CEVA - Earnings call transcript Q4 2018

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Operator

Good day, and welcome to the CEVA, Inc. Fourth Quarter and Year-End 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, this event is being recorded. to Market conference Relations. Intelligence, like Kingston, to now President, Vice Investor would turn over the Richard I and Public go ahead. Please

Richard Kingston

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

and the ramp upgrade optimism second on in can ability Research. and and its XG XXXX; lines capitalize to our well cycle; Forward-looking about quarter market design production full-year technologies, for recognition basebands Ericsson XX forecasts as leverage from and annual qualitative royalty optimism XXXX cellular its of double will such that in ups; optimism chips to customers' CEVA the product Mobility about positive Bluetooth, XXXX; the financial and sustained optimism as Yole new that and customer base CEVA's CEVA half first data customer statements include enabling the recover growth voice non-handset by revenue NB-IoT

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

over relations on the current Investors accepted measures. the also useful can it results, our our principles, will results investor be after quarter non-GAAP Form to which related the and With addition of today's using and call. of GAAP, to press filed financial said, found to in on are were review tables present management in report X-K In be I can XXXX, comparable their or to believes CEVA's direct with to measures reconciliation business, financial and GAAP release commentary, financial results which results this website measures the hand of portion shortly ended A earnings press can in copy XX, today, that found non-GAAP potential and our review be using financial we included in evaluating Gideon. today. addition issued financial accounting prepared in that accordance December today. certain now with also generally releases non-GAAP the management will most year also investors GAAP the certain encouraged for financial

Gideon Wertheizer

an CEVA The environment Good today. resilience Richard. licensing quarter and business joining despite is of softening broad excellent our for with by of that customers. everyone, the companies world. you, the you technology us thank addressing Thank morning, in smart demonstrates our fourth macro agreements premier a connected number comprehensive licensing base important of valued had with a portfolio and

in and quarter reflects royalty fourth due emerging to primarily China markets. revenue to higher space Our weakness attributable above-seasonal the levels, inventory handset

and particular recovery $XX.X continued fourth station million. the to sign the healthy were However, to with our million base of came related be new which we agreements, $XX.X in with of record of The Bluetooth, see customers. with licensing at revenue for landscape ZTE's time in non-baseband and of licensing expansion first XX business. we managed to quarter and customers, continues revenue, Total and XXXX six

XG over with During design that the customer targeting processor we market. few timeframe. largest associated quarters, part use we quarter, which deal the of company's revenue and one recognize a the XG in customer during agreements the the a history we signed the license this licensed will a case, next-generation with customized will next for of The

well-known devices. an capitalize will that our also smart of expand strategically to semiconductor We signed market on the important agreement growing U.S.-based with Bluetooth audio audio fast into a company technology

us in routers other advanced and barriers consumer with market Bluetooth IoT continues and two turn other also no smart entry NB-IoT Our prospects for companies The the poses with by continued Wi-Fi earbuds, XXXX agreements high background an to a reduce solution X.X cameras, Target speakers, volume as with connections signed narrowband-IoT of technology opportunity, many show semiconductor according cellular. devices. huge new billion Ericsson surveillance automotive recent agreements. connectivity, include to cameras, to that space reach the for quarter the can to cellular IP applications to dynamics report. the expected the gain good Mobility traction

last million, from down year. Royalty For million, and down XX% XX% in year. from $XX.X Licensing was $XX.X revenue revenue year X% $XX.X XXXX, from came was the last year. full at last revenue related million, down

Day customer in the in is total, customers XX XX to royalty out XXXX. roll have signed customers. in believe this Investor key with coming growth existing our today and strengthen revenue last addition first-time driver we agreements to license for designing continued X which we gradually markets our At base We expect revenues customer our royalty royalty month, incremental annual are were production paying the Analyst chips, over additionally that approximately and we diversified streams, in new XX of base sources. in disclosed actively double customers from royalty years. with We that A steady to new which will licensees for

remain XXXX through engines catalysts. on supporting licensing conviction growth capitalizing our design. we for number The based focused strategic sustainable our to is As on we move of growth a potential and and customer's beyond, our

is enterprise. versus fixed by new LTE-A migration quarter Dell'Oro usage quarters, report. third market broadband. to and acceleration drivers of models on massive decline the for base increased offered After IoT, the The mobile to consecutive XG base in in and wireless globe for cells station XX X% advancements and growth according latest gigabit-per-second in RAN comparable XXXX speeds as LTE-A and small in operators XG, are around multi quarter the overall mobile first year-over-year and XXXX demand public accelerating Group investment in faster safety are the station the revenue for access, RAN the space, main The

our Nokia, such and the upgrade with of relationships vast experience, put semiconductor us OEMs their XG. ZTE the cycle strategic forefront partners, along with upcoming for as Our at key

