CEVA - Earnings call transcript Q1 2018

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Operator

Good day, and welcome to the CEVA, Inc. Q1 2018 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, today’s event is being recorded. to of conference & Market like Kingston, to Public now President Vice Intelligence, would turn over the Richard Relations. I and Investor ahead go sir. Please

Richard Kingston

quarter data to forward-looking provide Thank assumptions such Yaniv today differ incorrect, statements they cover and or financial by to qualitative Wertheizer, materialize start note will will Chief Gideon and also general earnings CEVA you, uncertainties will of that the call. first Financial could the Gideon statements. morning, implied expressed highlights CEVA; by today's that Officer if cause then that Officer and first quarter and CEVA. and provide as conference statements for joined XXXX. aspects Please first well quarter prove forward-looking Chief Yaniv of the from qualitative XXXX assumptions. materially or welcome involve I results contains the am I forward-looking Executive Rocco. those Good Arieli, business and the discussion CEVA's from data. risks the cover everyone, with as for of and results

products on NeuPro products, well and as as second about quarter for of projected and cellular statements quarter and PentaG, guidance thereafter. the Optimism during the include for year up and the about schedules. ClearVox our gradual smartphone LTE Bluetooth second XG, full normal our IOT, XXXX, the market of Forward-looking inventory levels demand licensing reaffirmation prospects financial customer optimism associated AI with a our ramp the acceptance to guidance return and

Securities our broad the success smarter extent penetrating acceptance ability markets; filings markets, generally, connected results, that expansion These position incorporating to new LTE offset maintaining the the and more CEVA could of factors in our drivers be and us; obligation in to any to as our existing LTE information, our of our of dates. our the the the on space CEVA growth which and no the please the processing speed the customer of technologies ability signal new market impacts for devices the forward-looking and the strong Exchange AI, for license to ability market achieve and to products of IoT schedules refer to ramp-up networks, the IPs of continue and Commission. revenues. their execute maturity assumes on IoT in statements portfolio difference include, update with royalty information the and and handset For or agreements, speak respective markets; cause XG

prepared financial financial GAAP, for the earnings A release In release ended the Generally XX, today. the investors of addition using to most be quarter financial financial after measures tables results today comparable related measures, portion financial present also in using can their non-GAAP can and direct results on to financial press management were today’s Accepted current our found on review included in Accounting measures be in the which our it certain commentary Investor and also measures. reports issued found March will believes useful that Form non-GAAP to XXXX X-K be in are today. copy or the can addition press evaluating of those review also management which in website filed with call. Relations accordance GAAP GAAP this CEVA’s to with reconciliation we Investors the certain and encouraged potential business, our of Principles non-GAAP

standards of revenue Under would to known over call our like the January first quarter XXXX. stated ASC to customers our what CEVA best otherwise shipments. royalty numbers for the remind on Before for Gideon, estimates you XXX adopted new based are on handing The XXXX that represents of as are standard such the ASC new our first quarter the as revenue I stated. this shipped unless during the accounting XXX X, call

results However, known reported ASC as revenue financial our the XXXX QX accounting XXXX directly results, under financial as are QX old XXX. not comparable standard our which were to

also XXXX on you today’s We on call an provide for to ASC financial will XXX under as apples-to-apples results QX our comparison year-over-year basis. a allow reported

will over the I said, the throughout Standards to XXXX this have by hand Gideon. We With Accounting new required reporting call now that as approach will Financial Board,

Gideon Wertheizer

of in car two we surveillance products. camera, two CEVA-ClearVox noise beamforming OEMs. camera the new our customers first million. rest reflects and on revenue are expanding XXX comparable and which and and software for than under target our application segments. Baseband ASC a financial excess processor XX% lower or vehicle-to-vehicle channel is $XX.X call. based million, CEVA-NeuPro AI smartphone year and proud stronger communication, customers fourteen Thank primarily were newer continued The we and in which reveal at Three in due Customers for AI In came in and their basis. eight were entertainment, customers ASC in the revenue you, expectations equipment advanced royalty agreements headset, in Yaniv and line under and channel customers quarter the cameras. metrics on connectivity ADAS particular, seasonal Smart markets. $XX.X to during elaborate consumer cellular which are access the signed signed of year-over-year two Richard, revenue, existing revenue and smartphone attributable a strength $X.X in low-end inventories the were came agreements DSP came results everyone. feature phone to will section products, to welcome, the suppression to a phone includes were Total voice-enabled inventory later wireless ASC licensing first-time six XXX a lead IPs. existing with low-tier the the on that anticipated below License at for this upgrading of in quarter, business Royalty of million the shipments business decline technologies. and new XXX and of feature at IOT, during for

