Q3 2023 Ceva Inc Earnings Call
Good day and welcome to the CEVA, Inc. Third quarter 2023 earnings Conference call.
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Please note today's event is being recorded.
I would now like to turn the conference over to Richard Kingston, Vice President market Intelligence Investor and public Relations. Please go ahead.
Thank you Rocco good morning, everyone and welcome to <unk> third quarter 2023 earnings Conference call.
Joining me today on the call are a mere punish C. The.
C E O I can leave our yeti CEVA CFO.
Before handing over to Amir I would like to remind everyone that today's discussions contain 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.
Forward looking statements include statements regarding the benefits of future financial impact of the divestment of the intrinsic business unrelated refocusing our core strengths of IP development and licensing.
Market trends and dynamics, our market position strategy and growth drivers, including with respect to Wifi seven demand for our benefits of our technologies.
Plans with respect to see the share repurchase program and expectations, our financial guidance regarding future performance.
CEVA assumes no obligation to update any forward looking statements or information, which speak as of their respective dates.
In addition, following the divestment of intrinsic business to cadence financial results from intrinsic were transitioned to discontinued operations beginning in the third quarter of 2023.
All prior period financial results have been recast accordingly.
We will also be discussing certain non-GAAP financial measures, which we believe provide a more meaningful analysis of our core operating results and comparison of quarterly results.
Reconciliation of non-GAAP financial measures is included in the earnings release, we issued this morning and in the SEC filing section of our Investor Relations website at investors Dr. CEVA Hyphen D. S. P dot com.
With that said I'd like to turn the call over to Amir who will review our business performance for the quarter and provide some insight into our ongoing business I'm here.
Thank you recharge welcome everyone and thank you for joining us today.
Before I begin I would like to address the situation in Israel. Following the horrifying attacks took place in months ago. He.
He said, it's been an extremely difficult and heartbreaking time for all of us and I would like to thank the many of you who have reached out to us for your support.
Priority at this time has been for the safety and wellbeing of our employees and their families and we are doing everything we can do and to ensure we provide them with the support they need and they made some nice diversity is our operation in Israel remain largely unaffected and we continue to drive our business and support our customers' global.
Yeah.
I want to thank our employees and he's driving a board for all their efforts during this difficult time.
Turning our attention to the business since being appointed CEO CFO at the beginning of the year high as I emphasize our need to focus our efforts on our key I E. Peters, where are we have been strong leadership with differentiated offerings and that are best suited to drive scale and synergies of course.
Our technologies globally.
In the quarter, we took an important step in this strategy, we've our decision to strategically exit.
The U S Aerospace and defense design services industry and.
They invest intrinsic business.
When we acquired the intrinsic business in 2021, Alright, Jesus was that each would help increase our presence in the U S aerospace and defense industry and expand our offering to co create I P. S. O C designs leveraging the intrinsic team.
However, what became clear to me after joining is that the a N D industry doesn't offer product volumes.
With the IPO and business model.
And while the intrinsic scheme has a legacy in the U S Aerospace and defense design service capabilities. These were not applicable to our global customer base.
The sale of intrinsic to cadence clause on October 2nd for reference in the first three quarters of 2023 intrinsic contributed just shy of 10% of overall combined revenues lower than our internal plan and with lower margins and lack of profitability compared to our core business.
We expect the divestments of intrinsic to be accretive for us from day, one and we try not to the Ninety's percent gross margins moving forward.
Moreover, these divestments will allow us to drive stronger focus on our key strengths, namely wireless communications edge, AI and sensing software IP.
Yeah, and he will elaborate on the financial impact of the divestment in his section shortly.
The proceeds from the citizens, we serve to help us to invest in our future growth, we enforce our leadership position as the world's number one supplier of wireless communication IP and pursue the compelling opportunity we see in the edge AI flower DSP and N P O platforms and sensing softer I'd piece.
I want to emphasize also that we will continue to offer a system design support to customers globally that wish to customize our IP for their project as we still see strong demand for chip design expertise from our OEM customers in particular, but we will not focus on this service only type business model.