We also target to and large expand base XXXX. incumbents with our customer newcomers in

our all go strategic for up of product across lines. the Second, chain in comprehensive decision two main move. merits such value our There are to a

the both the for developing able solution and most and by holistically to hardware is, our are we power first The software, cost efficient customers. produce

and Electronics show a a example ASP all-purpose is customers the to user ClearVox, of primary as cancellation for way X.X billion A with recent that receive architecture, for are our network based which the CEVA-BX, binding of as AI which software devices in in us smart echo DSP and the along paving value-added range customer product such markets with Las technology, state-of-the-art forecasts by relationships technology, our enabled two are for Secondly, higher with Vegas. strategy will to will a we our our XXXX. of voice strengthen these smartphones, by turn use speech streamlining we headsets royalty with automotive noise economics, industrial. hearables, deployments our together these a A home, broad units neural Research and technology, recent enriching and new recent Yole offering in our By voice ship customers interface our WhisPro, other announced our enable technologies algorithms, and recognition at and to the Consumer study we technology.

customer in for in second our particular in by entire industry, said, performance. vision, computer half of XXXX to a large LTE provide second half integrated reflected dramatic stronger in gain OEM of ASP first Our XXXX. turned Bluetooth With year-over-year XG, led half reach coupled and as versus the increase a at higher shipments share LTE to a handset royalties, U.S. the Wi-Fi other AI, a recent for us growth and and year challenging vertically that the with be royalty in platform XXXX On revenue. licensing out cellular value, for

X market continues category to new being year-over-year annually that in the expand are XX% based by up with baseband deployed particularly units non-handset billion expected to XXXX. Bluetooth Our growing CEVA reach SKUs shipments as fast is

in both headwinds market non-handset AI the the growing solid expect to followed we the will channel growing to other half fast first by and prolong in Wi-Fi into or of In category, the a from ASP. addition the be half cellular It believe inventory, the two we royalties, XXXX of for quarters second progress in more is for XXXX expected As higher, units market. one stronger Bluetooth our and and and year. contribution

XG a on base XXXX originally a at than customer station, due based issue interoperability unresolved pace operator, with as and stage commentaries rollouts and will expected few for slower their in deployment handsets. our to by be As operator

continued XXXX to Accumulating large set the in the we more to due segments. which commentaries, hardest of we and will local growth the and that design Korea wins particularly a us magnitude plant for this this low the see in of indications In XG With stance driving stronger station of benefits part reveal by said, business, As taking to and resilient U.S., our is our wins, our our and royalties. in in on summary, the in deployment to the regard CES, XG the Yaniv a XXXX, are economic factors. those that and prudent for across those operators buildout, capturing China, of year. base seeds design emanating including all view growth year, coming targeted such, make shortly visibility is Japan, XG from quantify from timing

connected world and continue for We smart to to us. are in committed poses multiple growth pursue opportunities relentlessly the

like to would last the and Finally, call that IP reaffirmed to my as With suppliers AI. said, a partners, you connectivity, thank work the opportunity investors would I'll I XXXX position guidance. and leading extend employees We We over valuable for to prosperous financials least strong not of and and to a supplier for great I their their hard thanks our progress made our Yaniv, outline like to and cellular, wish speech vision, who all turn year. support. our and also all take this our solutions integrated execution. vertically for for happy in and will but our now

