Q1 2025 CEVA Inc Earnings Call
Thank you out there who sent in my transcript of the speech for films and television. It wasn't the firts time I've gone in and done that. When I create a film I take time out of my day to go back and look back and look up and come back and say thank you to the typer, and for thanks I think I've sold more books than I've made any other film ever on board. I never have any colleautages being sucked into the world that I do want to drag. You know, writing is fun and it's good for me because I get to come out there and play in front of an audience
Speaker Change: Good day and welcome to the CEVA Inc. 1st quarter, 2025 earnings conference call. Our participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch, then phone.
Speaker Change: To withdraw your question, please press star then two. Please note this event in May recorded. I would now like to turn the conference over to Richard Kingston, Vice President of Market Intelligence and Investor Relations. Please go ahead.
Speaker Change: Thank you. Good morning everyone and welcome to CEVA's first quarter 2025 earnings conference call Joining me today are Amir Panush, Chief Executive Officer and Yaniv Arieli, Chief Financial Officer of CEVA
Speaker Change: Before handing over to Amir, I would like to remind everyone that today's discussion contains four looking statements that involve risks and uncertainties as well as assumptions that if they materialize or prove incorrect.
Speaker Change: Could cause the results of CEVA to differ materially from those expressed or implied by such forward-looking statements and assumptions [inaudible]
Speaker Change: Forward-looking statements include statements regarding our strategy and growth opportunities, market positioning, trends and dynamics including with respect to significantly expanding market share in wireless communication IP and to momentum in diversifying our royalty customer base.
Speaker Change: Expectations regarding demand for and benefits of our technologies and revenues, expectations regarding technology innovations, including timeline to revenue generation, ourselves pipeline and backlog, and our financial goals and guidance regarding future performance.
Speaker Change: CEVA assumes no obligation to update any forward-looking statements or information which speaks as of their respective dates.
Speaker Change: 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.
Speaker Change: A reconciliation of non-GAAP financial measures is included in the earnings release we issue this morning, and in the SEC filing section of our Investors Relations website.
Speaker Change: 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. Amir?
Amir Panush: Thank you, Richard. Welcome everyone and thank you for joining us today.
Amir Panush: In the quarter, we delivered solid progress in our licensing business reinforcing our long-term growth strategy and expanding our customer engagement across all of our targeted use cases, connect, sense, and infer, enabling AJI
Amir Panush: Well, the revenue set short of expectations due to the combination of soft, low-cost, smartphone cheap cheapness and an industrial customer who had a slower product ramp up than in the prior year.
Amir Panush: However, by implementing cross-control measures, we mitigated some of the revenue impact and achieved profitability close to non-get EPS contenders.
Amir Panush: Importantly, our design wins this quarter. Not only is Threads and our long-standing partnerships with key connectivity customers.
Amir Panush: but also expanded our footprint with new customers embracing our sensing and AJI IP's main strong foundation for future growth.
Amir Panush: What's on revenue for the quarter came in at $24.2 million, up 10% year over year.
Amir Panush: Liciting revenue was $15 million, with 11 bills concluded in the quarter.
Amir Panush: including the number of notable strategic items which I will elaborate on now in the context of the three use cases with underpin our business.
Amir Panush: Conactivity Sturs is the foundation of EGI, enabling seamless communication between devices and data centers.
Amir Panush: For this use case, we have solidified our market leadership position by securing several strategic agreements with multiple key Bluetooth and Wi-Fi customers.
Re-enforcing our position in the long-term format [inaudible]
Amir Panush: One of our giant highest-volume customers, who is a well-established global customer base.
Amir Panush: Enemies and ready-shifting in podium, single and multi-protocol crumb of chips based on fever Bluetooth and Wi-Fi 618 has selected our Wi-Fi 718 for its next generation products.
Demonstrating the trust and long-term partnership with us
Amir Panush: In addition to this customer, we also signed a new long-term WIFI-6 deal with another high-volume customer, a Bluetooth 6 WIFI-6 Combo deal with a top 10 MCU vendor.
Amir Panush: and next generation Bluetooth deals with two of our leading audio customers as they continue to expand their connectivity offerings based on CEVA's market leading technology.
Amir Panush: The second pillar, enabling AJI, is the sensing use case, which includes inputs and outputs that have devices that are on the standard surroundings and deliver enhanced user experiences such as your pooled audio performance.
Amir Panush: For this use case, we secured multiple builds, most notably, an agreement for our real-space special audio software, which will be integrated into professional headset and harder audio devices from a leading PCIe OEM.