in with year. This in the extra to chipset its approximately CEVA XX% ReefShark a market during unit However, continued go likely we low-cost growth and inventory believe populated announced OEM there feature revenue to starting increase station second and to like expand XX% nicely shipment demand and return into and to is Also, over QX, would from Non-handset highly phone XXXX. tier-X production RAN incorporates geographies new of the second planned shipments. in shipments smartphone that DSPs. quarter secular which chipset QX India is QX half level growth in the normal a XXXX for Africa, of gradual Nokia, LTE base

short-term Let to dynamics substantial on potential products we take minutes our the few momentum licensees the next for licensing which me those as underlying enter revenue in of production. the elaborate for good into royalty and see three

not signed customer Bluetooth of The of our headphone DSPs IP as for smartphone one is hardware unit quarter, technology company it to call, just our Alexa voice the voice-assistance and and emerging but applies and targeting for such communication the smart streaming Currently, voice-enabled this agreements broad paved our stop the first expertise wireless algorithms of multi-billion music has shop with space multitude earbud with and CEVA headphones, also headphone. Bluetooth a in headsets, a for hearing few with Bluetooth which Bluetooth is has space. seamless success a noise the services this with software we new four technology. only ClearVox low-power and Last routes is voice-enabled the advance combined very Siri. of that suppression that devices. can headphone aids, connectivity for with is of opportunity voice and one devices way reputable companies voice both headphones, and on The such as CEVA speakers

platform. X the eight is Research. network had sales launched miles cellular this customers by XXX end to continue operators the worldwide. which network products The with nationwide space, covering our active recent quarter. its million IOT connectivity to we vertically-integrated confirmed new NB-IOT square the do in for plans second of and Mobile the CEVA-Dragonfly growing five analysis it The be XXXX already the the growing climate two NB-IOT cities. of X.X its China of continues according to with supporting agreements network in fastest – devices year by licensing Verizon last then ABI reported where momentum, this licensed IOT market NB-IOT below technology developing billion through expected is that Dragonfly in MWC We to on has by platform NB-IOT

market leader In our module a announced that to known with well addition, extending powered wireless by is it cellular a is DSP the that in technology. IOT Ceragon market

of Hong entry IOT core we of their market partner into we the By a success licensing these in value owning rights stepped ASTRI proposition our beginning our looking As our investments up for cellular space this can ahead, result expedite our to from customers enhance acquiring this and technologies and market. prospects by technologies, Kong. recent

the neural processing low-power product analytics. EDGE processor devices. technology voice supports pleased hardware range team The in initiatives camera such the product surveillance our product our is NeuPro to line for commercialize customers AI highly earlier targeting non-DSP of and XXXX relate its for we compiler surveillance the general other applications. product manage targeting is third encompassed as CDNN CS to musical autonomous vision, accompanied unveiled extremely of variety neural networks the with and optimized devices event assistant a The wide data limit reputable I car our NeuPro. is devices. new conclude smartphones, It and ADAS QX AI NeuPro optimizes At EDGE year, processing under in EDGE. AI by which am into network to first that application to and this in camera, a of GAP and line

on discussion in opportunities optimistic with the many exciting for customers line product very are this about movement. We are NeuPro other and

with Release-XX. robot The launch early on commercial over uses optic are as than call X.X XG. Sprint offering and update currently and to new me CEVA-PentaG backdrop, our smartphone came plans design and that cellular edge Yaniv, who Against reference MWC, long also X XX AT&T includes wireless is The modern new second promoted mobile is in in download per solution and as we a fixed service in-depth on and our next the enabler more the announcement radio experience alternative key supporting based solidify CEVA-enabled cellular billion T-Mobile aimed that in by next continue gigabit XG speed Insight design XXXX. UE It’s phone of strategy It by to solution. forecasts fixture and and a to XG position shipped XG our fiber offering hardware continues by beyond year and XG the as a to rollout Verizon. This costlier in handing with computing. the out product today. being prospects extend achievement for an subscribers Before upgrade than complete from our accelerates you for baseband software with on is XG CCS XG XG extend let up software Verizon. solution more billion full and capitalizes the joining to and space.