Yaniv Arieli

Revenue included non-GAAP royalty to the quarter on were down was audit of reflecting that compared total basis. fourth was $XX.X catch operations Thank results million last following customer. XX% as also year. $XX.X revenue GAAP same basis quarter for 'XX. revenues, approximately of I'll million, the quarter related reviewing revenues, our a year, from XXXX. follows; $XX.X quarter for morning. million revenue Good revenue to as Gideon. last start the of fourth an up higher on the for Licensing Royalty as total a reflecting of by million, The million, a and compared million XX% of XX% of margins was is breakdown $XX.X for $XX.X quarter XX% the XX% fourth Gross same you, $X.X and

aggregate similar intangibles prior the and an as guidance $X.X our amortization Our of quarter expense at the RivieraWaves. $X.X total below just equity-based million the and operating of was expense included level of acquired at compensation million. for $XX.X of for fourth OpEx the million, quarter high-range also

XXXX. over high-end of items Our also expenses quarter and to for XX%, OpEx of these similar quarter income guidance. the and quarter, were excluding the and fourth level respectively, diluted the $XX.X $X.XX, the non-GAAP fourth total EPS quarter GAAP net $X and operating third the decreased million, to at XX% million for our US

and royalty reported decrease decrease of $X.XX, million our quarterly and XXX income increase of the shipped, basis. to due on and of fourth baseband, From units customers. primarily XX% were non-handset Shipped XX% shipments In and $X.X shipments handset fourth XXXX during non-baseband the units Other to was net the million the the diluted is million from a million, units related decreased quarter shipped revenue licensees a non-GAAP a time shipped quarter Of year-over-year. sequentially, sequential were non-baseband The and chips, baseband in XXX basis. XXXX higher units these, by fourth single of X% year-over-year sound for respectively, a perspective, X%, million EPS units, XX% quarter. continued XXX respectively. which million revenue for from XX for and Our shipments. down volume or XXX to for Bluetooth we CEVA million units data. the quarter, the and down comparable were sequentially reflecting quarter XXXX sequentially actually a fourth quarter million on XXX XX% were first increased volume year-over-year surpassed million X% baseband reaching XX% fourth quarter handset The XX% XX%, XXX up shipped of year-over-year Of XX% increase. Bluetooth with increase third from shipment XXX a chips, quarter during

the mainly of annual due maturity total royalty CEVA-powered general revenue market. handset equates year-over-year for XX% XXX As devices of loss to approximately of smartphones year, year-over-year, unit represented shipments shipments in XX% year-over-year. and sold second XX% Annual share an These decreased million every to large which XXXX. units, our shipments Chinese to market decrease decreased our by customer of the XX

unit and in million up volume level and increased XXXX. as $X royalty record However, smartphone million, grow baseband to $X revenue of million a royalty from Non-handset tier shy X from we smartphones gained year-over-year, a $X our of XXXX per OEM. XX% reached average up just continued U.S. at in in

Bluetooth of terms XXX up were baseband million record year. for units, a shipments a record the our new contributing In with year-over-year units, unit non-handset to XXX XX% of units million

balance items. our for sheet As

million. As XXXX, $XXX balances, bank deposits CEVA's securities were of cash, equivalent and marketable XX, December cash

shares plan We of our during our quarter May continued buyback plan, active in of the approximately expansion XXX,XXX the fourth repurchasing existing 'XX, approved the Back million. Board approximately buyback $X for Directors adjusted available and of days. continue a at we quarter have repurchase. be for ASC the as XX for DSOs of XXX total low to fourth year-end, the shares XXX,XXX of Last, our level

XXXX, of XX generated we which of During million operations, the $X.X continued $X investments the in years. revenue purchase XXXX. million. to These licensing the shy last of to fourth headcount was depreciation R&D facility to for net during engineers. approximately quarter, new R&D was of Overall, people, or we us achievements TAM and headcount end units billion XXX our design UK, expanding the assets Bristol, year, and our our enabling from contributed the At XXX by a of our licensable about $X.X higher thereby XX increasing fixed few million R&D opening introduce cash XX%, approximately IP were products engineers, new overall of by

reach We financial values. growth, focus to thrive customers continue milestone, and markets, new on to new shareholder revenue and

our of another the from million, Now for year revenue CAGR with XXXX, post was excellent XX% diversification implementation our guidance. $XX licensing a year over Last in strategy.

be alluded and portfolio to On revenue While leads as demand expected year, our we to similar slightly than licensing continue non-handset tends revenue to new baseband, to product product royalties, all We're our the to a licensing new better similar stronger to to believe to healthy lumpy, forecasting earlier with a lines. be of and half across smartphones. of Gideon environment. strong customer SKUs release are expect of in XXXX, royalties the expand attributable In second baseband, we XXXX.

