Q2 2022 CEVA Inc Earnings Call
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twenty two earnings conference call
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I would now like to turn the conference over to Richard Kingston. Please go ahead.
Thank you Rocco. Good morning everyone and welcome to SEVA's second quarter 2022 earnings conference call.
I'm joined today by Gideon Wertheiser, Chief Executive Officer and Yaniv Ariyeli, Chief Financial Officer of Ziva.
Gideon will cover the business aspects and highlights from the second quarter and provide general quality of data.
Yaniv will then cover financial results for the second quarter and also provide guidance for the third quarter on full year 2022.
I'll start with the forward-looking statements.
Please note that today's discussions contain forward-looking statements that involve risks and uncertainties as well as assumptions that if they materialise or prove incorrect could cause the results of SEVA to differ materially from those expressed or implied by such forward-looking statements and assumptions.
Forward-looking statements include statements regarding market trends and dynamics including anticipated growth in the wireless component of the global semiconductor market.
and our customers gains in market share and the future of 5G and Wi-Fi.
our market position and strategy, including the strength of our technology offerings and efforts with respect to our co-creation business proposition.
impacts of global economic uncertainty and COVID on our business, including royalties.
demand for and benefits of our technologies.
and expectations and financial guidance regarding future performance including for the full year and third quarter of 2022.
For information on the factors that could cause a difference in our results, please refer to our filings with the Securities and Exchange Commission.
These include the scope and the duration of the pandemic, including continued restrictions in China.
the extent and the length of the restrictions associated with the pandemic, and the impact on customers, consumer demand and the global economy generally.
the ability of SEVA's IPs for smarter connected devices to continue to be strong growth drivers for us.
our success in penetrating new markets and maintaining our market position in existing markets.
The ability of new products incorporating our technologies to achieve market acceptance.
the speed and extent of the expansion of the 5G and IoT markets.
our ability to execute more base station and IoT license agreements
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, and our ability to successfully integrate Intrinsics into our business.
SEVA assumes no obligation to update any forward-looking statements or information which speak as of their respective dates.
With that said, I'll now hand the call over to Gideon.
Thank you, Richard. Good morning, everyone, and thank you for joining us today.
Siva produced solid second quarter financial result despite the challenging macroeconomic backdrop and disruption in production schedule because of the lockdown in major cities in China.
Our strength in wireless is space that according to a recent study by Dr. McKinsey,
will be responsible for 25% of the growth in the global semiconductor market over the next 5 years.
continues to drive our business and enable us to expand our footprint in the growing market of 5G wearable, wearable automotive.
when OSao was placed in defence.
Revenue for the second quarter came at $33.2 million, up 9% on a year-over-year basis.
The licensing environment continues to be strong, delivering $22.1 million in quarterly revenue at the back of 22 licensing agreements with customers targeting a multitude of wirelessly connected devices, AI-driven sensor, satellite communication, and more.
We also signed a strategic agreement for Blue Bug wireless audio technologies in the way of the space which I will touch on later.
Asia continues to be a major driver for our business, but our activities and scope of engagement with US-based customers is picking up.
Wealthy revenue came in $11.1 million, down 26% on a year-to-year basis.
Second quarter 2021 wealthy revenue included revenue of approximately $3.3 million following a resolution of disagreements on wealthy weight with the customer.
Carving out the $3.3 million amount, royalty revenue for the second quarter of 2022 was down only 4% versus the second quarter of 2021.
In Hensaht, global economic uncertainty and the impact of COVID measures in China are causing consumers to adopt cautionary approach with their disposable income, which adversely impacts health treatment, particularly in the low and the mid tiers.
Our base station and IoT Royalty category showed resilience as 5G rollout – 5G1 rollout continues in China and into countries with low 5G penetration rate today.
Our cellular IoT and Bluetooth customers continue to bring monkecher with both categories delivering year-over-year unit growth.
Let me spend the next few minutes to highlight research dynamics in the wireless space and how we are addressing them.