Amir Panush: He smarts a significant milestone as it validates the quality and robustness of our spatial audio software solution.
Amir Panush: After sensing data about the environment, influencing such data enable devices to better interpret their environment and proactively suggest appropriate courses of action.
Amir Panush: For this use case, we find an important deal for our high-performance, new plan, AGI, NPU, with Next Cheap, a Korean Automotive Semiconductor for the Next Generation Adel Solutions.
Amir Panush: Let me explain a bit more about this use case and why we were selected in the next sentence.
they were both performance
Amir Panush: and Safety of Aid Assistance continue to rapidly advance thanks to cracking-edge
Amir Panush: Vision Transformers are way for AI to analyze an image holistically as opposed to traditional non-convolution neural networks that analyze images, pixel by pixel.
Amir Panush: It brings significant benefits and superior performance for Ada's vision system, including object recognition, segmentation, and free space detection in complex systems.
Amir Panush: The Neurple and Support for Vision Transformers, coupled with its ability to possess multiple video streams and AI models all in parallel, make it ideal for next generation aid of systems.
Speaker Change: We are currently engaged in multiple discussions related to AI influencing using our new core NTU family, including several automotive players for the next generation platforms that require professors.
Upgrades to support youth latest air advancements and techniques
Speaker Change: In warranties, while overrevenue declines for the reasons previously mentioned, shipments volume remains strong, and we remain very positive about the long-term potential of our royalty
Speaker Change: Also, we have several notable achievements that highlights other warranty drivers for the business.
Speaker Change: In this regard, I'm pleased to share that we received the first royalty report from the U.S. OEM using our technology in the arenas like you bought it.
Speaker Change: As I discuss on our last annual course, we anticipate this customer will significantly expand our market share in wireless communication like P and generate the meaningful long-term more of this trend in the years to come.
Speaker Change: Additionally, I will wipe away one of these glue 183% near over year, from a 12% increase in unit
Speaker Change: This growth was given by a favorable product mixed shift towards Wi-Fi 6, which commands a higher YDSP compared to previous generations.
Speaker Change: This is a strong indicator that our Wi-Fi 6 customers are continuing to gain traction, particularly in the consumer and industrial IoT markets.
Speaker Change: All in all, our first quarter licensing performance and continuing momentum in diversifying our world to cut to my base.
Speaker Change: Reinforced the success of our transformation into a highly diversified IP powerhouse.
Speaker Change: We serve a broad range of end markets with a portfolio of high-quality products and solutions that enable any smart-edge device to connect, send and inferred data.
Speaker Change: As a reminder, success in the IP licensing business has measured over a horizon of several years.
Speaker Change: The innovations and technologies our engineers are designing today will reach commercial products and begin to generate workpiece within three to five years.
Speaker Change: This long cycle of view, underpin is how we sing and manage our business and shape our strategy focused on accumulated and sustained body creation over time.
Speaker Change: Our priorities remain clear. Continue innovating for our customers, deepen our technology leadership and building a strong future royalty stream while managing expenses with
Speaker Change: I'm confident in our ability to navigate the short-term vulnerability, one focusing on our mission to be the IP partner of choice for companies. They've been smart edge devices that connect and ensure data.
Yaniv Arieli: Now, I will turn the call over to Yaniv for the financials.
Yaniv Arieli: Thank you, Mayor. Good morning. I'll now start by reviewing the results of our operations for the first quarter of 2025.
Yaniv Arieli: Reimer, for the first quarter, increased 10% to $24.2 million as compared to $22.2 million to the same quarter last year.
Letting it break down in its funnels.
Yaniv Arieli: And I think in related, the revenue has increased 32% to $15 million, reflecting 62% of our total revenues and compared to $11.4 million for the first quarter of 2024.
Yaniv Arieli: Low-key revenue decreased 14% to $9.2 million, reflecting 38% of our total revenue down from $10.7 million for the same core last year.
Yaniv Arieli: Amir Panush, Richard Kingston, Amir Panush, Amir Panush, Amir Panush, Amir Panush, Amir
Speaker Change: Quarterly growth margins came in 1% lower than forecasted and guided.
86% of Gap Basin and 87% of non-GAAP Basin [inaudible]
Speaker Change: If you recall, we discussed the allocation of design activity for the strategic customer in the Faberite modem space.
Speaker Change: So some R&D costs for these efforts are presented in the cost of revenue and not in the R&D expense line
Speaker Change: Total growth operating standards for the first quarter, whether the low end of our guidance range at $25.1 million.