We annual we the to by are this base operators. from with stage some All commentaries in expecting in contribution are region X%, players station approximately million year. line forecasting at the year-over-year full key growth $XX of royalty all, in for royalty and

from about from due review In customers allocated higher a with we expect product quarterly that our reinforce expenses station goods, all get the our base be of line ramps, deal cost with the we $X.X insight that XG disciplined but will existing product expense our with to customization R&D more to basis We will we of approximately large the of Gideon will and million expected related as to customers. under this leadership, continue R&D on of particularly and earlier. cost expense continued On with OpEx, new momentum investments announced goods in R&D. business, discussed our licensing innovate our

and with our Overall, XXXX forecasted to quarter. of to will are associated about Interest is costs in be count a of income. higher higher expected Annual to Our about in million, $X for is similar of is XX%. and Equity-based non-GAAP at US mainly to per of to be pre-tax Taxes line. the contributed OpEx in forecasted on the year tax investments expected level. in region basis which of increase employee-related XXXX compensation also the Share gross slightly rate of similar million tools. of OpEx at be region XX% be XXXX tax level increase level are GAAP the the headcount, EDA lower R&D rate be The to all XXXX. $X.X $X.X but the XX%. for million percentage of income to margins dollar

allocation range on expected GAAP on gross based lower first to the for to with operating $XX.X million expenses I customization OpEx Specifically million bit expenses GAAP to XX% the than Overall, just norm, for are expected to million. attributable is compensation be amortization. $X.X million quarter, to and non-GAAP equity-based is margin anticipated be work basis goods of of the other the margins the $X.X due XX% be be Both $XX.X that non-GAAP cost XXXX, to the expense and first expected is expected mentioned. to approximately quarter of that to in basis. specific and Of

the due the R&D to first OpEx XXXX, first $XX Overall, will our in be of quarter non-GAAP in non-GAAP share could Net GAAP timing interest OpEx GAAP grant to session, for range, quarters. less following is million. the and Q&A none Kelly, of million now $X.X quarter similar counts quarter the of quarter Taxes some to to similar the million. and is basis on this and of Our year. expected and be you income open the than to higher payments, please. $XXX,XXX $XX non-GAAP first on range the first

Operator

will begin go come Please question-and-answer the from Gary Instructions] question now We ahead. session. Mobley Benchmark. The [Operator of first will

Gary Mobley

Good morning, gentlemen.

a $X say your need? million in was you or asking clarification Just royalty about revenue that question non-baseband did XXXX, you

Yaniv Arieli

just million, of $X Gary. Hey, yes, shy

Gary Mobley

And that what, XXXX? in compares to

Yaniv Arieli

About X.

Gary Mobley

respect... with And

Gideon Wertheizer

line in result had Gary, this as of we base the [indiscernible]. posted that revenue station a year

Gary Mobley

you -- the getting Okay. about SoC, you're And, a correct? for to bit XG licensees, little hear I'm sorry, on commentary that's your station hard base

Gideon Wertheizer

No. didn't both for cannot new our and on station one. elaborate mean, offering what I have, said to further we both have say as We the applicable exactly, side, end, XG we know, we base you and incumbents and handset it's side but that. about the We on

Gary Mobley

side, assume some it's have Okay. customization involved, But since to there's right? the on we infrastructure

Gideon Wertheizer

the case. necessarily doesn't it No,

going we You're an in of the say. we're what what offer, enhanced that's right few customization, decided The quarters. about to do that's what customer version next to new we and take

Gary Mobley

Spreadtrum, licensee timeframe? technology gains respect in right. into in do calendar that the All upgraded and you With Okay. translate royalty keep about XXXX, share share feel or obviously, share payer may year and us you some some That market how should modem XXXX preservation with had to that guessing. how struggles