Unarguably, wireless continues to be a cornerstone in the proliferation of intelligence IoT products that bring together wireless connectivity, sensor and AI into highly efficient SOC. At the back of this trend, Civa has become the wireless anchor to more than 300 semiconductor companies toNarrate ourselves from the need to
as they shape the intelligent IoT ecosystem.
By being at the forefront of wireless standards and offering it under IP business model, Civa lowers the entry bar for embedding wireless connectivity in SoC and enabling many families to come out with more cost effective and power efficient chips than the repurposed smartphone connectivity chips that Qualcomm, Broadcom, and MediaTek are selling into these markets.
In that sense, our living wireless IP along with the critical role wireless technology plays in IoT SOC opens up opportunities for us to elevate our business engagement from a delivery of just the IP core to our position where we co-create with the customer its own wireless system.
We are already experiencing very good interest with this business proposition and see this as a vehicle to grow our revenue base.
In the quarter we concluded a comprehensive agreement along the co-creation business model with a US based customer. This agreement was driven by top P.O.E.M. who will deploy our blue buck integrated wireless and audio IP platform across multiple SKUs for smartwatches here at the European Institute of Technology.
and other wearable devices.
The wireless market is the second largest market after mobiles in terms of volume. And recent devices offer high quality 3D audio, AI based noise cancellation, voice recognition, and IMU based contextual awareness. These are technologies that Civa offers to customers in addition to our processors and other IP technologies.
Another discussion that we are having with wireless customers this day is about
the co-existence of 5G and Wi-Fi, and whether one will eclipse the other.
Our view is that they will continue to coexist and in many use cases they are in fact complementary to each other.
5G also robustness in the form of security and low latency.
with its ultra reliable low latency URC standard.
The current Wi-Fi network on the other hand is simpler as the IT department are more familiar with it than with 5G.
At the Mobile World Congress, MWC event earlier this year, in a event that is historically dedicated to cellular, there were numbers of major Wi-Fi 7 announcements indicating that the Internet is not a good place to be.
that the cellular industry understands that 5G
and Wi-Fi coexistence will continue to play an important role.
Cisco, a long-term and dominant Wi-Fi player, commented at NWC that 5G and Wi-Fi must coexist in private networks.
These market dynamics and our strengths both in 5G and Wi-Fi AP provide us with significant potential to expand our relationship.
with new customers by offering them a one-stop shop for both technologies.
In summary, we are satisfied with our financial performance.
in the second quarter at the back of a challenging and uncertain macro environment. Our IP portfolio is trying to address the most exciting and crucial technology trend.
Our ability to step up and partner with customers for their wirelessly connected SoC design to our co-creation business model is compelling.
We will continue to focus on driving our strategic vision of enabling FENIX to make the product smart and wisely connected.
With that said, let me hand over the call to Yamir for the financials.
Thank you people.
I'll start by further reviewing the results of our operations for the second quarter of 2022.
Revenue for the second quarter was $33.2 million, up 9% compared to $30.5 million for the same quarter last year. Revenue breakdown with the funds. Licensing and arena related revenue was $22.1 million, reflecting 67% of our total revenue, up 42% as compared to $15.5 million in the second quarter of 2021.
Royalty revenue was 11.1 million reflecting 33% of our total revenues.
Down 26% from 14.9 million in the second quarter of 2021.
Second quarter 2021 royalties included revenue of approximately $3.3 million following a resolution of a disagreement on royalty rates with a customer.
After carving out the $3.3 million, royalty revenue for the second quarter of 2022 was down only 4% versus the second quarter of 2021.
Base Station and IOT royalty revenue contributed $7 million in the quarter.
sladdish from the first quarter and up 6% year over the year, despite the impact of the lockdown in major cities in China on some of our Chinese customers and the overall challenging macroeconomic embark.
Gross margin was 79% on gap basis and 82% on non-gap basis.
slightly better on GAP and in line with our non-GAAP expectations.
non-GAAP quarterly gross margin excluded approximately $0.3 million of equity-based compensation expenses. non-GAAP quarterly gross margin excluded approximately $0.3 million of equity-based compensation
and half a million dollars of the motivations of assets associated with intrinsic acquisition and innovation investment.
