Q4 2021 CEVA Inc Earnings Call
Speaker 1: Good day and welcome to the Siva Inc. full quarter and full year 2021 earnings conference call. All participants will be in listen only mode.
Welcome to the CEVA, Inc, fourth quarter and full year 2021 earnings conference call.
All participants will be in listen only mode.
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Speaker 1: After today's presentation, there will be an opportunity to ask questions.
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Speaker 1: I would now like to turn the conference over to Richard Kingston, Vice President, Market Intelligence, Investor and Public Relations. Please go ahead, sir.
I would now like to turn the conference over to Richard Kingston, Vice President market Intelligence Investor and public Relations. Please go ahead Sir.
Speaker 2: Thank you Rocco. Good morning everyone and welcome to SEVA's fourth quarter and full year 2021 earnings conference call.
Thank you Rocco good morning, everyone and welcome to <unk> fourth quarter and full year 2021 earnings conference call.
Speaker 2: I'm joined today by Gideon Wertheiser, Chief Executive Officer and Yaniv Ariely, Chief Financial Officer of CVA.
And today by Gideon <unk>, Chief Executive Officer, and <unk>, Chief Financial Officer of fever.
Speaker 2: Gideon will cover the business aspects and highlights from the fourth quarter and provide general qualitative data.
Gideon where cover the business aspects and highlights.
Fourth quarter and provide general quantitative data.
Speaker 2: The NE will then cover the financial results for the fourth quarter and full year 2021 and also provide guidance for the first quarter and full year 2022.
And he will then cover the financial results for the fourth quarter and full year 2021.
Also provide guidance for the first quarter and full year 2022.
I will start with the forward looking statements.
Speaker 2: Please note that today's discussion 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.
Please note that.
Today's discussion 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 on assumptions.
Speaker 2: Forward-looking statements include statements regarding demand for and benefits of our technologies.
Forward looking statements include statements regarding demand for and benefits all of our technologies.
Speaker 2: expectations regarding market dynamics, changes in the semiconductor industry, and our plans to capitalize on the foregoing.
Expectations regarding market dynamics changes in the semiconductor industry and our plan to capitalize on the foregoing.
Speaker 2: beliefs regarding benefits and the impacts of the intrinsic acquisition, including expansion into the aerospace and defense market, and ability to offer integrated IP solutions and enrich security and assurance products.
Beliefs regarding benefits and the impacts of the intrinsic acquisition, including expansion into the aerospace and defense market.
<unk> to offer integrated IP solutions, and a rich security and insurance products.
Speaker 2: expectations and financial guidance regarding future performance including growth in licensee revenues and customer agreements and qualitative data for 2022 and objectives regarding sustainability.
Expectations and financial guidance regarding future performance, including growth in license fee revenues and customer agreements and qualitative data for 2022.
<unk> objectives regarding sustainability.
Speaker 2: for information on the factors that could cause a difference in our results.
For information on the factors that could cause a difference in our results.
Speaker 2: Please refer to our filings with the Securities and Exchange Commission.
Please refer to our filings with the Securities and Exchange Commission.
Speaker 2: These include the scope and the duration of the pandemic, the extent and length of the restrictions associated with the pandemic, and the impact on customers, consumer demand, and the global economy generally.
These include the scope and the duration of the pandemic.
Stent and length of the restrictions associated with the pandemic and the impact on customers consumer demand in the global economy generally.
Speaker 2: The ability of Siva's IPs for smarter connected devices to continue to be strong growth drivers for us.
The ability of <unk> IP for smarter connected devices to continue to be strong growth drivers for us.
Speaker 2: our success in penetrating new markets and maintaining our position in existing markets.
Our success in penetrating new markets and maintaining our position in existing markets.
Speaker 2: the ability of new products incorporating our technologies to achieve market acceptance.
The ability of new products, incorporating our technologies to achieve market acceptance.
Speaker 2: speed and extent of the expansion of the 5G and IoT markets.
Speed and extent of the expansion of the <unk> and Iot markets are.
Speaker 2: our ability to execute more base station and IOT license agreements.
Our ability to execute more base station and Iot license agreements the.
Speaker 2: the effect of intense industry competition and consolidation, global chip market trends, including supply chain issues as a result of COVID-19, and other factors.
The effect of intense industry competition and consolidation.
Global chip market trends, including supply chain issues as a result of COVID-19, and other factors.
Speaker 2: and our ability to successfully integrate intrinsics into our business.
And our ability to successfully integrate intrinsic into our business.
Speaker 2: FIVA 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 hand the
<unk> assumes no obligation to update any forward looking statements or information, which speak as of their respective dates.
That said I would now like to hand, the call over to Gideon.
Speaker 3: Thank you, Richard. Good morning, everyone, and thank you for joining us today.
Thank you Richard and good morning, everyone and thank you for joining us today.
The fourth quarter and the fiscal year, 2020 , one was extremely intense and exceptionally successful.
Speaker 3: fourth quarter and the fiscal year 2021 was extremely intense and exceptionally successful.
Speaker 3: If the digital transformation drives industry to become connected and intelligent, our ubiquitous technology and collaborative business model present a significant and secular growth prospect.
The digital transformation device industry can become connected and intelligence.
Yes technology and collaborative business model.
A significant and secular growth prospects.
Speaker 3: Our record financial results for 2021 and the 2022 guidance that Yaniv will shortly outline bodes well with this dynamic.
Our record financial results for 'twenty, 'twenty, one and declining 22 guidance did you need when you showed the outline bodes well with these dynamics.
Speaker 3: For the fourth quarter, we delivered a record revenue of $34.1 million, the third consecutive quarter of record high revenue, up 22% compared to the fourth quarter of 2020.
For the fourth quarter, we delivered record revenue of $34 1 million.
The third consecutive quarter of record high revenue up 22% compared to the fourth quarter of 'twenty.
<unk>.
Speaker 3: The licensing environment continues to be robust at $21.3 million on the back of 20 new license agreements and four first-time customers.
The licensing environment continues to be robust.
$21 3 million below on that.
<unk> 20, new license agreements.
Paul first time customers.
Speaker 3: The fourth quarter licensing engagement highlights the transformation in our value proposition from licensing of standardized IP calls to our licensing of comprehensive IP platforms, which leads to higher upfront license revenue and larger royalty opportunities.
The fourth quarter licensing engagements highlight the transformation in our value proposition on license single standardized IP cores.
Licensing of comprehensive IP platforms.
Which leads to higher upfront license revenue.
Now Joe was the opportune.
Speaker 3: In this context, we executed a number of sizable agreements this quarter.
In this context, we executed a number of sizeable agreement this quarter and.
Speaker 3: among which are agreement with the Japanese OEM for the nationwide deployment of 5G fixed wireless access in Japan.
In mind reach a agreement with it.
OEM for the nationwide deployment of fiber.
<unk> fixed wireless access in Japan.
Speaker 3: a lead OEM customer for next generation Wi-Fi 7.
Lead OEM customer for next generation Wi Fi seven.
Speaker 3: a Tier 1 Semiconductor Company for an AI-based Advanced Driver Assistance Systems, ADAS project.
Tier one semiconductor company.
Based advanced drive.
Consistence Adas project.
Speaker 3: We also executed the first integrated IP solutions agreement where we coupled IP licensing with intrinsic cheap design for comprehensive platform for smart motor control product for a large U.S. semiconductor vendor.
We also executed the first integrated IP solutions agreement, where we captured IP licensing with intrinsic achieved design for comprehensive platform for small multiple control product.
A large U S semiconductor vendors.
Speaker 3: Wealthy revenue for the quarter came in ahead of our expectation at $12.7 million. Our diverse base station and IOT product category continued to expand, up 21% in wealthy revenue versus the respective quarter last year.
Royalty revenue for the quarter came in ahead of our expectation.
One 7 million below.
Our various base station and Iot product category.
<unk>.
Up 21% in warranty revenue very fast.
The quarter last year.
Speaker 3: Our technologies being deployed in wearables, PCs, smart TV, robot vacuum cleaners, surveillance camera, and in plenty of other IoT devices are key drivers of that growth.
Our technology is being deployed in Wearables Pcs small PV robot vacuum cleaner for Williams.
And in plenty of other Iot devices.
Key drivers of that growth.
Speaker 3: On 5G Run, a key customer of ours released for field testing new 5G Run product enabled by our latest and most advanced DSP, the XC16.
<unk> five <unk>, one at key customer of ours relief for field testing, new five <unk> product enabled by our latest and most advanced DSP the exceed 16.
Speaker 3: Comparing to the fourth quarter of 2020, wealthy revenue was down 21% as large US-based handset OEM moved to 5G, for which it uses chips from a competitor, which we alluded to on trial calls.
Comparing to the fourth quarter of 'twenty 'twenty Worldview revenue was down 21% as large U S. Based handset OEM moved two five G will reach its uses chips from a competitor.