Gideon Wertheizer

a they LTE So extremely to cases which and in in in in a the Spreadtrum key in their gain LTE, a some in strong this it's they of bit big this the refocus a they up of playing some because they're is cost. market customer, lost consumed advantages Reliance low have relationship that of have competitive will, and some with And a bit, had happen loss, share often, strategy. tier they business one. thing this in India, Reliance there And in they have XXXX, XXXX terms saw

we I the in in down. buying Day, emerging unfit and this to broadband, it new of going when in is us. their also like So going in the will XG the in transform a so phone, not basically two is we This forward, is refocus will is the that will market. XG and will see people think down, are XG ago We LTE, the they comes which Analyst still to situation phone, XG said next in were space low-end, LTE going And LTE, all mind, years same move keep mobile buying be not eventually for as they're in [indiscernible]. or what

a to good So shape Spreadtrum my is, in in expand opinion, this in space.

Operator

question will Cowen. Ramsay The come ahead. of from go next Please Matt

Matt Ramsay

those deploying that commentary a our for volumes of maybe those for like guess, you early the they'd base and juxtapose and FPGAs the on instead XG, A much. your again to hearing interesting evening. Good the on, company base some following that of very and using customer morning be some commentary of ASICs. baseband it from things, couple Thank of that of hear seems some Xilinx good around it's I station market, guys, products stronger then out of station you're base

broadly total your is ASICs delays bit that within rollout in is from deployment you in if distinguish of it in you could vendors is two, the the you. stations? you would a little helpful. Thank that most just maybe those talk So, Or be is about of and the base it like base between stations feel -- do of could market that slower technology in modem

Gideon Wertheizer

customers question. temporary One -- for station some the the some for FPGA is solution. itself. be your coming are ASICs, in to So I is could with a think base there We're -- elements into two deployment answer customers

going the And it term, into could expectation will a regions. XG but when will And XXXX, permanent be to it not is customers, they pace, other be in at it no For be itself the are that VPN solution, our at to everybody some but in be smaller be least will if ASICs, -- stable. more deployment comes in in going return. will of one pace one faster the point a deploy, they're was customers, a

position it will in not are install it year. will we certain they not said we There interoperability last I they everywhere, there thought are So some as in some as this are install is initial The in prepared deployment in cities. the remarks, issues. leftover now, --

And customers way is the that that not part there. with have options open wait are the on about there, the it, reshuffle. need pretty room that for saying interoperability, that's so it's there we and just spectrum, Nokia say happen. deployment issues So they upper our two ASICs, issues And are for FPGAs, everybody we are second enough way half the the that more to the of to the the is with by we

Yaniv Arieli

in timing Matt, report that second maybe wrong that maybe, we and not to did this got out growth we this data the highlight done on what half the versus first bake of last is year with that. to we royalty in year we yet and want see that before more year have come we best the

of then just and So that's I in. understand the better this when market that and difference there to opportunity that a year kicks think trying bit

guidance. our the -- we miss don't don't miss So

Matt Ramsay

it. Got you that. both Thank for

per on or the And a guess, from unquote question, a I baseband of feature some a early Thank OEMs market, I deployed on those XG And we're now years potentially it with in the would for the ago. your XG I a imagine the majority XG month seeing some when that you're quickly you seems handset back coming announcements relative about going might path more customers or, guess, guess, where to of maybe so. could mix? in XG to I customer than on you're get here secondly, on XG Qualcomm quote XG As of what follow-up they your then you. did how number going the be for basis in at right EOs talk unit pricing to and of handsets. seem to Barcelona like maybe based handsets mean will

Gideon Wertheizer

first XG, So, far see, believe of I a and a you're when lot, also wave that the see the it can to would be forms number as be you operator. it, Qualcomm-based going I see, all it would comes of as them

So interoperable will XG and be fully will it promote just decide and to be would said, like operators to underpin. it's meaning [indiscernible] very I localized, it

are XG station and have on when how install the them XXXX, Our when they we they markets out we to depending evolve, several customers see base them working something we will maybe the XXXX, to station on there market that come put the customers, will better know into is late and the first. because need base

LTE, and and for as XG went XX% in down so quarter-over-quarter will one XX%, to The we smartphone platform XG see. take you the and XG example have in know, broadband LTE. we'll So went data, than it comes new a Qualcomm down and way thing mobile you when if for it be higher QX a we an by LTE,

to in the, for market year. And the may the So mainstream to a this be of doing better. first us are think mass way in focus least, comes we and it market, half I year next that's when at