Turning to our earnings we delivered solid results, we are recovering our IP licensing business and it's not our deal pipeline is the strongest it has been this year and where it is we are encouraged by the second sequential quarter of royalty golf shipping in half a billion CEVA powered devices.
This robust level of CEVA powered shipments is a very encouraging indicator is the strength of our customer base and in winning business and taking advantage of the consumer demand recovery during the quarter.
Moving on to our licensing and royalty business performance in the quarter, We signed 13, new licensing deals in the first quarter, we had exceptional demand and contribution from our wireless communications IP portfolio well.
Our leadership position is unrivaled in the industry.
Recently, we reached the important milestone of passing $100 million in licensing revenues for our Bluetooth portfolio. Since it became a mature product. We added another nine nine licensing agreements for our Bluetooth IP this quarter alone.
Three of these customers also licensed our Wi Fi piece to develop wireless combo chips, one of them licensed our new Wifi seven IP for access points, which carries a substantial on a S be obsolete over the current generation Wifi six IP, both for licensing and R&D.
Why five seven possesses a significant opportunity for us with Abi research focused ink and device shipments of lifeway seven chipsets to grow at the CAGR was 75% from 'twenty to 'twenty, three 'twenty 'twenty eight and to more than 1.5 billion units annually with close to <unk>.
Forward your Wifi six licensing is to date, we are the de facto IP vendor for Wifi in the industry.
A generation of Wi Fi becomes even more complex or chip designers and our ability to have leading edge Wi Fi IP available in the same timeframe as Wi Fi stylites ratified means that we can enable our customers to get to market rapidly with lower risk and more cost effectively.
When you add in the fact that we can also provide the left to the latest generation Bluetooth IP that is required in almost every use case today not to mention our U W. B and several of our Iot a PS.
Our value proposition around wireless communication is exceptional.
The only a handful of companies in the war to date, the tap a leading edge wireless portfolio as comprehensive as ours and we are the only IP company amongst the leaders we are investing to expand our leadership and ensure our customers always received the best in class latest Star Wars IP to integrate connectivity into their chips.
Thanks.
We expect 2020 for Wi Fi licensing to be driven by Wifi seven demand why Wi Fi six royalties will experience meaningful growth in tandem.
We will provide more color around our Wifi, six and Wifi seven start to extend opportunities on our upcoming Investor day scheduled for December six in New York City.
The other two Wifi combo deals signed in the quarter were for Wifi six for smart edge devices, one was with a leading platform with the OEM in the electronic can make a community who the devices are widely used in education, and prototyping, who is expanding as offering by integrating Wi Fi C extend Bluetooth and the second.
What is the wave of major a designer and manufacturer of embedded systems.
Other notable deals concluded in the quarter included new agreements for our leading edge going to fight Pea with a global OEM leader in hearing care solutions and we are a leading player for here. It goes on Wearables intelligent chips and the deal for our DSP targeting the high growth satellite communications market.
Now on the royalties we reported the second highest volume with CEVA powered device shipments for any quarter in company history, driven by a recovery in consumer demand.
As evidenced from the strength of our wireless communication since licensing business in the past few years wireless Cheeps continued to lead the way in terms of device shipments with Bluetooth chips in the quarter, surpassing 300 million units and set of Iot. She pence at an all time high of more than 35 million units.
An area of some softness in the quarter was wireless infrastructure, where our main customers for five G. O N reported weaker than anticipated five gene networks bench.
<unk> sensing and AI technologies shipments of Tvs, Pcs and smart edge devices grew sequentially, including good traction for our audio technologies.
To conclude our business performed solidly in the third quarter and we are encouraged by the healthy licensing pipeline that we're building for this quarter and beyond.
Royalties the half a billion devices shipped in the quarter powered by our IP reflects the ability of our strong customer base to win business and take advantage of the consumer demand recovery.
We have just set up in between six we have taken an important step which will allow us to fully focus on our core strengths of IP development and licensing, which is where we see the greatest opportunities for growth and value creation for our investors.
In addition, reinforcing shareholder value the board of director decided to increase our existing tend to be a dish 18 repurchase program by additional 700000 shares.