Alluded to on prior calls.
Speaker 3: For the full year 2021, our total non-gap revenue grew 22% to a record of $122.9 million, driven by step-up in our licensing and RE and related revenues.
For the full year 2021, our total non-GAAP revenue grew 22% to a record.
$122 9 million.
No.
Even by step up in our licensing.
And related revenue.
Speaker 3: Revenue for this part of our business had a record performance of $73 million, up 39% compared to last year, with 73% agreement up from 55% last year.
Revenue for this part of our business had a record performance of $73 million below.
39% compared to last year.
773 agreement up from 55 last year.
This achievement in licensing our key fall business grows is signing up license fee is retail so for royalty revenue, reaching scale, our operating leverage and any issue.
Speaker 3: These achievements in licensing are key for our business growth, as signing up licensee is the precursor for royalty revenue, which in turn scales our operating leverage and earning per share.
Speaker 3: Our consistent and relentless effort to grow and diversify our licensee is already apparent in the royalty revenue out of the base station and IOT segment that grew by 29% year-over-year to a record of $28.6 million and 69% in units and approaching 1.3 billion units.
Our consistent and relentless effort to grow and diversify our relation fee is already apparent in the royalty revenue out of the base station and Iot segment that grew by 29% year over year.
<unk> of $28 6 million.
62, 69% in units and approaching $1 3 billion units.
Speaker 3: Overall, royalty revenue was record high, $49.9 million, of which strong growth in royalty revenue out of the base station and IOT category more than offset the decline in the handset category.
Overall, while the revenue was record high $49 9 million below.
<unk> strong growth in royalty revenue out of the base station and Iot category more than offset the decline in the handset category.
Speaker 3: To grow further our licensee base and strengthen our value proposition in this engagement, we completed the strategic acquisition of a transit during the year.
To grow further our licensee base and strengthen our value proposition in this engagement, we completed the strategic acquisition of intrinsic during deal.
Speaker 3: Intrinsics brings in new customer base in the lucrative aerospace and defense market and enable us to offer integrated IP solutions where we offer combination of IP licensing with the SOC design for an optimal performance outcome and larger revenue share with our customers.
Intrinsic to bring in new customer base in the lucrative aerospace and defense market.
Enabled us also integrated IP solutions, where we wholesale combination of IP licensing.
Youll see design.
Optimal performance outcome and larger revenue share with our customers.
Let me at this stage working through the soft process, we went through to determine our folk.
Speaker 3: Let me at this stage walk you through the thought process we went through to determine our focus. Go to the market strategy.
Yes.
The market strategy.
Speaker 3: The ongoing turmoil in chip supply has made evident the foundational role.
The ongoing turmoil in chip supply has made evident the foundational wall.
Speaker 3: semiconductor industry has in technology innovation and the overall economy. According to Deloitte, in 2020, global semiconductor sales rose 6.6% to $440 billion, even as global GDP shrank 3.5%. And for the next decade, the semispace is expected to show 50% faster growth than global GDP.
Semi conductor industry has in technology innovation and the overall economy.
Clothing to Deloitte in 'twenty 'twenty global semiconductor sales grew rose.
It rose six 6% to 440 billion below even as global GDP shrunk three 5%.
For the next decade, the semi space is expected to show, 50% faster growth than global GDP.
Speaker 3: Furthermore, geopolitical tensions and the criticality of cheap supply to national security drive government to spend and incentivize investment in the semi-space, as can be seen by the anticipated U.S.
Further more geopolitical tension.
Quality of chip supply to National Security drive government to spend any incentives in <unk>.
<unk> investment in the semi space as can be seen by the anticipated U S. Senate Bill 452 billion dollar investment and semiconductor technologies.
Speaker 3: Senate bill for $52 billion investment in semiconductor technologies.
Speaker 3: the Chinese government announcement of $150 billion investment in family space over the next 10 years.
<unk> government announcement of 150 billion investment in family space over the next 10 years.
Speaker 3: This explosive demand for chips drives OEMs and IT companies to internalize their chip needs and to engage directly with fundraisers and IT companies.
These explosive demand for chips drives OEM and IP company to internalize their kid needs input engage directly with fund with an IP company.
Also the Chinese government's ambitious to be self sufficient in the semiconductor space intelligence local invesco and technologies to form New chip company to drive the fast growing electrical electric.
Speaker 3: Also, the Chinese government's ambition to be self-sufficient in the semiconductor space encourages local investors and technologists to form new chip companies to drive the fast-growing electric car industrial and consumer product industry.
And consumer products industries.
Speaker 3: Against this backdrop, FIWA broad IP portfolio and capabilities to expedite and streamline customer chip development is open new and sizable customer opportunities.
Against this backdrop fever, broad IP portfolio and capabilities to expedite and streamlined customer achieved the development is open new and sizable customer look with union.
Let me add more color on how we plan to capitalize on these changes.
Speaker 3: Let me add more color on how we plan to capitalize on these economic changes.
Speaker 3: Wireless technologies, including cellular, Wi-Fi, Bluetooth, and UWB have been key strengths for SIVA. Over the years, we have been able to focus on the right-hand market and to build a very large customer base.
Wireless.
Ireland technologies, including <unk>, Wi Fi Bluetooth and UW Uwp has been key strengths placebo.
Although the yields we have been able to focus on the right end markets and to build a very large customer.
Base.
Speaker 3: key customers. We have earned strong reputation, which enables us to engage with and sign up top customers to drive next generation and new trends in wireless.
Key customers, we have and stronger mutation, which enable us to engage with and sign up customers to drive next generation and new trends in wireless.
Speaker 3: Strategically speaking, we will pivot in two main wireless trends.
Strategic theme, we will devote into main wireless trends.
Speaker 3: First, the proliferation of 5G in broadband and massive IoT.
The only situation of five G in broadband and massive Iot.
The recent Ericsson mobility report projects $5 5 billion cellular connection by 22007, it's almost 10%.
Speaker 3: The recent Ericsson Mobility Report projects 5.5 billion cellular connections by 2027 that are not handset, up from 1.9 billion connections in 2021.
Up from $1 9 billion connections in 2020 one.
Speaker 3: Cellular IoT applies to broad markets, among which are fixed wireless access devices, automotive, industrial laptops, and more.
Cellular Iot applies to broad market, among Guizhou <unk> fixed wireless access devices automotive industrial laptops and more.
Speaker 3: Cellular IoT is fundamental to enable smart transportation, smart grid, robotics, and remote health.
Cellular Iot is the fundamental is fundamental to enabling smart transportation small bleed robotics and remote healthcare.
Fever wholesale to Oems and semiconductor companies targeting <unk>, two highly integrated IP platform.
Speaker 3: FIWA offered to OEMs and semiconductor companies targeting cellular IoT to highly integrated IP plus.
Speaker 3: the PentaG for mobile broadband IoT and DragonFly for massive IoT.
Entergy for mobile broadband Iot and dragonfly four Macy legacy we believe that by capitalizing on these two technologies in the upcoming new generations place us in a position to address the whole market needs and to enable new entrance to Penn addressed this year.
Speaker 3: We believe that by capitalizing on these two technologies, in the upcoming new generations, place us in a position to address the whole market needs and to enable new entrants to penetrate this huge space.
Steve.
Speaker 3: Second is Wi-Fi upgrade cycle. The Wi-Fi market is huge and growing. ABI Research forecast 5.5 billion Wi-Fi devices by 2026, up from 3.5 billion in 2021.
Secondly, Wi Fi upgrade cycle, the Wi Fi market is huge and growing <unk> sales forecast five 5 billion Wi Fi devices by blending <unk> 26 up from $3 5 billion in 2021.
Speaker 3: The rollout of the latest standard, Wi-Fi 6, and recently 6E, is underway and expected to see more shipments than any prior standard as it extends beyond smartphone, PC, and tablet to smart home, industrial, cars, AR, VR, and many more markets.
The rollout of the latest tons of Wi Fi six and recently he is underway and expected to see more shipments than any player stand though is it.
Extend beyond smartphone PC and tablet and smart home industrial.
<unk> <unk> and many mall market.
Speaker 3: The complexity encompassed in new Wi-Fi design, along with new connected devices that require Wi-Fi IP integration, is driving strong momentum in our overall licensing and MRE business, which was up 39% in 2021 versus 2020.
The complexity and compassion in new <unk> design, along with new connected devices that require a Wi Fi IP integration is driving strong momentum in our overall licensing and MLM business, which was up 39% in 2020.
The one versus 2020.
Speaker 3: Our R&D investment will focus on the next generation Wi-Fi 7, which is expected to be in the market by 2024.
Our R&D investment will focus on the next generation <unk>, seven which is expected to be in the market by plenty plentiful.