Our total operating expenses for the second quarter.
worth $26.6 million.
below the low end of our guidance of $27.1 million, and the first quarter expenses of $27.5 million, mainly due to improved FX environment and the timing of the Israeli Innovation Authority grants received in the second quarter.
Optics also included aggregated equity-based compensation expenses of approximately $3 million, and motivations of required intangibles of $0.8 million, and $0.3 million associated with the cost of the intrinsic acquisition.
Our total operating expenses for the second quarter, excluding equity-based compensation and Meta
We were 22.6 million, also below the low end of our guidance of 23 million, and the first quarter expenses of 23.4 million due to the same reason I just stated.
On the tax front, we continue to implement the tax regulations in France named the IP Box tax regime enabling our corporate tax rate to be lower and the stats to a 25% on specific types of women.
We also recorded a benefit related to a true-up of the French 2021 tax return, which was partially offset by higher withholding tax expenses associated with future utilization in our Israeli subsidiary. Let's not deletenes. invest flawed financial assets in theFT
Yeah.
That other income included half a million dollars net loss from the re-measurement of a marketable security associated with CPF, formerly EyeSight Technologies, a leading provider of in-cabin sensing solutions in the automotive industry that ran public on the Tel Aviv Stock Exchange in the fourth quarter of 2021.
As we extend in the past, we continue to adjust.
our investment quarterly, up or down, based on the market valuation of those shares.
The up-not loss for the quarter was $1.1 million and the needed loss per share was $0.05.
compared to an income of $03 million and one cent for the second quarter of 2021. Our non-GAAP operating income was $4.6 million, down from $6.3 million for the second quarter of 2021. And our non-GAAP net income in the EPS for the second quarter of 2022 was $4.3 million and 18 cents respectively.
Other related data.
Shipped units by CIVA licensees during the second quarter of 2022 were 433 million units, down 18% sequentially, and down 4% for the second quarter of 2021 reported shipments.
Of the 433 million units shipped, 83 million units or 19% were for handset-based bench ships.
reflecting a sequential decrease of 17% from 100 million units of handset baseband chip during the first quarter of 2022.
And a 40% decrease from 138 million units shift year over year.
Our base station and IOT product shipments were $349 million in the quarter, down 19% sequentially, and up 11% year over year.
Of note, Bluetooth shipments were up 35% year over year to 255 million units. And cellular other key shipments were up 12% year over year to 20 million units.
Ask for the balance.
the end of June 2022.
Short-term and long-term cash and marketable securities balances were approximately 146 million dollars.
These last quarters...
share price levels, we activated our buyback program and we purchased approximately 136,000 shares during the quarter for approximately $4.5 million.
As of today, 362,000 shares are available for repurchase.
Our DSO for the second quarter was slightly higher than the last two quarters due to the lockdown in China that caused slower collections and came in at 42 days for the quarter compared to 32 days in the prior month.
During the second quarter we used $8.1 million of cash from operations. Depreciation and amortization were $2 million. And the purchase of fixed assets were $1.2 million.
At the end of the second quarter our headcount is 492, please.
of which 411 are engineers, slightly higher than the total of 400.
87 employees at the end of March.
Thanks for the guidance. Thank you.
In evidence for the first half of the year, our licensing, NRE, and related revenues were strong.
Also, as Gideon explained,
Our technology offering.
and co-creation business proposition resonates well with our customers and present new opportunities to grow our revenues.
In loyalty, despite the challenges in the macro environment, we continue to expand in the base station and IoT segment through the gradual rollout of 5G base stations enabled by our technology and see continued share gains in wearable, hearable, and IoT products at large.
With that said, we're monitoring the implications of the economic uncertainty that we experience in the second quarter associated with the handset royalties.
as we get closer to the holiday season, and as the COVID restrictions in China are being lifted.
specifically for the third quarter. Gross margin is expected to be slightly better than the second quarter.
approximately 81% on GAP basis, and 83% to 84% on non-GAAP basis, excluding an aggregated $0.3 million of equity-based compensation expenses, and $0.5 million of amortization of other assets associated with the intrinsic acquisition, NERB, and IOT, and in-version business assets.