Finally, we recently established a corporate strategy function at Sema and appoint the erythroid Schiefsky as our Chief strategy Officer area. As a result, driven semi conductor and technology executive and he's experience and knowledge gained from more than 20 years in the semiconductor industry will be instrumental in defining our future strategy and helped.
Drive long time ago.
I look forward to seeing many of you at our Investor Day in New York on December six where we will plan to share our strategy and vision placebo and outlined the growth drivers and opportunities in the years ahead.
Now lets me turn over the call to Yaniv, who will review, our third quarter financial results and provide fourth quarter and 2020 full guidance.
Thank you Amir and good day to all before I start reviewing the results of operations for the third quarter of 2023.
Wanted to explain that revenues cost of goods and operating expenses for the third quarter do not include intrinsic numbers, reflecting the intrinsic business as held for sale discontinued operation unless otherwise noted.
Revenue for the third quarter was $24 1 million as compared to $30 million for the same quarter last year.
Revenue breakdown is as follows.
Licensing and related revenue, reflecting 58% of total revenues were $13 9 million.
Compared to $18 7 million for the third quarter of 2022.
I think 3% sequentially.
Royalty revenue, reflecting 42% of total revenues.
$10.1 million as compared to 11 4 million for the same quarter last year.
However.
This is the second sequential increase for the first quarter and second quarters of 2023.
This supports the recovery, we have seen in handsets and general Iot product demand in the third quarter.
Quarterly gross margin on a standalone basis without the discontinued operations came in at 90% on GAAP and 92% on non-GAAP basis due to the lower service related expenses no.
non-GAAP quarterly gross margin excluded equity based compensation expenses of zero point $2 million and the amortization of acquired intangibles of zero point $1 million.
Total GAAP operating expenses for the third quarter was $24 4 million.
Lower than our guidance because of the exclusion of the intrinsic business cost.
Actions taken by management to reduce costs and lower employee related expenses.
Our total non-GAAP operating expense for the third quarter, excluding equity based compensation expenses and amortizations of intangibles or $24 million also below the lower end of our guidance due to the same reasons I just explained.
GAAP operating loss for the third quarter was $2 7 million up from GAAP operating loss of $2 4 million in the same quarter a year ago.
GAAP quarterly loss included equity based compensation.
And others.
The amortization of acquired intangibles was zero point $3 million and 0.1 million well cost associated with your costs.
non-GAAP operating income was $1 6 million compared to operating income of $7 3 million the same.
The period a year ago.
GAAP and non-GAAP tax expenses of $1.1 million was recorded mainly associated with withholding tax deducted by our customers.
Could not be utilized and were expensed.
GAAP and non <unk>.
Net loss for the continuing operation was $2 $7 million non-GAAP net income was 1.4.
GAAP net loss for the discontinued operations of intrinsic was $2 2 million and non-GAAP net loss of $1 million.
Overall, GAAP loss was $5 million and diluted EPS of <unk> 21 cents for the third quarter of this year as compared to a net loss of $22 3 million and diluted loss per share of <unk> 96 for the third quarter of 2022.
And our overall non-GAAP net income was zero point $4 million and diluted earnings per share was two cents for the third quarter of 2023.
Paired with net income of $4 7 million and diluted earnings per share of <unk> 20.
In the third quarter of last year.
Yeah.
With respect to other related data.
Shipped units by CEVA licensees during the third quarter of 2023 were 500 million units, our second highest quarter shipments on record.
Up 35% sequentially compared to the second quarter of 2023.
Of which we reported 370 million units and up 40% year over year from 357 million units.
Of the 500 million units reported 79 million units or 16% were for handset baseband.
Similar shipment volume for the second quarter.
Our base station and Iot products shipments were 421 million units.
45% sequentially from $291 million for the second quarter of this year.
51% year over year from a 279 million units a year ago.
Bluetooth shipments were 313 million units for the quarter as compared to 210 million units for the second quarter of last year as many of our customers experience strong sales, resulting resulting from consumer demand recovery for devices.
It's T double U S ear buds, smart watches and across consumer Iot in general.
<unk> shipments were 24 million units as compared to 29 million units in the second quarter.