Nokia is large and PentaG to addresses mobile of AI still unique communication an channel solution terms complete a design. customers certain or made player Nokia It of the MWC port that our similar second more. the operators of power DSP embedded XX% of latest today chipset AI the we PentaG the stated its with XX in in year. business licensing statement of the world To calls unit used production future expect in called The ReefShark. ramp healthy an compared ramp One features with is that and serviceable adapt announcement business. a our within A our CEVA-X during units this and that wants third offers to extremely environment, cores for that radio deployment quarter it for technology engines is the therefore market announcement XG experience hardware PentaG’s our integrated efficient around with to baseband ReefShark use consumption ReefShark network that to processing XG be Nokia The in variability the was benefit lower software the prior advancement to but the base RAN software-defined the in-house for affirms and at space. to increase from ingredient manner. This deployment we its incumbencies internal providing of a goal. continue in royalty extends highly other can Tier-X companies summarize, by field choice either complexity the key architecture up Mobilong upcoming in

preparation and believe products inventory happy to let this With product. newer discuss in terms this royalties, conservative over more our for extends These adjustment IOT latest and In of dramatically general, call focus Bluetooth up our an about Yaniv apply growth. cellular financials acceptance we cellular ClearVox models that we later market the is during of of AI primarily product year. our a products turn PentaG On with many are space industries in ramp guidance. to our while part remain the first quarter the we handset said, the me to for and prospects

Yaniv Arieli

XXXX basis total that in the margin $XX.X start revenues, a XXXX morning QX decrease our following operations XX% Thank on I'll year-over-year revenue compared XX% the first revenues, the of quarter revenue revenue licensing was of million, non-GAAP everyone. million. rules the second by XXXX. quarter $XX.X related follows: on Quarterly million, quarter XXX gross total you, quarter on actual higher reported XX% Royalty a ASC revenue was to Gideon. of was our to for $XX.X compared our Good for of XX% first Revenue the and as of GAAP for reviewing on XXXX. on as of basis. a XXX. The based million the first shipments and under based XX% was basis breakdown is we X% of results $X.X reflecting reflecting

the on our Our guidance of approximately OpEx compensation just approximately RivieraWaves technology. aggregated quarter gross and IOT non-GAAP $XXX,XXX the in our operating million $X.X investment for included an of of intangibles of million. million quarterly and below for $XX.X narrowband margin high-end were amortization expenses Total the $X.X was compensation equity-based equity-based expenses. of acquired the

Our expenses two share per guidance. the respectively. diluted $X.X GAAP million below million, the total items was high-end the $XX.X quarter and also of quarter and first U.S. operating first the excluding $X.XX were our for loss loss for

Our million diluted quarter $X.X and non-GAAP for $X.XX net income first respectively. and was EPS the

XX% reporting million, XXX, results was million shipments revenue and on end first XXX securities $X.XX sequential A $XXX a licensees cash XXXX stronger. by look sheet. direct down XXXX and approximately under baseband the under Our were basis. reported XXXX. approximately our non-GAAP only units XXX Shipped million up first Bluetooth XXXX financial and for based on our shipment the units and XXXX, of on basis Other during down XX% shipment for quarter decline on March XX% QX the in first per XX of a the XXXX Of shipments share units volume XXX and XX% the $XX.X XXXX shipped, standard were for the The EPS decline X% or approximately quarter for old from XXX million. comparison down loss bank follows: million quarter rule be At and loss XXX second based were XX% related XXX CEVA sequential million of deposits a handset $X.X was to were results on our as units, under year-over-year and $X.XX, financial million, non-baseband GAAP year-over-year data. QX respectively. million of shipped QX the actual sequentially XX% reflecting rule marketable old balances balance XXXX total a continues was quarter equivalent U.S. cash, and reached non-income and $X.X the and

report was our we quarter buyback from earlier. the authorized During the new currently quarter approximately during first paid discussed plan active million. at modern existing we accrued during rule, record need we for that installment average first per XXX, IOT quarter million for Gideon or the received also again plan. new to XX,XXX those approximately as $X.X price royalty of the an first for started quarter that $X.X technology repurchase become exclude shares to to billed we ASTRI’s on the remain Also, not the for of share repurchasing $XX quarter. have the obviously We payment full calculation. revenue And shares Due under our ASC XXX,XXX DSO an

the from days prior DSOs XX Our days, down XX first for quarter in quarter. were the

generated operation. from of During quarter, the we $X.X first cash net million

end are $X.X XXX depreciation which fixed of million, our and million. was people, was of engineers. $X.X headcount was XXX Our of In assets purchase March, the