Speaker 3: As mentioned earlier, in the fourth quarter we signed a lead customer Wi-Fi 7 agreement.
As I mentioned earlier in the fourth quarter, we signed a lead customer Wi Fi seven agreements.
Speaker 3: with one of the largest OEM in China, which seeks to decouple its dependencies on chip incumbents that currently dominate the advanced Wi-Fi chipset market.
We as one of the largest OEM in China, which seeks to decoupling.
These dependencies on cheap incumbents that currently dominate the advanced Wi Fi chips with mode.
Hey, Jay.
Speaker 3: Edge AI emerges from growing need to handle AI processing from cloud to smart devices such as smartphones, cars, robots, or 5G base stations to gain faster response and higher security.
Hai and they'll just from growing meat.
The AI processing from cloud to smart devices, such as smartphones.
<unk> or <unk> base station to gain faster response and higher security.
Speaker 3: A recent ABI research forecast, AGI is a fast-growing market, expecting to surpass 1.3 billion units by 2026.
And recent Abi research focus.
<unk> is a fast growing market.
<unk>, one 3 billion units by 2020.
Speaker 3: SIVA has targeted the edge AI market for early on. We already have good penetration with edge AI in automotivators market, where we are closely working with industry leaders, including both SEMIS and OEM, and in the surveillance and consumer market.
Fever targeted the Agi <unk> markets for early on we already have good penetration with edge AI in automotive Adas market, where we are closely working with industry lead.
Including both semi as an OEM and industrial Valeant and consumer market.
Speaker 3: To further capitalize on our strengths, we unveiled last month our new-generation AI processor, the NEO Pro-M. NEO Pro-M delivers a significant performance leap compared to its predecessors, NEO Pro-S, and for the first time introduced new concepts in AI architecture design, security integration, and chiplet scalability.
That capitalize on our strengths, we unveiled last month, our new generation AI processor, the new brand new brand delivers significant performance leap compared to its predecessor, Neil breath.
For the first time introduced new concept.
Picture design security integration and cheap let's capability.
Speaker 3: Its heterogeneous multi-processor architecture offers performance ranging from 20 tera-operations per second, or TOPS, to 1,200.
Genius multi processor architecture wholesale performance ranging from 20 Tera operations per second of books.
1200 dose.
Speaker 3: It extends beyond video to a whole new range of AI usages, such as natural language processing, 5G network optimization, level 4, 5 fully autonomous car, industrial machines, and more.
Users.
<unk> extends beyond video to a whole new range of AI usages, such as natural language processing for ISG network optimization <unk> been full priced fully opened almost call investor and machines and modal.
For the first time <unk> enabled chip lip scalability for reach our intrinsic Dean can wholesale turnkey design for a genius.
Speaker 3: For the first time, New PoEM enabled chiplet scalability, for which our intrinsic team can offer parenting design for heterogeneous SOCs.
We are building handled this.
Speaker 3: The onset of COVID-19 has increased the demand for wearable and wireless headsets and catalyzed innovation in this space.
Onset of COVID-19 has increased the demand for Wearables and wireless headset and capitalized Catalyzing innovation in this space wireless.
Speaker 3: Wireless headsets are looking for high-quality sound with smart and dynamic noise suppression. Smart watches are disrupting the traditional watch market and are evolving into health and activity monitoring devices.
Headsets are looking for high quality sound, we smiled and dynamic noise separation smart watches are distracting the traditional watch market and are evolving into health and activity monitoring devices.
Speaker 3: Research and development forecast that shipments of TWS earbuds, hearing aids, smart watches, and smart speakers will surpass 1.3 billion units by 2026.
These <unk> Jan development forecasted shipments of Dws, earbuds hearing AIDS smart watches and smart speaker, which help us one point.
<unk> billion units by two.
<unk> 2000 feet.
Speaker 3: Steve already has a strong position in the wearable and hearable space with dozens of active customers. We are in a unique position to standardize wireless audio processing IP with our latest Bluebird platform.
<unk> already has a strong position in the wheel bill inhaled space with dozens of active customers.
We're in a unique position to standardized wireless audio processing IP with our latest global platform less months, we enriched the Bloomberg value proposition with the launch of <unk> HD is suite of fleet configure software for high quality audio voice conversation.
Speaker 3: Last month, we enriched the Blue Bot Value proposition with the launch of Blue Bot HD, a suite of pre-configured software for high-quality audio voice conversation and contextual awareness.
And contextual awareness.
Speaker 3: BlueBot HD lowers the cost of entry for many semiconductors and OEMs that lack the skills expertise in wireless audio, which SIVA masters.
Global <unk> lower the cost of entry for mainly semiconductor Oems that lack the scale.
These in wireless audio, which CEVA muster.
China.
Speaker 3: Our revenue out of China grew 30% this year versus last year.
Our revenue out of China.
30% this year versus last year.
Speaker 3: unit shipment by our Chinese customer grew 38% versus 2020.
Unit shipments by our Chinese customers grew 38% versus 2020.
Speaker 3: We are the de-facto standard in wireless communication used by all major players, among which are ZTE, Uniswap, Best Techniques, Beacon, ASR Micro, and others, which overall constitute more than 75 active customers.
We are the de facto standard in wireless communication used by all major players in lung Guizhou VP uniform best techniques Beacon, Asl, Michael and others, which overall constitute more than 75 active customers.
Speaker 3: ZT, our key customer in 5G base station run.
GTO, a key customer in <unk> base station run.
Speaker 3: is set to substantially grow net footprint in China as can be seen by its recently securing 31%.
You said to substantially grow in net.
Footprint in China.
Seen by a recent.
Securing 31%.
Speaker 3: of the recent China Mobile Procurement bid for 5G 700MHz network and 34% of the 5G standalone construction for China Telecom and China Unix.
With the recent China mobile procurement deed for five 700 megahertz network and 34% of the <unk> Standalone construction for China Telecom and China Unicom.
Speaker 3: We are uncovering sizable opportunities in automotive, robotics, and mobile, where leading audiences are internalizing chip design.
We are uncovering sizable opportunities in automotive robotics and mobile with leading.
Leading Oems are internalizing chip design.
Speaker 3: Our most advanced technologies and our brand recognition set us up for further growth in China.
Our most advanced technologies and our brand recognition setup up for further growth in China.
Next before my closing remarks.
Speaker 3: Next, before my closing remarks, I want to update you on our objectives and commitment to our future sustainability.
I want to update you on our objectives and commitment our future sustainability.
Speaker 3: Companies around the world have provided sustainability plans for decreasing their carbon footprint over the next decade.
Companies around the world to provide their sustainability plans to.
We assumed the caliber and the footprint over the next decade.
Speaker 3: At our end, being an IT company, our direct carbon footprint is minimal, with activities primarily by R&D engineers and no manufacturing facilities. However, we intend to take
Relevant being in a company our basic <unk> footprint is minimum.
Activities, primarily by Eilers <unk> <unk>.
No manufacturing facilities. However, we intend to take advantage of our expertise in wireless AI and low power design to help our customer achieve their own sustainability goals is a stated above we are focusing on wireless Iot.
Speaker 3: advantage of our expertise in wireless AI and low-power design to help our customers achieve their own sustainability goals. As I stated above, we are focusing on wireless IoT where our technology can add resiliency and runtime analytics to optimize energy and water utilization and to expedite the shift to renewable energy.
Where our technology can add resiliency and onetime analytics to optimize energy and water utilization and to expedite the shift to renewable energy.
Speaker 3: We will also work with our base station run customer or next generation DSP technologies that will serve their objective of lower heat dissipation and energy consumption. We will continue to periodically consult with our investor of their perspective on sustainability.
We will also work with our base station one customer on next generation DSP technology.
Sure they'll objective of lower heat dissipation and energy consumption.
We'll continue the yodlee consult with our investor of their perspective on sustainability.
Speaker 3: So in summary, SIVA is uniquely positioned to capitalize on the semiconductor momentum and market transformation power of digitization. AI and connectivity. Our customer pipeline at the end of the year is historically high. We believe our key customers are keenly receptive to our product roadmap and priorities and willing to extend the scope of engagement with us.
Thanks, Emily fever is uniquely positioned to capitalize on the semi conductor momentum and market transformation Digitization AI and connectivity our customer pipeline at the end of the year as utility high we believe our key customers are keenly receptive.
While product.
<unk> and <unk> and willing to extend the scope with the engagement with us.
Speaker 3: We expect 2022 to be an exciting year with growing momentum in revenue, EPS, and customer engagement.
We expect 2020 to be an exciting year with growing momentum in revenue EPS and customer engagement. We are determined to continue to develop standout product and consistently grow our customer base and licensing engagement to scale our business.