And we are encouraged to see a number the number of Wifi six customers continued to ramp up their.
Production targeting Iot and smart home with the transitional to the Wi Fi six standard is in minutes.
Silver Iot shipments were a record of 35 million units in the corner as compared to 21 million units in the second quarter. This increase reflects the market is becoming mature and the technologies, making its way to more in products and consumer.
And industrial use cases.
Other shipments under the base station and Iot umbrella totaled 49 million units in the quarter. This includes our sensor fusion computer vision AI audio five G brand and Dsp's for non cellular communication, such as V to X or vehicles.
Thank you.
Smart meters satellites and drones.
Yeah.
As for the balance sheet items at the end of the third quarter, our cash equivalent balances marketable securities and cash deposits were approximately $132 million.
In the third quarter, we continued our buyback program.
Purchasing approximately 135 million shares for approximately $3 million.
Yesterday, our board of directors authorized an increase of 700000 shares to the existing 10, B 118 repurchase program as of today around 844000 shares available for repurchase.
Giving effect.
This expansion, we believe in our future business prospects and plan to take advantage of the program to increase shareholder value.
Our dsos for the third quarter were 31 days below our norm and better than the second quarter 47 days.
During the second quarter, we used one the third quarter, we used $1 $3 million cash from operating activities ongoing depreciation and amortization was $1 1 million and purchase of fixed assets were zero point $9 million.
At the end of the third quarter.
Our head count was 476 people, including intrinsic employees well.
Mm 391 were engineers.
Compared to 497 people at the end of the second quarter.
Yeah.
Now turning to our outlook.
CEVA.
Post divesting its intrinsic M. D service business will be able to present, GAAP and non-GAAP accretive financials for 2023 compared to its previous consolidated financials.
And excluding the ongoing losses from its discontinued operations.
Our gross margin will increase and get back to the 90 ish percentage level.
Cost of revenues and Opex will also decrease respectively.
Overall, we are actively on measures to reduce overall headcount and expenses and monitor them closely in parallel to investing enhancing marketing and licensing of our technologies.
Our licensing and related revenue business as shown.
<unk> proven in the third quarter.
And we see a promising pipeline ahead of us for wireless connectivity and sensing technologies.
Technologies.
In royalties, we anticipate consumer products and low cost smartphone to maintain demand ahead of the upcoming holiday season, and we will continue to monitor the five G base station ran market for any improvements.
All in all we expect fourth quarter overall revenue to be in the $23 3 million to $25 3 million range.
Looking ahead.
Into next year, 2024, and considering the divestment on the intrinsic service business.
Would you use the bases of the fourth quarter guidance for modeling 2024.
Potential revenue growth as the year progresses.
Gross margin are forecasted to be in the 90 ish percent level.
And overall, non-GAAP opex and cost of goods together, meaning all annual expense combined is.
As forecasted at this stage to be flattish with 2023.
Combining these we expect operating leverage to improve over 2023.
We will provide more detailed guidance for 2024 at our next earnings call.
Specifically for the fourth quarter gross margin is expected to be approximately 90% on GAAP basis, and 92% the non-GAAP basis, excluding aggregate of zero point $2 million of equity based compensation expenses and 0.1 million of amortization of acquired intangible.
Opex for the fourth quarter is expected to be slightly higher compared to the third quarter due to G&A.
Professional cost and employee related benefits and in the range of 24.2 to $25 $2 million.
And including an expense expected for $2 million of equity based compensation expenses of 0.3 million for amortization of acquired intangible.
Our non-GAAP Opex is also expected to be slightly higher than the third quarter for the reasons I just explained and in the range of $21 million to $21 million.
I want to emphasize that overall expenses for CEVA post the divestment of intrinsic.
Our forecast that to continue and remain at the lower expense level.
As we look closely at cost measures.
Net income is expected to be approximately $1 $1 million interest income tax.
Taxes for the fourth quarter is expected to be approximately $1 $4 million derived mainly withholding tax of new deals signed and reported royalties for the quarter.
And the share count for the fourth or is expected to be at 25.1 million shares.
Hey, Rocco you could now open the Q&A session. Please.