Gideon our guidance entire offer. demand as related for products As we guidance, experience of first Therefore, explained, than softness excess the range maintain continue low-tier the our of $XX approximately we in we revenue and the to healthy quarter believe the yearly smartphone view, In feature was million. the rather phone our across will licensing related we to experienced inventory, in demand issues. segment and channel

improvement gradual we quarter this stronger the second with expect impact such, of a As in starting year. the half

the of this US the the closely also our the existing of into the prudency, quarter. At royalty between production the DSP quarter parties are nor visibility discussions ZTE in for ban We this inventory into incorporate expectations we we visibility do levels components the which of regard. we for for on Department have lack plans Yet, modified have ongoing our ZTE’s and Commerce the implication second monitoring stage, platforms. this

be in front investors which will in maintain revenue guidance of and for our in reported annual return based discussed Efficiency expected to the annual basis year. gross quarter expenses expenses we compensation schedule, XX% million be the approximately an earnings both currently equity-based guidance of XX% station $XX.X the shipments, and be normal the we parts lift or million product number, to attributed half GAAP the for is divergence that our XXXX. second for to to to We equity the based anticipated in compensation Nevertheless, holiday guidance $X.X to in This that upcoming million range on and all the segment season-related $X.X be in is on calls this $X.X million, excluding non-GAAP we XX% with attributed $XX.X earlier intangibles. million year, on of royalty today. coupled our and expected base margin GAAP second included will moving of non-GAAP. amortization is to acquired and this of Overall of low-tier from to the inventory expected in aggregated royalty handset update OpEx annual is levels developments forecast of provided

Our is expected for quarter, million. about million $XX.X tax on the GAAP, XX% to share second is to million non-GAAP $XX.X on the to XX.X be Net second expected for of income quarter shares. be is $XXX,XXX, XX% rate in the interest count be expected to range Last, non-GAAP. OpEx approximately

said, session the with you Q&A please. So Rocco, could open that

Operator

Instructions] Thank of comes question Mobley from go you. first Gary Today’s Please ahead. [Operator Benchmark.

Gary Mobley

Thanks want I my guys. about Hi question your for year question. taking royalty guide for a XXXX. start to with out fiscal

Just maintaining the XX% grows are total in to revenue this be clear, that year? assumption you royalty

Yaniv Arieli

Yes, Gary. Good morning, that’ correct.

Gary Mobley

And clear, that strength mobile that does to of like year. weight by of puts of by the that do – in to still base station are the Nokia? you be And the fueled out to the you the half obviously half ZTE licensees second expect you year fueled be expect growth How XX% be second much just handsets? and well, get forecast taking and a you as on your of much do heavy how

Yaniv Arieli

discussions one third, number will and the we and they and the monitor The it. quarter only trying of the are different going in ZTE, developments U.S. we the the for taken the without out correction resolve to ZTE. is on China between the have second

to continues, our if guidance. update we may need So, annual this

But the hit taken limited for in maybe quarter, don’t that second out know our are a we quarter. we taking we second from speculation, only yet. only have now, the the For hit,

Gideon Wertheizer

Hi, go ahead. a – Gary, I you bit want

Gary Mobley

sorry, am No, ahead, I go Gideon.

Gideon Wertheizer

the $X.X there on a out basis in the new all between least thing we QX expand season in that at beyond the mean, were came because with came non-handset a ourselves on should I ourselves to to report, expectation. of that $X.X the other yearly say mind this million and we want according is cellular I we the business – is decline our revenue and a low QX we to to on million to parts rule internally gave is I side. provide accretive the keep seasonal between and that, this then this thought going cellular.

so-called this XX% an to Now about XXXX in of XX%. decline in in side, seasonal was the had between we in XX% non-handset the space event QX,

those XX%, relates out because and for XX% set space of now so But you seasonal phone kind industry the the that with high are was are it and season, QX, normalized in to decline XX% is tier season about was side inventory it and about this now should up This up and the to be – good inventory the shoot, quarter, they came be when shoot, in future is decline. relatively getting smartphone so and seasonal quarters. industry-wise; we are a the in declines in We going all you first the built low the QX hearing a then in operation high rate that general. those QX of to have

Gary Mobley

ZTE have Okay. Can that and ZTE. from get is specific? that the the the or relates be of you has the ZTE a appeal Last Department your second the predicated again is that you licensee Commerce I in whether may how don’t predicated assumption royalty much to with U.S.-based and ZTE if market station general to filed half question on share too to hoping in definition political it approximately SSE the rebound were it’s want base you the us revenue on And with or U.S. is of clear ramifications? year,

Gideon Wertheizer

in is let the me ZTE. U.S. the with ban start Yes, sold the made with here associated later components to part,

So our chip, vendors, that it’s had into are base many mainly vendors components go years in a that the our suppliers different that necessarily chip not against. embedded ZTE but only station chips technology,

build base they is cannot maybe even not they a full least that based. they or of, – So, station, U.S. have one though chip not don’t less based have in of sort the that of at the segment amount are they U.S. family,

device of make have components hold So, base they more. get they shipment design every all stations to will and and the resolved

or on if you you to still are don’t of cannot components with not the you mainly a that royalties build those space wheels So, without amounts you a stuck vendors to the without get have in sold. are just the and car other our are motor that and sell enough car, problem is going