Speaker 3: We are determined to continue to develop standout products and consistently grow our customer base and licensing engagement to scale our business. Finally, I would like to take this opportunity to thank all our employees for their hard work and dedication, innovation, and fantastic execution. I would like to extend my thanks to our partner suppliers and our shareholders for their confidence and support.
Really as we'd like to take this opportunity to thank all our employees for their hard work and dedication innovation and fantastic execution.
Thanks to our partners suppliers and our shareholders for their confidence and support.
Speaker 3: We wish you all a healthy, happy, and prosperous year, and please stay safe.
We wish you all a healthy healthy and prosperous seal and please stay safe.
Speaker 3: With that said, I will now turn the call over to Yaniv, who will outline our financials and guidance.
With that said ill now turn the call over <unk>, who will outline our financials and guidance.
Thank you Peter I'll start by as further reviewing our results of operations for the fourth quarter of 2021.
Speaker 3: Thank you, Gideon. I'll start by further reviewing our results of operations for the fourth quarter of 2021. Revenue for the fourth quarter was a record high at $34.1 million, up 21% compared to $28.1 million for the same quarter last year. Our third sequential...
Revenue for the fourth quarter was a record high of $34 1 million.
Up 21% compared to $28 1 million for the same quarter last year, our third sequential all time high.
Speaker 3: Non-cap revenue was $34.2 million, up 22% year-over-year. $0.2 million higher due to the purchase price allocation adjustment associated with our intrinsics acquisition. The revenue...
non-GAAP revenue was $34 $2 million was up 22% year over year, Europe was $2 million higher due to the purchase price allocation adjustment associated with our intrinsic acquisition.
The revenue breakdown is as follows.
I think another one related revenue was $21 $3 million, reflecting 63% of our total revenue.
Speaker 3: I can think NRE in related revenue was $21.3 million, reflecting 63% of our total revenue, up 78% as compared to the fourth quarter of 2020, and just slightly below in our third quarter, a record high.
Up 78% as compared to the fourth quarter of one <unk>.
It's slightly below our third quarter a record high.
Speaker 3: Growth in revenue was $12.7 million, reflecting 37% of our total revenue, down 21% from $16.1 million for the same quarter last year, but up 13% sequentially.
Royalty revenue was $12 7 million, reflecting 37% of our total revenue down 21% from $16 1 million for the same quarter last year.
Up 13% sequentially.
Speaker 3: PlayStation and IoT royalty revenue contributed $7.8 million in the quarter, up 21% year-over-year.
Base station and Iot royalty revenue contributed $7 $8 million in the quarter.
Up 21% year over year.
Speaker 3: including all-time record high contribution from our sensor fusion product line and continued growth and strength across our base station and IoT product line overall.
Including all time record high contribution from our sensor fusion product line and continued growth and strength across our base station and Iot product line overall.
Gross margins.
Speaker 3: Gross margins were 83% on gap basis and 87% on non-gap basis, both higher than projected, due to lower allocations in credits and the recalls from R&D into cost of goods.
83% on a GAAP basis at 87% and non-GAAP basis.
Both higher than projected due to lower allocation of infinity, and our REIT costs from R&D into cost of goods expense line.
non-GAAP .
Speaker 3: Non-GAAP-poorly gross margin excluded approximately $0.3 million of equity-based compensation expenses and $1 million amortization of acquired assets associated with the Intrinsics Acquisition and Immigration Index.
Gross margin exclude approximately <unk> 3 million of equity based compensation expenses and $1 million.
Amortization of acquired assets associated with intrinsic acquisition in the vision in that.
Speaker 3: The total operating expenses for the fourth quarter was $26.6 million over the high end of our guidance due to lower allocation of intrinsics and R&D costs from R&D to the cost of revenue compared to our prior core budget.
Our total operating expenses for the fourth quarter was $26 6 million over the high end of our guidance due to lower allocation of intrinsic in our REIT costs from R&D with the cost of revenue.
Our prior guidance.
Speaker 3: Touch shifts between the two expense line items may happen from time to time and are tied to the actual chip design work performed in a quarter.
That's shifts between the two expense line items may happen from firewall and.
An archived to the actual chip design work performed in the quarter.
Speaker 3: OPEX also included aggregate equity-based compensation expenses of approximately $3.2 million, amortization of acquired intangibles of $1 million, and $0.3 million of intrinsic related duties.
Opex also included aggregate equity based compensation expenses of approximately $3 2 million.
Amortization of acquired intangibles of $1 million.
And <unk> 3 million.
As in transits related deal costs.
Speaker 3: total operating expenses for the fourth quarter excluding equity-based compensation.
Our total operating expenses for the fourth quarter, excluding equity based compensation.
Speaker 3: Amortizations of intangibles and deal costs were 22.4.
Amortization of intangibles and the deal cost was 22 four.
Speaker 3: over the high end of our guidance due to the same region I just stated for
Over the high end of our guidance due to the same region I just stated.
GAAP other.
Speaker 3: GAAP's other income included a $1.5 million revaluation, net of taxes, for my investment in CIFIA, formerly called EyeSight Technologies, the leading provider of in-cabin sensing solutions in the automotive industry that recently went public on the Tel Aviv stock market.
Income included a $1 $5 million.
<unk> net of taxes or wind investment in CTF, formerly called eyesight technologies, a leading provider of in cabin sensing solutions in the automotive industry that recently went public with Tel Aviv stock exchange.
Speaker 3: We will adjust our investment quarterly based on the market valuation of their shares.
We will adjust our investment quarterly based on the market valuation of their shares.
Speaker 3: Gap net income for the fourth quarter was $3.9 million and diluted net income per share $0.17 compared to a net income of $0.6 million and $0.03 for the fourth quarter of 2020.
GAAP net income for the fourth quarter was $3 9 million and diluted net income per share of 17% compared to a net income of <unk> 6 million and three cents for the fourth quarter of 2020.
Speaker 3: Our non-GAAP operating income increased 8% to $7.2 million and $6.7 million for the same core last year.
Our non-GAAP operating income increased 8% to $7 2 million from $6 $7 million for the same quarter last year.
Our non-GAAP net income and diluted EPS for the fourth quarter was $5.3 million, 20%, respectively significantly higher than our internal estimates.
Speaker 3: Our non-GAAP-based income in the alluded EPS for the fourth quarter was 5.3 million dollars and 22 cents, respectively, significantly higher than our internal S&P.
Speaker 3: The name sum of the looted EPS for the fourth quarter of 2020 was $4.7 million and 20 cents respectively.
Net income and diluted EPS for the fourth quarter of 2020 was $4 $7 million.20, respectively.
Other related data.
Speaker 3: Shipped units by SEVA's licensees during the fourth quarter were 416 million units, down 5% sequentially, and down 14% from the fourth quarter of 2020 reported shipping.
Shipped units by CEVA licensees during the fourth quarter were 416 million units down five five.
Hi.
<unk> sequentially and down 14% from the fourth quarter of 2020 reported changes.
The $460 million shipped $83 million and units or 20% or for handset baseband chips.
Speaker 3: The 416 million ships, 83 million units or 20% or for handset-based ventures.
Speaker 3: reflecting a sequential increase of 148% from 33 million units in handset baseband ship during the third quarter of 2021, and a 62% decrease from 149 million units shipped a year ago.
Selecting a sequential increase of 148% from 33 million units in handset baseband chip during the third quarter of 2021, and a 62% decrease from the 149 million units shipped a year ago.
Speaker 3: Our base station and IRT product shipments were $333 million in the quarter, down 18% sequentially, and up 25% year-over-year.
Our base station and Iot product shipments were $333 million in the quarter down, 18% sequentially and up 25% year over year.
Speaker 3: Of note, sensor fusion with a record 21.8 million units in the quarter.
Of note sensor fusion was a record $21 8 million units in the quarter with cellular Iot Bluetooth and Wi Fi also.
Speaker 3: cellular IoT, Bluetooth, and Wi-Fi also delivering strong contributions.
Liberated strong contributions.
That's for the year.
Speaker 3: Our sold shipments increased 24% year-over-year to over 1.6 billion units, an all-time record high which estimates Kuwait to approximately 62 SIVA-powered devices sold every second in 2021.
Our total shipments increased 24% year over year to over $1 6 billion units, an all time record high.
And which estimates would equate.
Approximately 52 CEVA power.
Our devices sold every second in 2021.
Speaker 3: Annual shipments of handsets were down 33% year over year to 383 million devices.
Annual shipments of handsets were down 33% year over year $383 million device.
Speaker 3: This decline is attributable to a socket loss of a customer at a key OEM who was replaced by Qualcomm 5G modem chipsets and lower shipments of overall 2G feedback performed in the emerging markets last year.
This decline is attributable to a socket loss of a customer and a key OEM was replaced was replaced by Qualcomm <unk> modem chipsets and lower shipments of overall <unk> performed in the emerging markets last year.