Operator

question next Mike go come The Please will Genuity. of from Walkley ahead. Canaccord

Mike Walkley

Great, thanks.

year-over-year weak; Just just Thank a puts you us up recovering, year-over-year? though then the your be expect maybe process through per should up us million kind are overall better in you, obviously, so even ZTE and like kind seems some on should of slightly of we're royalty question maybe Intel look about walk in should through just of iPhone, X a gaining going share issues, volumes year, on, of you slightly it the, walk of Nokia year-over-year declines through 'XX. takes Can be but and and the because growth a you where some Spreadtrum, calendar your of lot at? be nothing the business something you can versus seeing customers thought royalties you. the

Yaniv Arieli

Thanks Sure. Mike.

quite allocation we we low start into the much right stronger first or gaining volume about and SKUs sockets half continue in so mainly half, the very right, all two all over those got, especially picking year quarters in five year the the that spill probably for and I all we've space think similar of we've more with believe more a will that Apple that from, inventory, that about over I we'll talked XXXX. I got first We next being will thing from published seen saw talked Last you the you the from for points that second earlier. know, that reasons reasons two, miss the ago. the that won. into that all matureness we in launch, different QX September will we seen levels were QX, one the mentioned will weeks, or of the the to year that year we think And the QX throughout have where the up they've handset overall maybe were six around second two different and last the and Spreadtrum you

quarter we there SKUs OEMs. will reporting and ZTE And not to need that and just the not volume the half saw holes mentioned not year you different and new of working. you see the by last lot see, in a of timing of we now any So these we different be like hope and earlier of OEMs,

did year think not and throughout XG picks I in bake should the we potential. with that the that this, When yet. numbers linear So up be with more

second Nokia half potentially ZTE and this on second board. much compared to with half see stronger will We a

see. just to royalties to pending from new no is in, that in included and have happen wins, new other this of not and models. we're full last that For should both baseband, markets We that that is royalties and for dozen not a Nokia, is we yet into year-after-year, up couple a relatively early we're that for just automotive opportunity the some increase could row, and hit the and out a sound our year lot we volume we about space talking could talking units our did two All not deals now Yet royalties. the and in But that's We're But wait that the in about hope design extent talked in the see still XXXX saw ZTE we narrowband want IoT to about, of something take yet. probably markets XXXX. non-handset third unharmed. and not going are but there years. those chip pieces first with continue

a of that, continue taken year-over-year a lot pretty should biggest in business we've So all station from basis. these base is parts we other of looking growth dollar the, good a non-handsets very course, for and contributor, and on prudent approach coming now are

Mike Walkley

helpful follow-up Okay, my that's and question.

another you about extra just for, plus sold So cost research year-over-year? development, million and going goods include X of sold? clarification, the costs X.X of goods of cost say to extra exclusive Just, and on of have million you did is sold? that or X goods that up million expected cost for Is the R&D in that

Yaniv Arieli

talked than big that, reason never about project a right, ongoing last part XXX plus, you're X new those make get that more our a has to we If the customer realize that That split bit that's want explained, that a is we customers into customers. us, to increase. more really we rather XX worked for and it's of them R&D of to it support and for a are us. deals successful level that and that R&D to of production, much four and causes pressure with needs them portion support signed years the Gideon mainly It's the In million on line. we

it's allocation on that XG top the of design X goods and both of on you for million that win. of specific have So the that cost OpEx

Mike Walkley

Congress Great. seeing World weeks. Mobile two and forward in to Thank look at you you

Gideon Wertheizer

Thank Great. you.

Operator

Suji will Desilva from question ahead. Roth of go next Please Capital. come The

Suji Desilva

Hi, large to A the customization Gideon. that question Hi, the the on quarter didn't milestones go revenue the revenue, because deferred the have Is there's for to collect the, there, multi Is Yaniv. license you up? agreement why cash? that reason? achieve XG

Gideon Wertheizer

pretty Yes, deal. a a, it's that's correct. It's big

starting we've ever have signed an to it and or we'll deal I technology you or six go milestones as work think we're we on and the along. so, the we, five over we probably quarters, so biggest recognize invoice said

Suji Desilva

new customer? Okay, or that that a to existing is then customer an And CEVA customer helps.