So in they hold put you next ingredients and some they they that chip the don’t the the problem. that’s - are ourselves position our incorporating base But into have ZTE don’t that and bigger the vendors and maybe all is U.S. technology the probably of problem quarter. a That’s of second the know as that you going the have levels inventory into part question. second know said, exactly

The a base first as know, handful ZTE the first of And contributor say for that dollars for year. part of forward. this is is with the large royalty millions very question us you I can the we example, to be building station even of going market part are would

the the for quarter. maybe rest get for they we about This for guidance that’s now haven’t more million and trying second magnitude we our to that resolved the of be what more prudent $X we the time. So, with hitting or and over with year is taken out all less of hope are

Gary Mobley

Very good. Thank you guys.

Gideon Wertheizer

Sure, thank you.

Operator

And comes our Walkley today question Mike of Please ahead. go from Canaccord. next

Michael Walkley

your opportunity Is to should baseband opportunity, your processor licensing strategy different CEVA open we how that your use currently think with baseband don’t Great, switching this engines? And gears another new do technology also customers you Thank currently the licensing, then, XG developing OEM believe success you XG station base thanks. an in-house? to in can top-five that’s just today? about add you. smartphone With there

Gideon Wertheizer

– it then it’s is there. base the and to it the Yes. because XG incumbencies on both yours, comes station and to answer mean, you I started rely question, cannot when technologies

our are We or very a in-house. chip mobile companies shot phone to developed there this in didn’t presence expand big use market, them a

very and one on but not progress optimistic I strategic time, comes active in takes discussions mentioned Eventually, are I it it all, size wireless case like in handset this does progress. about my fixed When respect. and autonomous other said fits so used we and driving. remarks to in and these So prepared agreements are there the am

built advantage to technology it modern even a of methodologies PentaG attractive of new that do that way offers Here, several implement. with in and can we that modern technology And people technology. way other portion the or the - we take this this in-house to ways incumbencies that

AI, in offer in mentioned and think company the efficient I software-defined platform of. goes the IP industry semi I can software-defined advantage As take that side the radio enough, we and only definitely side the radio, are people so, are that

equipment, when handset - really comes fine within with some portion an we it the to and but see not with of don’t whole of are and So, XG it the platform, it. people a

Michael Walkley

for related Can that some Okay, up nice it us basebands much break the year-over-year. give non-handset you. see the the XXXX? handset of getting to maybe revenue You you. non-handset see market And do revenue. kind royalty it’s versus down handset-related down market little thank to and see market, Can maybe non-handset more royalty year-over-year success XX% you a in basebands Thank than us you the rough parameters for of just bit? reiteration seem you be you how

Yaniv Arieli

Hi, good morning.

the our we for there what ZTE waiting season. weeks now that’s something about the are magnitude of different in that and we on launch have is first was popped of thirty Nokia to moving for course, as a design and the just still, models is demand them There although than many it and optimistic think are out few model, parts have cycles, they a of we that bit need many see wireless the in is year. premature Gideon layers I they early around ReefShark would earnings in estimate couple going the efforts about so the component still handsets which ago of reported other the inventory and and ZTE and built said, their build mobile wins third was we in chip semiconductor weeks deployment. are as the earlier design quarter issues that brand our quite of the of last but it’s the to not and the in so expectations, people, in many the It

take all we QX have and older an those last XX% the down calculation, we apples-to-apples which looks step-by-step. it compared when about think If I to only at are to shipment million $XX is for So, we example, basis. the take revenue year in it

starting the year the without point of parts. about somewhere And into the these rest moving

around products along, points we up So, we basic you to that’s like and base happy very other and it. we breakdown color of and then need more station as the see add data want will ramping the information all the share recovery are to non-handsets like but go the the that

Gideon Wertheizer

changing Let this it me are we lot had that we did or will side to now, quarter are year change. right it’s just of assumption the not and the case. fundamental not our beginning underlying of stuff we sort like at add, annual guidance maybe at the because does change. because why that that The go this this the not have we made we Keeping reason of one changing feel and But, explains of to have appeal the we those. ZTE was continue along, progress the

go which go transition just right them sooner, forward straight you on you the year-over-year when but high for an are demand look see, at So, half maybe season we space. the we take positive Nokia, the will the be should the there. they now hand usually direction of When issue second things we at to inventory because on post-Christmas going The into of market were When are in the mobile, fear, one the is about initially about in a take, conservative it’s season, the starting we you public speak shippers be the year. the about is quarter that new is of back, the from beginning the seasonal fourth there including barely the the first by and first you reasons and this didn’t coming one this supposed is it’s quarter is decline the themselves to year. and the day, and looking that our

is underlying – are not resolved changing be when the assuming on fundamental, you ZTE They shortly. So, if assumption. look will this again that our