Speaker 3: Our base station and IOT product royalty revenue continue to grow and reach a new record level of $28.6 million, up from $22.3 million in 2020, and $13 million in 2020.
Our base station and Iot product royalty revenue continued to grow and reached a new record level of $28 6 million up from $22 3 million in 2020.
And $13 million in 2019.
Speaker 3: In terms of units, A-station and IOT product units shift were 69% year over year.
In terms of unit base station and Iot product units shipped were 69% year over year.
Speaker 3: to almost 1.3 billion devices.
Almost one 3 billion devices.
Speaker 3: non-GAAP operating income from 2021 increased 43%.
non-GAAP operating income from 2021 increased 43%.
Speaker 3: 22.7 million from 15.9 million reported from 22.7 million.
$22 7 million from $15 9 million reported from 2020.
Overall, excluding our intrinsic forgiveness.
Speaker 3: Overall, excluding our intrinsics business, we grew our revenue 14% year-over-year, with the non-GAAP licensing business growing 22% to almost 64 million units.
We grew our revenue 14% year over year with a non-GAAP licensing business grew 20%.
Most 64 million units.
Speaker 3: with the intrinsic business, we are now fully on board and with the new opportunities outlined by Gideon earlier, we are excited by the potential ahead of us.
Within the business.
Now fully on board.
With the new opportunities outlined by Gideon earlier, we are excited by the potential ahead of us.
And so the balance sheet items.
Speaker 3: As of December 31st, 2021, Cibas Cash Cash Equivalent balances marketable securities and banks' deposits for $155 million.
As of December 31, 2021, Steve is cash cash equivalent balances marketable securities and bank deposits were $155 million.
We did not repurchased any shares during the year and have approximately half a million shares available for repurchase.
Speaker 3: Do not repurchase any shares during the year and have approximately half a million shares available for repurchase.
Speaker 3: Our DSOs for the fourth quarter were 39 days, slightly lower than the prior quarter and below our norm left.
<unk> for the fourth quarter were 39 days slightly lower than the prior quarter and below our norm level.
Speaker 3: During the quarter, we generated $11 million cash flow operation.
During the quarter, we generated $11 million cash flow operation.
Speaker 3: depreciation and amortization on 2.3 million dollars and the purchase of fixed assets 0.7 million.
Depreciation and amortization was $2 3 million and the purchase of fixed assets zero points $11 million.
On an annual basis with.
Speaker 3: generated 25.8 million dollars from operations compared to 15.2 million a year ago.
We generated $25 $8 million from operation.
In fact, a $15 2 million a year ago.
Speaker 3: At the end of the year, our headcount was 476 people, of which 390 were engineers, slightly lower than the 485 people at the end of September .
At the end of the year, our head count.
476 people of which 390 <unk> engineered slightly lower than the 485 people at the end of September .
Now for the guidance.
As Gideon explained we expect 2020 to be another exciting year with strong growth expected in licensing and energy revenues and royalties from our base station and Iot category.
Speaker 3: As Gideon explained, we expect 2022 to be another exciting year with strong growth expected in licensing and energy revenues and in royalties from our base station and IOT categories.
Overall, we're forecasting total revenue to be in the range of 141, five $145 5 million unit.
Speaker 3: Overall, our forecasting total revenues would be in the range of $141.5 to $145.5 million versus $122.9 million in 2020.
Versus $122 $9 million.
'twenty one.
Speaker 3: Our licensing and our related revenue business is expected to grow.
Our licensing and our reading the related revenue business is expected to grow.
Speaker 3: and extend and we benefit from multiple growth vendor vectors where we excel. In particular, 5G, Wi-Fi 6 and 7, edge AI, wearable and hearable.
And extend as we benefit from multiple growth.
Vectors, where we excel.
Nicholas <unk> Wi Fi, six and seven edge AI wearable and horrible.
Speaker 3: in addition to our new integrated IP solution offering.
In addition, our new integrated IP solution offerings and.
Speaker 3: and expanded access to the lucrative aerospace and defense market via Intrinsic.
And expanded access to the look with the aerospace and defense market via intrinsic.
Speaker 3: present further compelling opportunities.
Present further collapse.
Compelling opportunities.
Speaker 3: In royalties, our base station IOP product category continues to flourish and we will have a noticeable contribution in royalties in 2022.
In royalties, our base station and Iot product category continues to flourish and we will have a noticeable contribution in royalties in 2022.
Speaker 3: Disabilities from base station, RAM, Bluetooth, Wi-Fi, and sensor fusion will be the main drivers and will outgrow the representative market.
And dissipate royalties from base station ran Bluetooth.
And sensor fusion will be the main driver.
We'll outgrow their represented Denmark.
Overall, we forecast another growth year in royalty revenue with the strength of our base station and Iot royalty drivers will more than offset the anticipated decline in handset base station royalties and the remaining four G smartphones from a tier one OEM.
Speaker 3: Overall, we forecast another growth year in royalty revenue, with the strength of our base station IOT royalty drivers will more than offset the anticipated decline in handset base station royalty, and the remaining 4G. Smartphones from the tier 1 OEM are phased out over the course.
Our phased out over the course of the year.
Speaker 3: On the expense side, we forecast just over 18 million dollars in additional overall expenses in 2022 versus 21. We quoted both in COGS and...
On the expense side, we forecast just over $18 million in additional overall expenses in 2022 versus 21.
Quoted both in Cogs and Opex as we consolidate intrinsic business on a full year basis compared to only seven months in 2021.
Speaker 3: We consolidate intrinsics business on a full year basis compared to only seven months in 2021. And from our other R&D.
From our other R&D ongoing investment.
Speaker 3: Specifically, on COGS, we expect higher non-GAAP expenses of over $10 million due to the cost of NRE revenues from intrinsics.
Specifically on Cogs.
We expect higher non-GAAP expenses of over $10 million.
Due to the cost of energy revenues from intrinsic.
Opex.
Speaker 3: with a strong licensing execution in recent years and even stronger expectations for 2022, we will continue to support these new customers and reinforce our leadership with disciplined investment in R&D.
With a strong licensing execution in recent years and even stronger expectations for 2022, we will continue to support these new customers and.
And reinforce our leadership with <unk>.
Disciplined investments in R&D.
Overall non-GAAP operating increases.
Speaker 3: will be approximately $8 million.
Opex increases will be approximately $8 million.
Speaker 3: Part of it is also contributed to the consolidation of the intrinsic business on a full-year basis compared to only seven months in 2020.
All of it has also contributed to the consolidation of the intrinsic business on a full year basis compared to only seven months in 2021.
Speaker 3: Equity-based compensation is forecasted to be higher in 2021, around $16 million.
Equity based compensation is forecasted to be higher in 2000, and 2021 around $60 million.
Speaker 3: This is due to special retention efforts targeting our employees compared to pre-COVID-19 era and the recent competitive semiconductor industry in all worldwide R&D fields.
Due to special retention efforts targeting our employees compared to pre COVID-19 era and the recent competitive semiconductor industry in all worldwide R&D sites.
Speaker 3: Annual gross margin is forecasted to be in the region of 80% on a gap basis.
Annual gross margin is forecasted to be in the region of 80% on a GAAP basis.
Speaker 3: 82 to 84% of non-gap.
82% to 84% on non-GAAP basis.
Speaker 3: Interest income is forecasted to be higher than 2021 due to the increased interest rate environment and hopefully better FX effects than we experienced in 2021 at approximately $0.4 million per quarter.
Interest income is forecasted to be higher than 2021.
The increased interest rate environment, and hopefully better FX effects and we experienced in 2021.
Approximately zero point $4 million per quarter.
Taxes are expected to be approximately 25% of pretax income on non-GAAP basis.
Speaker 3: Taxes are expected to be approximately 25% of pre-tax income on non-gap basis.
Speaker 3: and our share count for 2022 is expected to be approximately 24 million shares.
And our share count for 2022 are expected to be approximately 24 million shares.
But typically for the.
First quarter of 2022.
Speaker 3: Gross margin is expected to be approximately 80% on GAAP bases and 82% on non-GAAP bases, excluding an aggregated $0.3 million of equity-based compensation expenses and half a million dollars of amortization of other assets.
Gross margin is expected to be approximately 80% on a GAAP basis, and 82% on non-GAAP basis, excluding an aggregated $3 million of equity based compensation expenses and $5 million of amortization of other assets.
Opex for the first quarter of 2022 is forecasted to be lower than the fourth quarter on a GAAP basis and flattish on a non-GAAP basis.
Speaker 3: OPEC for the first quarter of 2022 is forecast to be lower than the fourth quarter on a gap basis and slightest on a non-gap basis.
Speaker 3: Gap-based optics is expected to be in the range of 26.4 to 27.4 million dollars.
GAAP based Opex is expected to be in the range of $26 four with $27 $4 million.
