congrats on the qualitative internals that you presented. First, I'd like to know -- we saw 30% sequential decline in Series 40 for Nokia in the first quarter. And what do you -- how do we -- how is Intel offsetting that, or how -- your other licensees in general offsetting that for your -- for the second quarter? And that's -- because that's a pretty big piece of the unit volume for you guys I think.

Yes, that's -- speaking that it was for us also surprising that the 2G -- the fact that Nokia lost so much volumes in the quarter and 3G still stayed there and even growing on a yearly basis.

So, it went to the white box players. You have now OEMs for 2G not even in China. You have OEMs in India. And companies like Spreadtrum say that they are taking share of it.

Well, Intel's got to be getting some business somewhere else, right, to offset that as well because they reported I think it was 4% sequential decline for that sector. I don't -- who knows how much of it was McAfee? But, you would think that's a pretty stark contrast to what Nokia is doing.

You have the Rex, the Samsung -- it's complicated for us to know exactly where -- we know per phone those branded phone who are the suppliers. But, for the non-branded phone and how they shape up there, it's very hard to know. But, I think it's important to know that 2G volumes still are flat to modest growth. It's not -- and all these 800 million that we are roughly in the year, these should somehow switch to 3G. It's just a matter of time question. It's not questionable.

I guess the bottom line is your licensees are picking up share elsewhere where Nokia's losing it I guess is the message.

Yes, that seems to be the case, yes.

Now, why -- I heard -- I guess the -- was the EDA license the reason why prepaids went up so much?

Yes, correct, Matt, yes.

And why didn't you just put it in the CapEx?

No, we don't capitalize it. We -- it's just written off on a quarterly basis in the life of the EDA agreement or term, no reason to capitalize expenses. We don't do it to any other expense.

Right, I understand. I was just thinking of it as a tool. What was the CapEx in the quarter?

$300,000 in dollars, and depreciation was about 150-ish.

Okay. Now, deferred revenue went down. I guess the -- and DSO went up pretty sharply. Give a little background on that. I presume that the big strategic deal, you haven't hit any milestones that you've been able to invoice them for. And that's part of the reason you don't have deferred revenue. But, I don't -- maybe you should explain it, not me.

Yes, no, nothing that critical. It was more of a timing issue. Each milestone we get, we get paid. Today, a month after the quarter end, we are down to roughly $5 million in AR, so from 7-point-something. So, it -- we don't have any collection issues whatsoever. It's just the timing on the quarter end with some of the work that we had to do specifically this quarter.

Backloaded in other words.

Yes, correct.

What about deferred revenues? Should we expect that to come back a bit?

No, I think there's nothing special around that that I could think of. No, it's -- no, nothing special around that figure I believe.

Okay. The -- Gideon, you mentioned a couple interesting applications beyond the -- besides the infrastructure one, the advanced Wi-Fi access point and the broadband sat. Were both of those in Asia?

No, one was Europe. The other one was in Asia. In Asia, there is an interesting development there with satellite communication with a few deals that we closed, or we did a few in the pipeline. It's not just for TV. It's also for data. So, it's a pretty advanced (inaudible).

Thank you. I'll let someone else ask a question.

Thanks, Matt.

Thank you. The next question comes from Jessie Katz with Oscar Gruss.

Hi, guys. Thank you for taking my question. You've mentioned that the (inaudible) wireless infrastructure orders come through. And I wanted to ask if you could elaborate why this isn't reflected in your 2Q guidance, or maybe you can also tell me if it maybe will come through in later quarters, or how do you see that?

Well, I think I mentioned earlier overall that the specific deal that we are allocating revenues over the development cycles should end up at the end of this year we believe, so sort of scattered over the next two or three quarters. And it's part of our ongoing licensing activity.

So, of course, as soon as we finish the design and the customer takes it into his product line and starts designing into the chip, we'll have the royalties a few years down the road. But, from the licensing side, we said that we're comfortable with these types of levels, our normal range of licensing. And I tried to give a little bit more color today on some newer markets and not the traditional necessarily, the traditional baseband ones, but new market segments. So, we feel a bit better from the licensing environment.

Thank you.

Sure. Thank you.

And as there are no more questions at the present time, I'd like to turn the call back over to management for any closing remarks.

Thanks very much. Thank you, everyone, for joining us today and for your continued interest and support in CEVA.

We will be attending the following upcoming conferences and invite you to join us there. On the 23rd of May, we will be at the Barclays Telecom and Media Conference in New York. On the 30th of May, we'll be at Benchmark Company's Fourth Annual One-on-One Conference in Milwaukee. And on June the 12th, we'll be at the William Blair and Company Growth Conference in Chicago.

Thank you, and goodbye.

Thank you. This concludes today's teleconference. You may now disconnect your phone lines. Thank you for participating, and have a nice day.