Yes, Sir if you would like to ask a question. Please press Star then one on your telephone keypad.
If you'd like to remove yourself from queue. Please press Star then two.
Once again, ladies and gentlemen that started when I wonder if you have a question.
Today's first question comes from.
Kevin Cassidy at Rosenblatt Securities. Please go ahead.
Yeah. Thanks for taking my question and congratulations on a good quarter in a tough market.
What we're hearing through its earnings it's a lot of a slowing in demand from the Iot market, but here you are saying you are shipping are the second highest unit.
In the company history.
Can you explain why you're outperforming that these markets.
Yeah definitely and I.
I would say several things related to that one is that overall, we have really progressed well with our.
Basically licensing of our Bluetooth and Wi Fi and other wireless connectivity technology. So we have larger and larger customer base that are basically keep ramping the volume so that provide us the tailwind to keep increasing the volume, but also we believe that our customer base generally speaking on average are doing better than the rest of the market.
We are now positioning more competitively and are able to gain market share.
So that's that's how long for this phenomenon this quarter I would say and the restocking that hasn't happened in this quarter as well.
Okay, great and maybe as a follow up just on your licensing business can you say how much the U S sanctions could be hurting your licensing deal in China.
Yeah.
And so for now they have not they have not for two main reasons. One is the end markets.
Good to the consumer market, namely automotive.
Industrial and medical.
And less of supercomputers no business with the Fabs Fabless.
Industry and building Fabs.
And those businesses supercomputers so.
Most of the sanctions are targeting those end markets. If you look at some of the other players in the a and the IP space.
There are similar to ours are theyre, saying more or less the same things.
At this time.
And for the time being China is still an important market for us it's a big market for us and we haven't seen any specific restrictions for the markets and the technology that we.
Yeah and to add on that and we have really been to break out and competency of our technology and previous licensing we've a very broad customer base in the consumer markets in China.
And actually we see those customers are coming back.
After a very good support in and very competitive technology, asking for either and I'm quite of this type of technology to the next basically started out with the next stepping technology or.
Asking for additional technology that previously we haven't.
Provided them as I as I shared previously like cat.
With our Blue chip customers asking for Wi Fi, we see then some of them asking for your WB and then for AI capabilities and other type of technology that we can offer them.
Okay, great. Thank you.
Thank you Kevin.
And our next question today comes from Chris Reimer with Barclays. Please go ahead.
Hi, Thanks for taking my questions.
You mentioned the gross margin benefited from the sale of intrinsic and data protection and cost relatively speaking can you give a little color on on the.
What other benefits you might be seeing in terms of changing the business in terms of our sales and marketing in terms of head count that might change also because of the.
Discontinued business.
Yeah of course, I mean, it's a completely different business model with a completely different customer base, a mirrored talked on the prepared remarks about what drove us to get into that the both the U S market and the size of the customers in that space, but the lead times to close.
The deal with the a and D is a very long process getting new technologies and new projects.
The agreed upon and then getting it funded through Washington has a long long process, it's completely different than the lead time to license, the Bluetooth or Wi Fi or a modem for us.
Just talked about had mentioned the different markets different technologies. So first the design cycle is shorter than the design itself and of course, the end market is high volume compared to the M. D that is a very lucrative and high end market, but the volumes there for loyalty.
Business.
The core business is an IP licensing and royalty business that is something that we haven't seen it doesn't exist in the service business. So from all of that.
Different businesses together with the fact that if you have services you record those cost of services and the cost of goods and that reduces the margin when I Pee business that is now back to the 90% that's probably the combination lead time customer base the magnitude of royalties that we.
Andrea.
But we could generate from these from our existing customers and new ones in our space is few of the benefits that I could highlight mirror anything there.
Are there I would say of all the IP business model is much more levered gimbal and ways that we can drive also better gross margin and we don't need basically so call. It two to have the people in charge into cost of goods. Shortly in order to develop the technology. We are more developing innovating we've R&D to build the IP and then we leverage that across large number of customers that can also shaping high.
Volume.
Is that a better basically.
Frankly for US has been in moving forward, even with more focus.
Hi, Thanks.
And just in relation to the combo deals that you mentioned earlier.