Speaker 3: My anticipated total operating expenses for the first quarter, $3.2 million is expected to be attributed to equity-based compensation expense, and $0.8 million for amortization.
While disappointed total operating expenses for the first quarter was $3 $2 million are expected to be attributable to.
Equity based compensation expense and <unk> 8 million.
For amortization.
Speaker 3: Excluding those items, non-GAAP objects for the first quarter is expected to be in the range of $20 to $21 million.
Excluding those items non-GAAP opex for the first quarter is expected to be in the range of $20 million to $21 million.
Net interest income is expected to be approximately <unk> $4 million.
Speaker 3: And interest income is expected to be approximately $0.4 million.
And what's the trend in the first quarter of 2021 taxes in the first quarter of 2020 exit that would be higher than the norm with strong pipeline and backlog revenue mix for our connectivity product.
Speaker 3: And it was a trend in the first quarter of 2021. Taxes in the first quarter of 2024 are expected to be higher than the norm.
Speaker 3: strong pipeline and backlog revenue mix for our connectivity products.
Speaker 3: originating in France, which has a higher corporate tax rate, and from utilization or withholding taxes.
<unk> <unk>.
<unk> in France, which is a higher corporate tax rate from utilization of withholding taxes in Israel.
Speaker 3: Last share count for the first quarter is expected to be approximately $23.8 million.
Last share count for the first quarter are expected to be approximately $23 8 million and roughly.
<unk> you could now open the Q&A session.
Speaker 1: Thank you. We will now begin the question and answer session.
Thank you we will now begin the question and answer session.
Speaker 1: To ask a question, you may press star then one on your touch-tone phone.
Ask a question you May press Star then one on your Touchtone phone.
Speaker 1: If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press the button.
If you are using a speaker phone we ask you. Please pickup your handset before pressing the keys.
To withdraw your question. Please press Star then two.
Speaker 1: Today's first question comes from Suji De Silva with Ralph Capital. Please go ahead.
Today's first question comes from <unk> Silva of Roth Capital. Please go ahead.
Speaker 4: Hi Gideon, hi Yanniv, congratulations on the results and the strong 22 guidance. If you could go into the revenue there that you guided and talk about what you think the revenue license mix is and more generally, how should we think about the license model evolving here from what we've seen in the past?
Hi, Gideon Hi, <unk>, congratulations on the results and the strong 'twenty two guidance.
If you could go into the revenue there that you guided.
And talk about what you think the revenue license mixes and more generally how should we think about the license model evolving here from what we've seen in the past.
Yes.
The.
Speaker 3: What we are seeing is a strong interest in Wi-Fi, and we mentioned Wi-Fi 7. Wi-Fi 6 is the mainstream one, and we start seeing people looking for Wi-Fi 7.
What we are seeing in view.
Strong.
Interest in Wifi, and we mentioned why price driven.
Wifi six is the main.
The mainstream one and.
We start seeing people looking for Wifi Susan.
Speaker 3: It's hard to find even semiconductor companies that offer Wi-Fi 7, and we are in a position to offer it. 5G, we mentioned in the call, a very large agreement that will be in the more broadband IoT. Broadband IoT is everything that...
It's hard to find even semiconductor company that built for <unk>.
Submissions locally.
In <unk>, we mentioned in the call.
Very large agreement that we did in the more broadband Iot broadband Iot and routines.
Speaker 3: uh... outside of the mobile uh... we uh... extremely optimistic about the edge AI market we came out with uh... uh... fantastic product
And outside of the mobile.
We are extremely optimistic about the energy market.
We came out with.
Fantastic quarter.
Speaker 3: which we call New Poem, and we already, in the beginning of the quarter, signed a lead customer for the AJI.
Which we can move for them and we already.
In the beginning of the quarter signed a lead customer for the Hai.
Speaker 3: And the fourth anchor in our business is everything that relates to wearables and wearables. So TWS, headset, gaming headset, watches.
And before the <unk> business is everything that related to your bids and Wearables, So tw hit gaming units.
Watches.
Speaker 3: So when you look on the composition of this, what we see today, these are the four large anchors. On top of it, we have what Intrinsic bring in. It's a solid customer base. They have a pretty large customer base, very loyal.
When you look on the composition at least what we see today.
The default the full allowed Jamie so on top of it.
Well intrinsic begin.
Solid customer base.
Sure.
The <unk> customer base.
Speaker 3: And with them, we are offering also to customer integrated IP solution. Integrated IP solution is a sizable agreement, it's the IP plus.
And the and it has been.
We are offering to capture new integrated solution integrated with the solution.
<unk>.
The size of an agreement.
It's VIP plus.
Speaker 3: the designs that intrinsics can do and we basically adopting what in the semiconductor called semi-custom we do an IP version of the semi-custom
The designs that intrinsic can do and we basically adopting.
<unk> core semi custom we built an IP version of the same platform and the outcome is.
Speaker 3: And the outcome is a large difference. Overall, you see a step up in the licensing.
The allowance so overall, you'll see a step up in the in the licensing that is not because of <unk>.
Speaker 3: that is not because of MNA and activity, it's just a matter of...
May and activity just in net <unk>.
Speaker 3: a growing activities and interest for customers.
<unk>.
A growing activities.
Interest from customers.
Speaker 4: Okay, and then the license for 22, would you expect it to start becoming more lumpy given the use of intrinsic? Just understand that dynamic.
Okay, and then the license for 'twenty two would you expect it to start becoming more lumpy given the use of intrinsic just to understand that dynamic.
Speaker 3: Well, you know, licensing in general is lumpy. The idea is to have a large pipeline and to try to see on a yearly basis that you are doing. So I don't anticipate, you know, you know us for a while. We don't, we didn't come out with big surprises in licensing. And I think the way we see it now, this will be the case in 2022.
Hi.
Licensing in general.
Lumpy the idea is to deliver large pipeline.
And to try to.
See on a yearly basis.
Doing so I don't anticipate.
You know us for and we've done that.
We didn't come out with that surprised us in licensing and I think the way we see not only is this will be the case in 2022.
Speaker 3: And with that, at least for the beginning of the year, we're looking at a very strong pipeline and backlog for the beginning of 2022 with some deals that are already signed in the quarter. So at least the beginning looks quite robust.
I would add that.
At the beginning of the year, we're looking at a very strong pipeline and backlog for the beginning.
'twenty two with some deals that <unk> already signed in the quarter.
So at least the beginning looks quite robust.
Speaker 4: Okay, great. And then one quick follow-up, perhaps, for you, Neve. The gross margin for 1Q, you guided 82%. For the full year, you guided 82% to 84%. What are the drivers of expanding gross margin through 22%?
Okay, Great and then one quick follow up perhaps for you need the gross margin for one can you guided eight 2% for the full year guide, 884% what are the drivers of expanding gross margins were 22.
Speaker 5: A lot of it comes from from the Royal royaltity. Obviously the world is there.
Sure a lot of it comes from us from the Royal Air royalties, obviously the royalties.
Speaker 3: high margin business and the lucrative part of our business.
High margin business in the lucrative part of our business and we see that ramping up towards the later part of the year with more base station.
Speaker 3: And we see that ramping up toward the later part of the year with more base station activity and newer markets and newer players that should come into production with us in the second half of the year. That's one technical contributor. And the other is just...
Activity in.
Newer markets and newer players that should come into production with us in the second half of the year, that's one technical contributor.
The other ones.
And so just.
Speaker 5: That's more or less the changes, because the licensing, as we said earlier, it's more or less the same. Sometimes one quarter could be stronger with a larger deal versus the other, but there's nothing that dramatically changes from the cost of that business. So technically, it's the royalties that set the tone for the gross margin. Okay. Thanks, Gideon. Thanks, Steve. Congratulations again.
That's more or less that's more or less the changes because of the licensing as we said earlier.
It's more or less to say and sometimes one quarter could be stronger with the larger deal versus the other but there is nothing dramatically changes from the cost of that business. So.
Technically it's the Worldview.
Set the tone for the gross margin.
Okay. Thanks, Gideon Thanks, Steve Congratulations again on the progress.
Thanks, Thank you.
Speaker 1: And our next question today comes from Tavi Rosner with Parkways, please go ahead.
And our next question today comes from Javier Rosner with Barclays. Please go ahead.
Speaker 6: Oh, hi. This is Chris Reimer on for TAVI. Thank you for taking my question. You mentioned some of the potential from the intrinsic integration ramping up through next year. Can you just talk a little more about that and what you are most excited about in terms of revenue drivers into next year?
Hi, This is Chris Reimer on for Catherine Thank you for taking my questions.
You mentioned.
Z potential Fannie in Shanghai.
Patients beginning well.
Ramping up for next year.
Can you just talk a little more about that and what you're most excited about in terms of revenue drivers into next year.