Michael Walkley

the in more and Thank important Is of Is year, about first pass royalty the me it Great. maybe growth Thank seasonal bigger some improvement Is gains catalysts are the look drivers some you. areas the half timing second Intel help the settled? getting of the it for Last aspects? you. at us question some you half Can factors? ZTE of as it besides it what the Nokia in for of I’ll you second ramp? for you maybe over if think see platforms? just the of share their half iPhone the on,

Gideon Wertheizer

less it’s the of time things production It’s what it’s is, trend, customer. into showing know shipping are this it’s monitoring station, the we is ingredient if all get are or the course with The expect, progress. base more I a because we from ZTE with we all and think mean, of and it’s handsets are customer vision, first can there, different products this Smartphones, or we Bluetooth, of small and less mentioned the them there starting more markets customer currently already. progress. I all – baseband the above.

the direction. right monitoring are the things at are shipments on We pattern the this stage of and

Yaniv Arieli

products of are has issued a a some round products today these of production still today I and see you lot would in that that ramping mentioned, drones lot that say, of because the earlier which new examples they year. are Gideon up, was could all And now distributed

basis, non-baseband a contributions that’s full have year royalties. see our them we the on to So, all new but

Michael Walkley

Thank you.

Gideon Wertheizer

you. Thank

Operator

our Wolf question And from Please comes ahead. next Barclays. Joseph of today go

Joseph Wolf

phone market? handsets? about market, to some seasonality but you back, fall. more markets the second we significantly the And of I calling do was compared markets color, guess I lower get to just on you Are transitions you. to I think we come cost half about bit was little them phones? feature the that wondering for of the them a about feature to it recovery, expect kind are Is the handset Are better what hoping recovery? expecting as of calling in smartphones? going in you mix kind of And the as talked you what am we ASPs think it thought – to that fell the Thank looking where we handset

Yaniv Arieli

Joseph. hi, Yes,

ourselves the start to hundreds market all millions a Let’s and year this phone. new how feature phones are long I do last continued in the phone, mean, with asking we generate of feature Gideon we as the around. Maybe couple how first is at long a said, how still this it’s existing XX%. supplies and it dramatic this – decrease, of is is because change, years, sequentially of

had before. of are if this to earlier took Apple because Gideon thereon, this level. feature you you they About approaches ago, issue I a and feature something have aggressive We XXX% demand are mentioned results introduced have have phone. we cards an or seen think a of of they here we is something very will and called magnitude low-end also different smartphones, end as and sure call, Not from that more phones issue how an that deck is even the a and a lower we not maybe high was that inventory LTE more the a prudent assuming actually in year saw and the got that everybody

phone, have than the smartphone use evolving a have There LTE this for it couple of phone. be monitor still the we gave out these times the operators. people are pick subsidies have. for the is and been right it after, the of pricing a rise, ever year of prices new seeing ago, predict, network seen reduced raised a and are discounts be in we saying The a maybe just it the But lead some again that or from these is to lot simple that very it’s significant the very priced have smartphones. different phones we QX seen device. is ASPs and for some while. mid-XX we driver smartphones feature then up our low-cost It than this am a just of LTE them. could inexpensive carriers XX, seen were we those of we the there a – I are models today up feature operators low-cost something because finally seen in these was the is or if market people starts as two next for and India these jump twice – into haven’t phones phones type smartphone be in key to and years, not if course from correction, haven’t of did feature lost a have not sign them to So, example subscribers more that in or we XX, they year sure years what could a to That to Hard from see is, prices it phone use soccer. that phone could directly There could of feature step-up QX if

in the last more I years. mentioned, of the So, the fundamentals parts. the that am other The direction. of for the not terms at more and we moving sure to if segments this high-end lot and of cannot we the ASP a it’s are the still about the one, end ball couple more of need goes high-end any crystal it. and we in to haven’t for inventory that smartphone the markets, vendors in there about we that the of talk The with have any LTE, better emerging day year off the speeds seen rolled think we correction see now I different into devices

of want the of or everybody expecting will So didn’t think SKUs, I now of the have it from the inventory lot second to with SKUs, find that half. timing and the much in volume, more the moving reduction lot feel, part second it’s and stronger year a in later quarter. that’s issues And is they to have. together starting of all a market had the the we high-end put just happen, you I think and But pieces, things the of that what

Joseph Wolf

Okay, that’s helpful.