OpEx for the third quarter of 2022 is forecast to be slightly higher than the first quarter of this year. Gap-based OpEx is expected to be in the range of $27.6 to $28.6 million.
of the anticipated optics for the third quarter.
$3.4 million is expected to be attributed to equity-based compensation expenses.
$0.8 million to their motivations for the quite intangible aspects.
$0.3 million associated with the intrinsic acquisition.
Our non-GAAP optics is expected to be in the range of $23.1 to $24.1 million.
Your interest income is expected to be approximately $0.4 million.
And the taxes for the third quarter are expected to be similar to the first quarter, approximately 25-27% of non-GAAP tax rate, or about $1.7 million.
Taxes generated for the new 10 percent.
lower tax rates on specific revenues from our French activities would be offset by tax expenses associated with withholding and the future utilizations in our Israeli subsidiary.
Share count for the third quarter is expected to be approximately 24.2 million shares for non-GAAP EPS scan connections.
Waka, you can open it now. Thank you.
Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-down phone.
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Today's first question comes from Matt Ramsey at Cowan. Please go ahead.
Good morning, good afternoon everybody. Thanks very much. Yaniv, I couldn't help but notice there in your guidance commentary for the third quarter and the back half of the year that you guys didn't really talk about revenue. So I'd be remiss if I didn't ask the question. So if you could give us a little bit of help there on just the trends you're seeing in the different end markets and how you guys think about revenue trending. Obviously there's caveats around the macro.
I think that's going to be the question that most folks want to ask here. Let's just see what we have to say on revenue. Thank you.
Sure, good morning. I'll start and then we'll jump in as well. So we are not giving guidance on a quarterly basis to the fact for many years now that our customers under a 606 revenue recognition rules, we report what our customers report in the same quarter itself. So we don't really get, and you guys also don't get visibility from the cell phone manufacturers and OEMs and the...
Bluetooth enabled devices and a lot of other OEMs, how much they actually plan to sell. And therefore, giving guidance to a big portion of our revenues which are the royalties, under 606 has been very difficult. And we have stopped doing that because the data does not exist.
With that said, there are some very positive trends in our role as a business, and that's around the base station AOP. We managed with all the uncertainty that you asked and mentioned to grow that portion of the business 6% with the lockdowns and the rest of the macro concern. A lot of it this time around, every quarter comes from a different market and that's why we're here today. Thank you very much.
stronger than others. This time around we saw growth in very strong growth compared to people.
if you want for example, in the 5G base station rank. We saw continued growth in Bluetooth devices on a year-over-year basis, and cellular IoT devices on a year-over-year basis. So that trend continues. I think it should be there for a long period of time. Every quarter a different market, a different segment could pull in or be the driver for those royalties. And I think because we are powered in so many devices.
in China and China related countries, low end, mid tier type of phones, smartphones. This is where the uncertainty lies. It could move in different directions partially because of the lockdown, partially because of concerns, but eventually there are needs for those low end phones. We saw more resilience in the high end, Apple and Samsung's results. And we saw at least in the second quarter less in the low end.
the second half last year was $21 million, $21.5 million. This year for the first quarter of the year, for the first time ever, two quarters in a row were about $22 million. The shutdown in China, if they did affect consumer demand, as we said, it did not affect technology companies to continue to do design work. After two and a half years of COVID, companies know how to run their R&D sites offline and from work, from home, and we continue to see very strong...
Sorry for the long answer.
I try to cover all that basis. Yeah, let me just highlight two things regarding the royalties. Obviously, KUBO was tailwind or headwind, I would say, on handset revenue, on set royalties at the low, I would say, low end, concentrating on the low end of the thing.
The way we see it is OEMs are a bit prudent in piling up the inventories or prefer to clean up inventory in preparation. We are getting to the second half of the year and we see more prudency there at the OEM level.
When it comes to the law in the market, we were in this position several times, when there is some kind of a market events that affect the economy.
The low end, the hand set is the first thing that is detected, but it's the first thing to recover and it could be a fast swing when this uncertainty goes. So that's where we see it now. We have the product. Thank you.