Speaker 3: So thenallyif you ask, of the imedgrated Rapp solution.
So I believe you asked about the integrated <unk>.
Solutions.
Speaker 3: That's the question. So first of all, last year we signed the first agreement in this category of business. So the idea is to come to the customer,
That's the question. So first of all last year, we signed the first agreement in this category of business. So.
The idea is to come to the customer.
Speaker 3: with the IP that we have, and you know that we have a pretty broad portfolio of IP, and take care of not just providing the standardized IP, but the whole platform for the customer. So there are many, especially OEM sites that...
Got it.
That we have and that we would be a broad portfolio of IP and the take care of not just.
By the end of the standup very sleepy, but the whole platform for the customers. So there are many especially OEM side.
The.
Speaker 3: They want to go fast into the market and still lack the experience of building an SOC and embedding IP in SOC. So we are coming and say, okay, let's build a business model that we do not just give you the IP but also do the whole design of your section or a chip.
They want to go faster into the market.
<unk> makes the experience.
Building, the National C and embedding IP and Src so.
We are coming through.
And it has been in.
The business model that we do not just give you the IP, but also be the Horton design will fuel.
Section with chip.
Speaker 3: And the benefit for us is that we get larouger share of of the world we come out of in terms of life.
And the benefit for us is that.
We get larger shells of the world.
Out of that.
In terms of license and work.
Speaker 5: So what Billy is saying is that we acquired Intrinsics six or so months ago, but we already in the second quarter, they were with us, we were able to change some of their business model and also collect royalties for those services.
So what gives me saying that.
We acquired intrinsic six or so months ago, but we already did in the second quarter. They were with US we were able to.
<unk> changed some of their business model and then also collect royalties for those services. So that was the first step and it's already in the design and we should be getting royalties in the future and we want to take this to another level with adding much more seamless technologies and bump of intrinsic and doing this combination.
Speaker 5: That was the first step and it's already in design and we should be getting the royalties in the future. And we want to take this to another level with adding much more of Steves Technologies and Papa Intrinsics and doing this combination.
Okay.
Speaker 6: Okay, got it. And just looking into M&A, I don't know if it's on the table just now, but do you have anything maybe in the pipeline? Are you comfortable with where you are from a technology standpoint right now?
Okay got it.
<unk>.
Looking at M&A I don't know.
On the table just now but do you have anything maybe in the pipeline are you comfortable with where you are from a technology standpoint right now.
Speaker 5: I think we've made a lot of achievement if you look at the licensing, the revenue over the last couple of years, that's the...
Well I think there's been a lot of achievement. If you look at the licensing revenues over the last couple of years.
The.
Speaker 5: The answer to the question of do we have enough technology, are the technologies interesting and growing the market in the world today, in the semi-world, in the digital era that we talked about in the prepared remarks, so if you look at the bad aspects, I think we are doing all the right things, and obviously there are more technologies out there that we're focusing, whether it's next generation or new things.
The answer to the question of do we have enough technology is out of the technologies and the <unk>.
Interesting in growing the market in the world today in the semi world in the digital era that we talked about in the prepared remarks.
If you look at the.
And bought off by saying I think we are doing David I'll divide things that obviously there are more technologies out there that we're focused on whether it's next generation a new thing.
Speaker 5: We're not done with it, we'll continue to... I should add to this, the...
We're not we're not done with it and we'll.
Continuously.
I should add.
Sure.
Sure.
Speaker 3: When you do a licensing, it's just the first part of the success because this should be followed with loyalty. So when you look on the, for a while, for the last few years, we are growing the licensing consistently.
Sure.
When you do a licensing is just the first part of the of the success because this should be followed with warranted. So when you look on the <unk> 41 for the last few years, we are growing the licensing consistency and you look last year on the one piece that is coming from.
Speaker 3: And you look last year on the world list that's coming from this licensing, what we call the base station in IOT, that's 29% year-over-year goals in world list, and we're talking about 1.3 billion units.
This licensing, which we call the base station and Iot.
Wednesday, 9% year over year goes in royalties and we are talking about $1 3 billion units.
Speaker 3: I think it's 61% year-over-year unit growth. So that's how, when this.
61% will be unit growth so that's how.
When this.
Speaker 3: cycle vicious cycle works this is how it should work you know you go the licensing and in a two years further you see the
Site the vicious cycle works. This is how we should.
<unk> global licensing gain.
Please further youll be youll see the royalties.
Speaker 6: Got it. All right. Thank you very much. That's it for me.
Okay got it alright, thank you very much that's a journey.
Thank you.
Speaker 1: And next question today, question T Ramsey: we TE I Cal with them company, Please go.
And our next question today comes from Matt Ramsay.
<unk> company. Please go ahead.
Speaker 7: Yeah, hi there, this is Ethan Potaz and I'm on for Matt Ramsey here. Congrats on the great quarter. I wanted to kind of drill into the Foliar 22 guide a little bit more. This is a bit broad, but could you guys discuss where you guys see most of the upside coming from? You know, if you could kind of parse the origins of that growth between handsets and 5G.
Yes, Hi, this is Ethan potassium gone from Matt Ramsay here.
That's on a great quarter I wanted to kind of drill into the full year 'twenty to guide a little bit more this is broad but could you guys discuss.
Where are you guys seen most of the upside coming from.
Could kind of parse the origins of that growth between handsets handsets in <unk>.
Speaker 7: uh... you guys get some positive commentary out of uh... signals in china or or is that uh... intrinsics or or a mix between the sort of things
Guys gave some positive commentary out of some signals in China or is that.
<unk> or a mix between those sort of things. Thank you.
Speaker 3: So it's a, let me try and he will add his perspective.
So.
Try anyway.
It is his perspective.
But.
Speaker 3: And when you look on the licensing, we mentioned earlier, I think it was Suji's questions about all those vials.
When you look on the licensing deal with <unk>.
We mentioned earlier I think it was <unk> question. So both on those designs.
Speaker 3: So we expect growth in this licensing. We have the product, we have the customer base, we have the market position, and that's good because this creates the next cycle support. Now in terms of wealthies, I would say in the base station IOT is a solid growth. We have all, you know, it's a combination of new products because we have so many customers in the pipeline.
So.
We expect growth in this licensing we have the product we have the customer base.
And market position.
And that's good because these carriers.
The next the next cycle for bonuses or in terms of royalties I would say in the base station is the solid goes with.
The.
Combination of new product, because we have so many customer in the pipeline.
Speaker 3: that start to shape, but the things that we see in the position that we have in smart TV, PC, earbuds.
Sure.
The.
Things that we see in.
Positioned at where these smart TV BC deal Budd.
Speaker 3: this will be volume-driven. Also, in the 5G base station run, last year when it comes to China, it was kind of a pause in terms of capital expenditure, but it looks like and we get two data points, it will be a much larger win rate.
This will be volume driven also in the <unk> base station run.
Last year, when we need it.
Comes to China was kind of proposed in terms of capital expenditure, but it looks like then.
It gets two data points.
Much larger.
Yes.
Speaker 3: in China Mobile, China Unicom.
In China Mobile China Unicom.
Unit volume.
The.
Speaker 3: So the XC-16, which is the next, the new chip that they roll out for field testing, so that gives us some indication for a renewal.
So.
And then <unk> 16, which is the mix the new chip they rollout fulfill testing so those give us some indication for renewal extend issue in China more into not just the <unk>, but the oil.
Speaker 3: in China, more into not just the urban one, but rural and also industrial, robotic, they want to install, they want to rely on 5G.
So industry industrial book, because they want to install.
<unk>.
Speaker 3: We have another customer that's showing production ramps, and that's the 5G. In mobile, we believe 2022 will be the bottom when it comes to this large OEM that moves to 5G, which is not this technology or another, and we have other.
We have another customer that.
The showing.
The <unk>.
Production rates.
And thats the <unk> in mobile, we believe plenty plenty, who would be the bottom when it comes to this large OEM.
The multiple five deal which is not this technology on the other and we have others.
Speaker 3: We have other customers in this area. I think the other customers that we have in the handset, in the basement side, will benefit from the move of 5G from high tier to the low tier, where this is their sweet spot.
We are.
The.
Other customers in this area I think the other customer that we are in the handset and the baseband side will benefit from the move of <unk> from high teens to the low deal will be this is the sweet spot.
Speaker 3: And we have, we signed up, and that's something that we want to emphasize while we are here.
We have.
We signed up and did something that we want to emphasize when we view.
Speaker 3: that the SIVA Play and 5G handset is not just in the basement processor. We have customers that license our connectivity, Wi-Fi and Bluetooth. So they're going to use our connectivity IP for handsets.
The fever.
<unk> is not just in the base of importance of sodium.
The customers did nice things, how connectivity Wifi and Bluetooth so they are going to use our connectivity full handsome. So one is already shipping the other one is.