Gideon Wertheizer

you one. to did we I give any to speak not this clue mean,

Suji Desilva

enough. Fair

Okay.

Gideon Wertheizer

[Indiscernible]

Suji Desilva

two small more cells of really? you it you a perception more Is but opportunity small misperception? -- know, you And then, those I or that is you're guys upgrade in here. that take off you as which cell infrastructure which it have up even on XG, better in really broadly ramp cells, is macro content and macro of I just, the core have the guys and levered in Are might a an mean, you cell, wireless to have small

Gideon Wertheizer

more usage way macro we Right the beauty then be when places both and the in that all the because diverse plan by over is where [indiscernible] are and we the about build deployment the LTE is now the all XG we going be We're big the those the the that's the to the it to scalable and we wireless in market. there fixed of and XG, mobile customer. have much is that's But and so and can LTE. place for small cell address and the comes

Suji Desilva

Okay, that’s question the quick your that in talked Can growth. 'XX? you support about that would the rank on non-baseband non-baseband, growth sub you order last of the in best 'XX opinion One very segments helpful.

Gideon Wertheizer

growth wise wise drones early, mentioned different three last After amounts, is wise dollar are that the devices the vision the the of vision three contributor significant have cameras been So so no scratching the said we're in the million about years, kinds up three for year-after-year biggest less last probably We're Bluetooth. ever more GoPros base years had not I and year with handful the volume of stations we earlier the a And as and if year. and like dollar million million than just then and Wi-Fi and dollars talked up. to both more dollars. the sound sport years but specific the see ago segment in This from units, has picking of been Then that millions products licensing future. moving not and we one yet that XXX Bluetooth using devices, strong we The opportunity, a XX% dollars million started in decreasing we so from for the our more is XXX have far. that and goes few of us. unit We that. near we more devices, seeing By connectivity, that of are that's hundreds way, volume CEVA the winning more. and best -- the as don't

to anticipate volumes increase. those to continue we so And

every but from is amount then after vision I in a connectivity, and biggest station contribution, the think I seeing So the we're sound. front dollar would say, base the that

Suji Desilva

Fair enough.

Gideon Wertheizer

that. segment a Narrowband And IoT top on is not of new there yet. that's

Suji Desilva

Very helpful, indeed. you. Thank

Gideon Wertheizer

Sure. Thank you.

Operator

go The will from of Rosner come next question ahead. Please Barclays. Tavi

Tavi Rosner

we grow, looking fast at some for a expected, would non-baseband Thanks as did shift did I license since ago. few unit, in -- taking -- growth, -- see opportunities question. know, began as When unit although have I a we guess my emerging the years I see the you a didn't become

non-baseband are could what growth significantly for and this you kind guess there you same are that outperform to I expecting guided growth from areas the of that So XXXX, in the royalties extent, in any guidance? for

Yaniv Arieli

to I our late, the think which with did the in part last clear want that we we're control. make of same and question was we start year, course, the had the not that on quite not second Of we'll mistake

at forecast to date potential there of account have very because Nokia exact try don't ramp and yet least up the into quantity we that So not quantify. taking a note to prudent small we or amounts role to

XX to that's XX go of in expect production exactly see do extent and XXXX that of don't into are companies of how where that We out to working we we to phase, what have 'XX versus and for no or we're customers the growth we that evolves. for wins few looking a equation. overall But most design we that that XXXX. to on XX% that doubt And have know XX%, growth still we So is something volume the, that there new units. XX that's talked today, we about, is quite we'll in in now are in, design today what, units, anywhere between of at

of units millions significant of So tens still that of products. should new be

a and that for we course, the will baseband dollar Of to help perspective, be again, there need overall. devices