that? to going exactly about I think in – can does Is about or per remind ReefShark base terms are I the we what’s we there know – about How us much you can going to ASP how should opportunity geographies, hope the what’s many in station, and revenue you you how thinking hear on, but the – how like baseband am certain for flow As you it how rollouts if early that? specifically, certain product that many through? tell content? about DSPs it’s too that of be assuming are the thinking account then, in non-handset there? What be And

Yaniv Arieli

this will and opportunity we in to $X last go for the yes, we already becomes size another, Gideon device more we’ve let are breakout number we or and the baseband is X% as specific $XXX market. in or XX-Q market than are Right business, line It’s and the seeing in mentioned maybe this different and could sophisticated Well, having think content so, help this it the if assuming now, we And a sizable I let today open with more and general with got market If in you base look of at time an other me of one as up question, chips too vision, on pretty $XXX from of big enough for be shift. we our you have market are win with in by. in everyone overall earlier, chips being customer an mentioned, a these that non-handset our a we start significant market the one very or connectivity, us, billion components station, to different deployed share, item. could all year Gideon semiconductor us XX% devices design-wise a may maybe us. contributor that it’s in of get expensive pursue royalties that have talking will public, – ASP as a the that it’s for market, about and chip that goes

first royalties the we basically around way the would in the some starts and royalty I such. the hopefully these and as to the Nokia make second then to I year and this and just was the already the corner of that see half define exit parameters mentioned think from are we of ZTE opportunity

Joseph Wolf

then more just granular one mix. and Okay, finally the about question

assume is the that handset any quick – still XX-XX way think the XX% am of sort by think guess, big some maybe is which my product Bluetooth royalty to I still I the the way, the I revenue. XX-XX Bluetooth. develops opportunity. I think the you end wondering Is there XX% if year just non-seasonal the voice-enabled or within Bluetooth that closer mix of to non-handset to And new even of with going the opportunity, is a year it you mentioned the talked for grew a to baseband units am that about the math, well? second in the fair million, of half I as about was or reasonable non-handset is the $XX mix of is or the You be it by starting

Yaniv Arieli

stations. had parts, is – quarter is season, us, for base full doubt, there Again, we - QX abnormal are XX%. the year help from of centered the you moving customer basis it an years or for for there. year year, or Last when no have back but through is XX%, year new cited shipping of is still maybe ago the this just XX%, this lot are a we and but I No, not if quarter. and non-handsets. here went or is fast. in these first yet are we X%, time, for went – we to a but the this XX% tell volume years We rest Eventually, almost non-handset handsets two to with to a am this many running quarter shy should we sure get not because And of XX%. is and XX%, the seasonality year and things in, bit kick you to it’s XX%, us next typical XX% a

and So, the I XX% by you XX think handsets if you the year-over-year. get is go bigger the something up anywhere from of way, Bluetooth percentage between new more markets. and units the back more could percent, contribution

headsets. seeing So, more are we

more seeing are We connected devices.

– of bunch different are seeing devices. Bluetooth and and more aids headsets, and bracelets hearing We hearing a

last big. Bluetooth of in ASPs, applications, of lower it’s, One we signed on, that maybe four quite just the last deals quarter just could audio move type but QX. As is and opportunity thing the in we remind volume we

in-house So, these are very interesting for markets us.

Joseph Wolf

you. Thank Perfect.

Yaniv Arieli

Okay, thank you.

Operator

comes And next Desilva of from today Suji go ahead. Capital. Please question our ROTH

Suji Desilva

guys. Hi

question markets. smartphone First on the

and our breakout worth and or LTE units the still now Just really models waiting high-end breaking bulk customers the you new kind LTE on are is units not of do the of out?

Gideon Wertheizer

break we happy to it out. No, are

a on shipped We million a QX in units basis. versus XX have XX year-over-year year million ago,

Suji Desilva

Okay. waiting you do And low-end for but models? color any would like just markets, customers inventory I correction, the sounds new know helpful? at the see be high-end there

Gideon Wertheizer

comes high-end. I sure, OEM the the in not different days. in high-end timings timing one September every those normal these are is the the mean smartphones, and earlier but The at On year,

successful – that’s in of more parts. not think would in volume, the the couple is vendors I of that could that the they maybe are be they the moving just there ones we and how – timing then but aiming are if question find are, we other are

Yaniv Arieli

but in again quarter. QX way basically up mainstream, works a kind a it the Yes, set of

So to channels QX there big the are high big going gains do to – big, in volume. you are the QX, see that all ones

and on things slow. call inventories, demand we entry-level nearly they no we the demand in a we I exactly in QX understood – in those there of way. don’t out change and know inventory it’s adjustment. – need bit High are as that how, their to because from a there but go that still P&L the models the new rebuild the place. an and is got have to And review. they they a So, it, But heard structural was have season in through said,