Is this something that you're you're pitching as something that's already available together or is it strictly from a customer perspective, if they if they want two or three things and I'll ask alright, I'm just trying to gauge.
The potential in terms of a larger and larger sales regarding combo deal.
He can give any color around that and what the potential.
Potentially there sure. It's actually both we have had this quarter treated it like that we see and afterward demand flying more for a different type of combos, especially is specifically more Wifi Bluetooth combo, and but also we organically internally are basically developing these technologies and offering at something.
Is that about to for people to take advantage with fast time to market with a different type of combination of our core wireless technologies between Wifi Bluetooth 15 point for your W. P and L. A minority.
I would add to that.
And Chris that.
We empowered to remind us all we powered the.
Billions device Bluetooth last year.
$100 million ish Wi Fi so one of the potentials and royalties is to catch up because Wi Fi came later to the consumer markets.
Much more focused on the residential and enterprise and today lots of consumer consumer devices automotive almost everything around US has also Wi Fi.
The activity and the volume opportunity for us with combo chips and Standalone Wi Fi is a magnitude larger with higher asp's. So that's one of the.
Advantages over these combo deals.
And it's definitely have possibly bowflex there thinking what is moving forward as a blip of customer asking for homeless with Wifi and vice versa.
Uh-huh great Okay.
That's it for me.
Thank you Chris.
And ladies and gentlemen, as a reminder, if he would like to ask a question. Please press Star then one on your telephone keypad.
Today's next question comes from David O'connor would be empty Perry Barr. Please go ahead.
Okay.
Good morning, Thanks for taking my questions are one or two on my side, maybe firstly Amir you talked about the revenue grew progresses in 2024 and can you just give us a sense of what those drivers are specifically from an end market as you look into 2024, that's my first question.
Yeah definitely David So first we really establish a very strong leadership in wireless communication overhaul.
As we just discussed on the previous are related to a previous question, we see lots of pharma customer base that they've used our Bluetooth technology or Wi Fi are coming and asking for the other technologies, we see potential very good debt and increase in U W. D activities as well as Tommy Narrowband Iot.
Also see our five gene and I O T himself the proliferation of five G outside of handsets and micro base stations and we have significant opportunities are happening in 2024 and last but not least we have announced that this year, our new plan products for a G. I as far that is basically.
Becoming available in the market by engaging with multiple customers in terms of quantification and this is a golf engine for us as we go to next year.
Although what I will provide more detail as an explanation on all of that in the coming Investor day, and we'd really like to see everyone and welcome everyone.
Thanks for that and maybe a follow on just on the Wifi side of things.
CUNY Bluetooth massively successful and <unk> mentioned a billion.
Last year I I.
Kind of what's the stage of what do we need to happen for kind of Wifi to reach that hockey stick, we're really talking kind of a significant.
Awkward kind of shipment on the Wifi side of things.
Yes.
Revenue growth you talk about your or is that kind of part of the road to kind of hit those.
Okay.
Yeah. So we started with our Wi Fi and meaningful penetration wafer Wi Fi for generation, but that was really the early stage of penetration and.
They're much more successful in broad based penetration can lead the transition to Wifi six and that's where we really started establishing our de facto leader leadership isn't high people buy there.
Sir licensing activities happened and it has been in the last two years. So we are expecting their royalty golf and to really pick up nicely in 2024, and then weave that into 2025 and six even further so I don't know exactly when that hockey stick when it starts but definitely we would see a meaningful ramp in 2024 and that will.
Continuing into the next two years very very strongly and the number of licensing that we have right now more than 14 and really across pretty much all of the consumer and market segments as well as somewhat to launch it in other places.
And considering its across the different configuration of station access points with much higher ASP, you're on average than Bluetooth that's what it would be a very strong word to go fast in 2020 for them moving forward.
Both.
Right.
I think what David sorry.
Yeah.
Yeah.
Okay.
David I'm sorry. This is the operator, youre breaking up pretty badly Sir.
I mean no.
A little bit better here Sir Please proceed.
And just one quick one on the M&A given the intrinsic divestments any change really on the strategy on the M&A side of things. Thank you.