Gideon Wertheizer

don't Yeah I first add regarding It the in place. will over the in go have mind probably question, go and station, that non-handset when things exactly minus so we many IoT, that go your in all I will can visibility better? all to base it Keep exact call better comes how they pace the have would and design two that, when will, of we process market. things, it what

those In Yaniv, this we we year. covered already ZTE. to progress they're, very took that on base XG, and know just that Nokia this going we taking So and know prudent both station, they're we're for how

us will So And so now our are potential LTE, macro, know, baseband. comes then the to in China and class. right concern is cell, base, The just than many is boost not XG, the see the the you the, example ZTE the and happened, market, good, put not to for dispute question, faster the have macro, US, that if in XG you baseband, I the In trade the come they even the in a expand get so both it's I of not then gave and what you [indiscernible] the doing macro. aside in we LTE. macro handset mean, one improves we're the relatively that will into the XG implies

come So when short or strength about magnitude you would that very speak period. in

unknown So there. be these but want about we still are potential to didn't optimistic is again problems, it, the

Operator

Paribas. come go Our today David of last ahead. Exane BNP from Please question will O'Connor

David O'Connor

exact us are idea a your Great. in many XG on in where Maybe deal And signed give a thanks. of to licensing in aspect that And the XG do of one What's deals up, maybe cycle? to squeezing Thanks how the expectation you again what the made you guys. have XG, deal license maybe question I we follow an you back that in the me then going for and today's? XXXX, expect quarter, what, can the close? biggest

Gideon Wertheizer

waiting the of soon me risk a let they player, thing us it's serious as this more finish can and deal When the give see for question we'll customer the serious because big people give. we to clarity as wants, can XG. a we It's that what want, what curious called customer. only say take so So that first I customer about a signs second take are

the into and XG, you, we technologies if take, platform. in announced you XG a MWC. these and it if you of And in that's, the handset. about can we is said portion PentaG your when sees end have are our you what out. we it targeting we, incumbent station, miss, base I is but take this there last that XG in and it in take more it are expecting and goes remark you can technology we're and you also, believe newcomer new can shutter year specific of The you it that take, the to customers XXXX our it started, expand this an leave a portion have thing for to if that that comes same a The prepared to because technologies we PentaG, we're first XG, license or it call you So few comes necessarily to don't we're all, deal. believe newcomers in you're general, When there the footprint and take it,

equipment So dynamic how I very tell fairly how, signed, have handsets reason future stuff addressing. weeks, I hectic commitment exactly And and say the how many would we engagement. a other only many that but is cannot which we are have can all XG and engagement very dynamic, thing the know I very give you that for any dynamic customers, you a I don't it's we the

David O'Connor

then and for Yaniv. that a for Thanks it. follow got Okay, maybe up

around what's assumption XG the growth, XG? and across Thanks. ASPs royalty the XXXX baseband Within handset

Yaniv Arieli

U.S. It's with and the see low-end be speed we mix players year. space if continue in just and we that. in The, be should much we the environment, many have overall change back we will as much. coming would helped important, the earlier Spreadtrum higher LTE are if that more competition like they high-end think to when a OEM any dollars discussed in we, too royalty will XG any, picks suddenly happy up over be not and the elevation. pushed and the bit, the Again higher. we, last contribution XG to because here that ASP a XG stay. we is In healthy the I but Maybe added In the the didn't there

we think the the that's today. I could ordinary same not up, see a more what will combination or So flattish ASP and tell we lower are the of ASP, as as out if we versus much that, somewhere less volume pick for of which nothing the But now. here

David O'Connor

Okay. Got shipments it. And LTE one, one QX? in maybe final just the

Yaniv Arieli

million. XX

David O'Connor

that? was what Sorry,

Yaniv Arieli

QX. XX million in

David O'Connor

Got it. Thanks, guys.

Yaniv Arieli

you. Thank Great.

Operator

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

Richard Kingston

interest Thank you. us And today you for in joining thank continued and and of all your support CEVA.

regards include the X-K With Congress our XXth events As Barcelona, XXth for on our XXth of Susquehanna section Conference New and California. website information a other exhibit reminder, March upcoming March February from investors.ceva-dsp.com. will the Conference call be Mobile these through World of at and to attending, current these and visit the XXth investor York prepared accessible Roth Spain; on on an we through XXth on Thank this Please as in the attending. in Annual you Point, the XXst in and further events conference events website filed and section Dana goodbye. we Technology be the remarks report will Form are for investor

Operator

concluded. conference is for attending The today's Thank presentation. now you

Have lines. disconnect You may day. a now great your

CEVA (CEVA) 13 Feb 192018 Q4 Earnings call transcript