Suji Desilva

quarter? quick Bluetooth And the then the Okay. numbers another unit housekeeping you question. give Did in

Yaniv Arieli

and we in looking $XX are we have million made ago, quarter. – this XX was long this Bluetooth a second

Suji Desilva

great. million, $XX

versus of newer the royalty magnitude traditional Okay, products ASP royalty some we of there NeuPro, expect the thanks. units? the the should NB-IOT, What like are with just the ClearVox, rates understand

Gideon Wertheizer

the on that though to bit see don’t, a the first of the make, the three is that as this which we the this is of as hardware, royalty so. times chip. a the the yes, time, or we and is first we pure between getting two IP the software giving important ClearVox, higher This are to time and it are moving future when is It’s percentage

they the in have to after OEMs that to the on add and technology. get already will lot work we do use it order that have a So, chip access to

that it to boycott need our to trying provide technology. for are We

production, could but we add into core those color this again, of So, more had you it in devices, top is we bit chip DSP when a on if show that’s to the and itself. on, the goes give

Suji Desilva

about non-baseband and we’ve of kind products Okay. voice you lastly, in those year-over-year then, And seen talk imaging segments? the what sub can products, the

Gideon Wertheizer

sure years but have seen the I ago. have here of two business, seriously or a year markets, them more if of am breakdown much not I you the different

products on not powered to X for units year first zero in last annual a of quarterly we If an in from XXXX XXXX. you million the in remember, vision-related time basis, basis,

hopefully, this can have a it two-digit of is units, hopes few number to year two-digit Our grow starting. and is for just

and was to I take from it’s So QX, X higher. what it don’t plan further here but remember it much in

Suji Desilva

Great. Okay. Thanks guys.

Gideon Wertheizer

you. Thank

Operator

comes from David go with ahead. today Exane. And our Please final O'Connor question

David O'Connor

IP Thanks gentlemen. using And for can morning question. IPs Mediatek talk engine. the my competitive dynamics Maybe, I you about processor Good you around competitor AI can for newer their get and in in taking firstly, smartphones? also are Huawei the see

Just to And should ability markets some question. help on this engine me then a capture we newer follow-up of my Nokia. in That’s how about your think first smartphones?

the ReefShark. Thanks. a based better, rollout that Is up market inputs just for how ramp of aggressive you the RAN understand in forecast? to half assuming Nokia or the Nokia on are of on more it is second based So, it

Gideon Wertheizer

Okay.

that a kind company the company hybrid have initiatives IP of they starting competitors, got is by are semiconductor company. company we – and going AI, do. mentioned with and a you So, few They Huawei way not to

the Our performance is there that for advantages advantage many reports that highest software. the so stated is we reports state have we are are comments other and microprocessor improved one showed and our

because Our their is – to software is that [Indiscernible]. only features is is a software software, earlier, and this as call CDNN started our maturity software with what called – the showing video we we the show only that what

in are with stage. entry to for people these us compete this So, two relatively to barrier high

But, our parameters. Nokia, So Nokia. course, when to comes with our of it discussion combination we a assumption of discuss cannot is

at I We up this so knows ramp of not are yet sure because stage. is that am something is the to that something Nokia see, this base that

David O'Connor

guys. Thanks helpful. That’s

Gideon Wertheizer

Thank you.

Operator

session. question-and-answer would our remarks. turn for like to back Richard the Kingston I any conference closing concludes over to This

Richard Kingston

for joining everyone of for interest your continued today you Thank us and and CEVA. support

participate We shareholders The us we encourage will be all to CEVA votes attending attending next proxy be will casting their to upcoming through the the and you invite Annual or week and event. meet events there. Stockholders Meeting following held

also will Conference York Jefferies Aviv, and XXth events Annual in May Israeli XXth We attending. on Oppenheimer and New of XX Cowen Credit visit events Aviv Suisse in XX, you for the Conference on in June XXXX Tel London June on be Boston Annual on Semiconductor XXth Technology May these our ROTH the will Supply Conference Please good other bye. on the Chain information Thank June XX. the Boston through XXth, website be and London section in Conference Conference XX, Annual and June further investor Sector we on in The XX, in X, Israel Insight Trek Media the Cross Israel attending Stifel Telecom on Tech Tel

Operator

has conference Today’s you you. presentation. all We Thank thank for concluded. now attending today’s

You disconnect lines have wonderful your may day. and a

CEVA (CEVA) 9 May 182018 Q1 Earnings call transcript