5G is where the opportunities in hand-fed 5G mid-low-end is where our customers are focusing and then the product in place discussing the course.
design ways with Xiono and Oppo and of course the India side of things.
So.
As soon as this cloud of uncertainty will somehow clear up, we're going to see this coming back strong. When it comes to the base maturity, I think the unique cover is probably, we talked about the knowledgeable part, as
and there's a small kids and I would say
we see the COO goes all over the place because
We are coming, our customers are coming every quarter with new products. It's shared and it's growing. It's not just growing with the market but above the market because new products are coming from our customers.
So...
The handset is something that impacted that but the rest is good.
Great, thank you both guys. I really appreciate all the commentary there and we certainly do appreciate the uncertainties that are out there. As my follow-up question, I'll keep it quick and I'll get back to you.
Yaniv, could you, I think you guys gave some commentary in the script about the amount of smartphone units that were in your royalties. Could you also sort of quantify how much of the royalty revenue in the second quarter was in the handset market just so we can calibrate risks there? Thank you very much. Thank you very much.
We actually continued to give these numbers quarter after quarter. Out of the $11.1 million, $7 million were base station IOT, and the $4.1 million were doorstep-related.
Thanks guys, appreciate it.
Sure, thank you.
And my next question today comes from Kevin Cassidy with Rosenblatt Securities. Please go ahead. The reason my next question today comes from Kevin Cassidy with Rosenblatt Securities.
Thanks for taking my question and congratulations in this tough market, having good numbers.
But you showed 22 new IP deals and you are very impressive with that. And last quarter it was only 14 new deals. But the revenue is about the same. Can you say is there a trend there for…
smaller deals or maybe just give us a feel for what happened in that mix.
Yeah, good morning. We answered that from time to time. I don't think that taking the revenue and divide it by the number of deals gets you anywhere. Some deals that were signed are not delivered, because if you don't know the customer and you don't know its financial background, you don't recognize them, you don't deliver the technology before we actually get paid. So there is a little bit more complexity around the number of deals that get signed versus the average amount.
I would say that in every given quarter we have one or two bigger deals for millions of dollars, and we could have smaller deals for a single user, for some software elements, or work in the hundreds of thousands of dollars, and we could have deals, and usually do have deals in the $2 or $3 million type range. And I wouldn't take one – you cannot from those numbers get to one answer or the other. I would say it's a combination of large deals, small deals, recurring customers.
and you do every quarter obviously. So it's a combination of all these three or four elements.
Okay, I understand. Just make sure it's not a trend. And the intrinsic, you didn't say much about some of the pipeline that you're working on there. Can you give us some feel for the intrinsic opportunities?
Yeah, so Intrinsics has a strength in the defense market. The defense market has its own dynamics and usually it's a large project. What we are adding now under the umbrella is our new customer base. We already signed few designs.
in respect to see the customer base that come to us and after understanding what in theory can contribute to asking for such designs.
And what we are discussing at the call about the co-creation business where we come to the customer and take the lead on the wireless system and this has a significant role because those guys are the integrators of OIPs.
Okay, thank you.
Thank you.
Thank you.
And our next question today comes from Suzy De Silva at Roth Capital. Please go ahead.
Hi Gideon, how are you, and Eve? Gideon, you talked in the prepared remarks about having cellular and Wi-Fi and the coexistence. Can you talk about the advantages of SEVA of being in both markets along with, you know, just having strong opportunity in each one, maybe the synergy between them?
Then.
It's the image of the Wi-Fi in Sanjay.
There is a lot of technology synergy between Wi-Fi and 5G. They use the same, especially Wi-Fi 7 and 5G. They use the same modulation mechanisms. With that said, thank you.
The way we deal with customers is that we see the Wi-Fi as the local area network and 5G is the one, the broad network. So when we go to customer proposition, basically it's a tool technology that we put together as two components of our offering. And we deal on the integration between the two. But...
We see more and more customers asking for those technologies either in order to address larger markets, or go to what is called access point or fixed wireless access where in one hand the Internet is coming into the home through 5G and spread the word around through Wi-Fi.