Yeah, David we will discuss it more than that on the analyst day, but generally speaking I would say I would say is that and my focus with the team is really on the IP business model and how we are going to leverage that we have establish and in the last several years and and and more recently.
Very very well oiled machine of how to drive a good success of licensing and then from that royalty and we strongly believe the die are out there and very good assets related to that business model that we can go and create synergy and long term success for our company is moving forward so definitely it.
This is an important priority for me and the team.
Thank you.
Thank you Anna.
Our next question today comes from Sushi, the Soho with Roth Capital. Please go ahead.
Hi, I'm Marianna, you've I'd Echo my thoughts and hoping you and your families are safe.
Safe can you could you talk about the licensing activity in China. The update there on you know what.
There is a recovery there a pause or whether it's you know tracking.
Tracking as it has in the past.
Yeah, I would say that if you compare it to last year or during the hype of the covered it's definitely a slower and we share that already last quarter and discuss it to some degree and over the last few months and but I would say right now from our perspective.
That has stabilized.
And we see right now the demand stabilizing as I mentioned, we really have a strong incumbency of customer base and we see a strong demand from there to basically go to the next generation to add more technologies.
Yeah.
And investments in China, while it slowed down versus last year overall and now it has stabilized.
And companies are coming back to basically go to the next board like that they want to deliver to markets and go in and the hospital the IP that they need.
We also see it in China, the demand for not only connectivity, but also for H I and other technologies that we have so overall it has stabilized and we've got opportunity to create golf as we go and progress in 2024.
Okay very helpful. And then I apologize if you already discussed this I jumped on late but the wireless infrastructure opportunity are there any tailwind up into an opportunity in the calendar 'twenty four I know that market's a little bit softer nylon demand perspective, but curious if that cannot recur and all that kind of revisit that in the calendar 'twenty four time frame.
The money markets again, Susan wireless infrastructure sorry.
Yeah. You know this this is a market that three or four years. We've monitored we have two of the biggest players in that industry and that market is.
Is driven by older and.
Operators demand.
Networks in a certain town Cindy stay country and it varies it started off with a pretty strong investments in five G. In the last couple of years because of the hype and the demand and the advantages of it no latency and a much more bandwidth and recently.
They realize that there was no new killer five G application.
Are there that is needed for four five gene Edwards.
Dean maybe two quarters, some slowdown, especially in Q3 and we saw the reports by the different players in the industry that the demand soften with.
Also different comments that it may be ramping up again to a better extent in Q4 so.
It was never a seasonal market it was never a cyclical market. It was based on.
The demand every time or every year it could be a different quarter, because we had a very strong peak and we talked about the strong deployment of fiber to base station Q3 was muted compared this year compared to Q3 last year by the way are super strong.
And it could change the quarter after.
Because theres still deployment of five G worldwide for different use cases, we're not talking just macro base station, but also small cells and the market is there the needs are there, but it varies from quarter to quarter and from operator to operator.
Q3 was a.
Very muted and we hope that Q4 could be it could be more and stronger and we have other <unk> players.
Not just the baseband market that I mean, you also talked about the licensing that's good.
I'll start contributing royalties.
Going forward.
Thanks.
On that basis comparison definitely we see a potential for a walk from 2020 for one debt that has been very muted this year second.
As Andy mentioned, we see we have more customers that are going to ramp in 2024 outside the macro base stations for <unk> Iot technologies.
Okay. Thanks, everybody.
Okay. Thank you. Thank you.
And ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Richard Kingston for closing remarks.
Thank you Rocco and thank you everyone 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 and accessible through the investors section of our website.
With regards to upcoming events, where we will be participating in the following conferences. The wells Fargo seventh annual TMT Summit is taking place November 29th in Rancho Palos Verdes, California.
CEVA is hosting its investor day, taking place on December six in New York and all investors are welcome to attend in person or via webcast.
And finally, we'll be attending the Oppenheimer fourth annual <unk> summit, taking place virtually on December the 11th for.
Information on these events at all events, we will be participating in can be found on the investors section of our website. Thank you and goodbye.
Thank you Sir.
Today's conference call. Thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.