Speaker 3: So one is already shipping, the other one is in design. So that will be another angle that we see materialize in the year or early next year.
In design.
So that will be.
The ranges.
We see materialize.
In the early next year.
So thats when it comes to the royalty so base station and Iot growing.
Speaker 3: So that's when it comes to the royalties. So base station IOT growing, cellular a bit mixed bag, but still we believe when it comes to the key customers, the low, but the other customers likely to ship more than 2021.
Samuel.
It makes big steam we believe when it comes to the key customers the loan but that is customers.
Likely to ship more than 2021.
Speaker 7: Okay. Great. Very helpful. And then as a follow-up, you know, while not generating a ton of royalty revenue currently, we've kind of seen some great progress for the burgeoning opportunities in auto. And now with this sizable AI ADAS-based agreement, you guys called out in the prepared remarks. I was wondering if you guys could expand a little bit more on auto, given some of the more accelerating trends.
Okay, great very helpful.
Then as a follow up.
While not generating a ton of royalty revenue currently.
<unk> seen some seeing some great progress for the burgeoning opportunities in auto.
And now with the sizable AI Adas based agreement you guys called out in the prepared remarks I was wondering.
If you guys could expand a little bit more on auto given some of the more accelerating trends that youre seeing out there today.
Speaker 5: Yeah, you mentioned those, beyond 5G and Wi-Fi, which is, you know...
Yes.
Mentioned those.
Beyond beyond <unk>, we choose.
No.
Extremely big and vibrant.
Speaker 3: Extremely big and vibrant. ADAS is a growing market. We see very interesting OEMs. And here one talking to us about chips that they want to make. Talking about our AI. In particular the new generation.
Okay.
It is.
It is a growing market we see.
<unk>.
The Oems in Q1 bookings for us about chips that they want to make bookings and mode only.
In particular, the new <unk> the new.
Generation so.
Speaker 3: So this is, as you know, automotive, it's a longer cycle.
But this is as you know promoting with.
It's a longer cycle.
Speaker 3: And a lot of things will happen, and we need to build the first, the license, before start talking about voltage. Voltage is more 25, 2025, 2026.
And the <unk>.
And the local speaks with Hudson and we need to build the first the license before scope bookings about once it's one of these is more plentiful in 2025 2026.
Okay, great. Thank you.
Thank you.
Speaker 1: And our next question today comes from Martin Yang at Oppenheimer.
Today comes from Martin Yang of Oppenheimer. Please go ahead.
Speaker 8: Hi, thank you for taking my question. My first question is on your 2023 outlook. So embedded in the guidance is roughly mid-teens growth. Do you expect intrinsics, how do you expect intrinsics to grow comparing to the other parts of the business?
Alright, Thank you for taking my question.
My first question is on your 2023 outlook so embedded in the guidance.
In the mid teens growth do you expect a <unk> six how do you expect some transit to grow comparing to other parts of the business.
Speaker 3: You know, we opened up Intrinsics for this year because it was new and it was only for seven months, and tried to get it to quantify that add-on to SIVA because it was something unique that you can expect.
Yes.
We opened up intended for this year because it was a new loan for seven months and try to get it to quantify that add on placebo because it was the <unk>.
Im thing unique that you connect platform going forward as we explained here multiple times I think in the prepared remarks, and even the achievements so far with the FASB and forget it.
Speaker 3: Going forward, as we explained here multiple times, I think the prepared remarks and even the achievements so far with this ISP, Integrated Service Solutions, is that we see in forensics today is part of CIVA, we see the IP offerings to SEMIs and to OEMs today is a much more richer content and it's not just the pure IP.
Yes, yes.
Sorry.
Solutions is that we see intrinsic today is part of Steve how we see the IP offering.
<unk> and two Oems today is the much more richer content, it's not just the pure IP most of the public companies that deal with IP today.
Speaker 3: Most of the public companies that deal with IPs today do this and offer other services and other design and more help to the customer for revenues. Obviously, these are larger deals and bigger opportunities and potentially would
This offer other services and other design wins and more help for the customer for revenues, obviously, the larger deals and bigger opportunities and potentially with new customers that don't have the bandwidth to design their own chip. If you could design a block for that all the chip for them that opens up a new market with veeva.
Speaker 3: and new customers that don't have the bandwidth to design their own chip. But if you could design a block for them, or the chip for them, that opens up a new market that Steva before that did not have. So going forward, I don't think we're gonna break down in forensics to the different segments of Steva. You know, from time to time, maybe we get some qualitative data, like we did on the base station, on a non-handset market that we are active in.
Before that did not have so going forward I don't think were going to breakdown intrinsic.
The different segment placebo from time to time, maybe we get some qualitative data likelihood given the base station on the non handset.
The.
Markets that we're active in humans.
Speaker 3: He wins some interesting deals or some interesting designers that will highlight them.
Some interesting deals there are some interesting design wins that will highlight them I think one of the most interesting one is the one that we talked a few minutes ago about adding for the first time novelist chip design services, but also royalties for their end market and if that's part of the business going forward with larger deals with the <unk>.
Speaker 3: I think one of the most interesting one is the one that we talked a few minutes ago about adding for the first time, not the.
Speaker 3: chip design services, and also royalties for their end market.
Speaker 3: And if that's part of the SIVA business going forward, larger deals with the licensing element, with an NRE element, and with an ongoing royalty element, so we're tied and put them back to the next generation and be part of the next generation ship, both design and an IP offering, and again, new royalty stream, that overall strengthens the SIVA story, and this is how we believe is the right way to approach the SEMI space today. Thank you.
It can take element within <unk> and with an ongoing royalty yellow element so were tied and could come back to the next generation will be part of the next generation chip both design and an IP offering that again, new royalty stream.
Overall strengthens the see the story and this is why we believe that the right way to approach the semi space today.
I hope that soon.
That answered your question.
Speaker 8: My next question is about, you know, any potential impact you see in the first calendar half on the supply chain shortages that may affect your outlook for royalty revenues?
Yes understood.
Next question is about.
Any potential impact you see in the first calendar half on the supply chain shortages that may have affected your outlook for royalty revenues.
Speaker 5: Well, you know, we've been two years now in COVID.
Well, we know it's been two years now in Covid.
Speaker 3: A lot of buzz and a lot of issues around supply chain, but we haven't seen really any effect or minimal, to be more precise, effect.
A lot of buzz a lot of it.
Issues around supply chain, if you haven't seen really any effect or minimal to be more precise effect with one or two customers that guided lower last year due to the chip design you may have seen that more in the low cost.
Speaker 3: with one or two customers that guided lower last year due to chip design. You may have seen that more in the low-cost 2G phones, the feature phones. I think there was much more focus on higher-end devices last year and maybe those types of products in the emerging markets got less attention in chips to build the model. Maybe we saw it a little bit in the base station side as well.
Fuji phone the feature phones I think there was much more.
We're much more focused on higher end devices last year end and maybe those types of products in the emerging market uplift.
Okay.
Pension and chips to build the model, maybe we saw a little bit in the base station side as well.
Speaker 5: But we haven't seen that as a problem. And hopefully, 2022.
We haven't seen that as a problem and hopefully 2022.
Speaker 3: clears out more faster than it was in the last year, but we haven't seen any real effect yet at least, significant ones by it.
Clears out more faster than it was in the last year, but we haven't seen any real effect yet at least.
Significant ones by any of our customers.
Got it thank you very much.
Speaker 1: And ladies and gentlemen, this concludes our question and answer session. I'd like to turn the conference back over to Richard Kingston for closing remarks.
Ladies and gentlemen. This concludes this concludes our question and answer session I would like to Congress conference back over to Richard Thompson for closing remarks.
Speaker 2: Thank you everybody for joining us today and for your continued interest in SIVA. As a reminder, the prepared remarks for this conference call are filed as an exhibit to the current report on Form 8K and accessible through the investor section of our website.
Great. Thank you.
Thank you everybody for joining us today and for your continued interest in CEVA.
As a reminder, the prepared remarks for this conference call are filed as an exhibit to the current report on form 8-K unacceptable through the investors section of our website.
Speaker 2: With regards to upcoming events, we will be participating in the following conferences, the Susquehanna Virtual Technology Conference, March 3rd and 4th, and the 34th Annual Roth Conference, March 13th to 15th in Dana Point, California.
With regards to upcoming events, we will be participating in the following conferences. This.
Susquehanna Virtual Technology Conference March 3rd and fourth.
Of the 34th annual Roth Conference March 13th 15th in Dana Point, California.
Speaker 2: Further information on these events and all events we will be participating in can be found on the investor section of our website. Thank you and goodbye.
Further information on these events and all events, we will be participating and can be found on the investors section of our website. Thank you and goodbye.
Speaker 1: Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.
Thank you Sir This concludes today's conference call. Thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.