Okay, that's helpful Gideon, thanks. And then on the 5G infrastructure base station side, can you talk about how many customers you're ramping today maybe versus 12 months ago? Is there any inflection in the upcoming quarters or maybe the macro would impact that? Any thoughts there on how 5G is going to ramp up from here?
Cool.
First of all, in terms of customers, we have two big customers that take us to the market based station, the largest business. There are several other customers that are in the market.
you know, expose us to different other markets like small firms and other now 5G and that's what we would really like and believe in 5G is extremely big year so in one hand and also come new phone factor of 5G so we have things like private networks we have 910 so you only the strong
year if age ?
So think about the opportunity ahead of us in terms of geographies, in terms of India. It's a big market.
And another thing, it's a high entry barrier because if you have any relation to them, experience.
very difficult to create an alternative.
That's helpful Gideon, thanks everybody.
Thank you.
And our next question today comes from Chris Robert with Barclays. Chris, please go on.
Hi, thank you for taking my question. I wanted to ask about operating margin. You mentioned in your comments that you might be seeing some benefit or de-risking. I was just wondering if you could give a little colour around what's going on there and what the moving parts are.
Yeah, sure, great question. But when we added intrinsics, and added both NRE services and the co-creation of licensing both and offering both IPs and services and designs of chips or blocks, it obviously took our margins down from the 90s that we were for many years to the low 80s, anywhere between 80 to 84ish type, 85%. That's where we sort of been...
It's just the technicalities here. Nothing is changing the business. It's just the mix of licensing versus royalties. And the higher the royalties, obviously in the future as well, the higher the margins will be. But we don't see it going anywhere higher than that 83, 84 for the company, until the new royalties from this business kick in as well. That's about the knowledge and understanding for the guidance for Q3.
the new market, the new add-on that we could grow the business quicker and faster and add more offerings to the semiconductor industry whether it's in hardware, or software, or IP. That's really where the merit is. There's no doubt that it's a little bit of an easier environment to look for ideas and better pricing. But our dilemma of what is the next step for Civa to continue its growth and expedite it is to look at one or two new opportunities. Obviously, there will be a conflict between new opportunities and opportunities but our agenda or maybe similar opportunities like ahoods, insight, design strategies, as I said before, is all about Cookie and bringing the coming customer to an all- cowboy world ofisation and just advocating to makebah allows a more-fished technology for rule making. For more information on Civa in this course... AllMusic
really comes from what is right, not how much it will cost. It's a factor, but let's find the right technology. We have multiple ideas, by the way. We have multiple...
different projects that we are looking into, different collaborations, and different ideas that we want to target. And we are actively looking at nothing right now on the agenda, but that is something that we continuously want to add on to our offerings.
Great, thanks for the color. That's it for me.
Thank you.
And our next question today comes from David O'Connor with Exane BNP Paribas. Please go ahead.
Great, good morning. Thanks for letting me ask a question. Gideon, maybe going back to the strategic agreement of co-creation with the customer, can you just talk around the catalyst that drove that decision, why now, and also maybe, Yaniv, related to that, can you talk around the impact on the model from the co-creation relationship and the follow-up? Thanks.
So let me explain the rationale from a customer standpoint to go to this proposition and maybe Anith can add an implication on the model. But the rationale for the customer is...
If you want the company to get into the wireless space, you are not Media Tech, Broadcom, and Broadcom to some extent.
It's a huge enterprise because you need to deal with things that are not just complicated in terms of technologies and integration with others.
It's also a skill that is scarce.
Now, we figure out the fact that we have all these technologies and abilities to do. And we bring in our other competencies whether it's in transit, in design, or whether it's software and we come to the customer and say we can create for you, that's the co-create. We can create for you, your own wireless system.
And the result of this one is it's a larger deal, a larger amount of fraud risk and the
In terms of the business model, it does not disrupt the business model of the business model of the business model of the business.
It's still IP. What we deliver is IP. We don't deliver chips or semiconductors to them. It's just the IP. But from the customer's standpoint, this block has a huge value. I'll add one more thing to it. A classical IP model, you license your IP and you wait until the customer finishes its design. It could take one or two years, qualify the chip, test it, and then that goes to the OEM.
into the final product. Here when we do a block or a whole chip from an IT end service, that sort of moves a bit of the responsibility for the success of that block or chip to us. So we have more visibility into that. And as Gideon mentioned, the key critical change in the business model is that as soon as that chip goes to production, hopefully, or maybe could be a little bit shorter than two years in this type of consumer based…
solution, we'll get royalties. And on a typical old school NRE service base, there's no royalties. It's a one-time deal. Maybe recurring engineering efforts, but you don't get the royalty component. Here as soon as that ship is ready, out the door, in production, that's the real add-on to the volume and to the royalties from our perspective. So it's a win-win, both from a little bit more involvement in the R&D of our customers and the road map to come after that ship into production. On the other hand, it's the royalties.
That's quite helpful, thanks. And maybe, going back to your prepared remarks, you talked about engagements with US companies picking up, I think. Which technologies are these engagements picking up? And what are you doing a bit differently maybe to capture some of these US-based opportunities? Thanks.
Do you need technology in terms of the...
You need technology in terms of the mode.
Well, just is it hearables, wearables, is that on handsets, which kind of areas are these engagements taking off, the US-based opportunities?
And the specific engagement that we talked about in the program, it's wireless audio, meaning Bluetooth and audio, this combination is also preserves complexities and the target market is wheel-built and wheel-built.
and watches, smart watch.
Thank you. If we could just squeeze one last one in. Just on the handset baseband royalties, how would you split that out low end, kind of mid-range versus high end in the royalties? Thank you!
The normal.
Most of our business is in the mid-range these days. Our customers' business today, Uniswap is the biggest customer of ours.
a strong presence worldwide, India, China, Latin America in mid-range phones. You know, the low-end phones are almost disappearing. The 2G and 3G don't really exist that much anymore, so it's mainly the 4G is bringing the volume, and 5G, they have a good offering with some design means, so that's the potential over the next couple of years.
Thanks so much.
Thank you. And our next question today comes from Martin Yang at Oppenheimer. Please go ahead. What?
Hi, thank you for taking my question. I have a question regarding your Bluetooth and Wi-Fi How much do you estimate that you have the exposure to consumer end markets?
through your direct customers? And do you foresee any upcoming weakness into the second half for Bluetooth and Wi-Fi shipments?
When it comes to Bluetooth and Wi-Fi, it's a...
I cannot.
People say exposure to consumer market, it's all over the place. We have people that use our technology for automotive, we have people that use our technology in industrial recently, we see people are using it in Excel.
headset, audio, so
There is no any concentration on specific market and that's the reason that it is serious because you know.
Every quarter somebody else, Florician could be another company that faces difficulties. We saw it clearly in the reports that we got in the quarter.
Thank you. I have no more questions.
to you and remember when I conducted and see you next year. So because we love you, we're here to support you. Thank you all for coming here. I expect to see you next year.
Royalties for Bluetooth were up here over the year with all these market uncertainties. So this is part of the answer that we have seen in the second quarter as well.
Thank you, sir. Ladies and gentlemen, no problem at all. This concludes our question and answer session. I'd like to turn it back to Richard Kingston for closing remarks.
Richard, may you be on mute?
Apologies, sorry, thanks Yannick. Thank you all for joining us today and for your continued interest in SEVA. And as a reminder, the prepared remarks from the conference call today are filed as an exhibit to the current report on Form 8K and accessible through the investor section of our website.
With regards to upcoming events, we will be participating in the following conferences. The Oppenheimer 25th Annual...
Technology, Internet and Communications Conference being held virtually tomorrow August 10th.
We'll participate at the Rosenblatt Securities Technology Summit, Age of AI Conference, August 23rd and 24th.
will be in attendance at the Jefferies 2022 Semiconductor IT Hardware and Communications Infrastructure Summit August 30th and 31st in Chicago and the Jefferies Israel Tech Trek which will take place September 21st and 22nd in Tel Aviv
Further information on these events and all events we will be participating in can be found in the investors section of our website. Thank you and goodbye.
Ladies and gentlemen, this concludes today's conference call. You may now disconnect your lines and have a wonderful day.