Speaker Change: So the non-GAAP operating expenses for the first quarter, excluding equity-based compensation expense and motivation of intangible and deal costs of $1.7 million below the end of guidance, and similar to last year's event.
Speaker Change: Jack operating loss for the first quarter was 4.4 million dollars, down from Jack operating loss of $5 million dollars in the same quarter a year ago.
Speaker Change: I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Speaker Change: Monga operating margins and income were 1% of revenue and 0.3 million dollars compared to operating loss margin of 4% and operating loss of 0.8 million dollars recorded for the score of 2024 respectively.
Expand Monitoring, Contribute to partially offset lower than expected tuning ribbons.
Financial income is $2.1 million, compared to 1.3 million
The unit will be higher than our estimates, and for the year. [inaudible]
Speaker Change: This was due to a significant increase in value of the Euro versus the US dollar for the first quarter on over 7%. Impacting the value of our Euro-dominated assets, especially French tax receivables.
Amir Panush: Amir Panush, Richard Kingston, Amir Panush, Amir Panush, Amir Panush, Amir Panush, Amir
Speaker Change: Gapadong, Gap Proxies were approximately $1 million, slightly lower than on-guiding, and affected by the geography of the revenue that could ignite from the end and the world's revenues.
Speaker Change: Jack met loss for the first quarter of its $3.3 million and they lifted loss per share of its 14 cents compared to a net loss of $5.4 million and they lifted loss per share of 23 cents for the first quarter of 2024 [inaudible]
Speaker Change: Now get net income in the leading earnings per share for the first quarter of 2025 with 1.4 million dollars and 6 cents respectively as compared to a net loss of 1.3 million dollars in the lead loss per share of 5 cents reported for the same quarter last year.
with respect to other related data.
Speaker Change: ship units by CEVA licensee during the first quarter of 2025 for 420 million units.
Up 15% from the first quarter of 2024 reported shipment
Speaker Change: of the 420 million units reported 49% a million or 12% both for mobile handstands and modems.
[inaudible]
Speaker Change: 337 million units were for consumer IoT markets, up 19% from 284 million units in the first
Speaker Change: 34 million units for industrial IoT markets, up 26% from 27 million units in the first
Speaker Change: Matthew's shipments were 233 million units in the quarter, up 15% from 202 million units in the first quarter of 2024.
Speaker Change: Fuller on a T-Shitman for 48 Known in Units, up 31. Warren,
percent your video. [inaudible]
Speaker Change: Last Wi-Fi shipments were 35% million units, up 12% from 31 million units a year ago.
Speaker Change: Wi-Fi and Royal Theater, the new, however, were up 183 percent year over year due to a strong contribution from Wi-Fi six shipments.
Speaker Change: which is scary, the higher ASP, the older Wi-Fi 4 and Wi-Fi 5 standards.
Speaker Change: for the low-cost smartphone market, an industrial customer with a slower product wrap-up than a year ago.
Speaker Change: That's for the balance sheet items. At the end of March, we have cash, cash, equipment, balances, marketable security, and bank deposits of approximately 158 million donors.
Speaker Change: The adults for the first quarter were 54 days, similar to prior quarters.
Speaker Change: The first quarter of US$7 million cash from operating activities are ongoing depreciation and depreciation of US$0.9 million and purchase a fixed asset for US$0.3 million.
Speaker Change: At the end of the first quarter, our headcount was 435 people including 354 were engineers.
Now to the guidance [inaudible]
Speaker Change: Amir Panush, Richard Kingston, Amir Panush, Amir Panush, Amir Panush, Amir Panush, Amir
And we discussed not prepared remarks.
Speaker Change: Our licensing business continues to perform well. With robust interest in our AJI portfolio and continued expansion of our wireless leadership.
Speaker Change: In politics, we highlighted a US smartphone OEM that reported its first 5G modem royalties to us in the quarter.
Speaker Change: and the ASC uplift in Wi-Fi 6 as a customer's volume shipment increase.
as for the global micro-environment and talents.
Well, you don't see any direct impacts from tariffs.
Speaker Change: The indirect impact on consumer demand among other factors has increased the uncertainty about the year, giving these evolving dynamics.
Speaker Change: Amir, lower than anticipated revenues for the first quarter were adopting a more cautious outlook for the rest of the year.
Speaker Change: Lowering 2025 Reverted Iron from high single digit range to a low single digit range for growth over 2024 annual revenues.
Speaker Change: expense level, cost of revenue and topics together from a range of 2 to 6% over 2024 to in line with 2024 or 96 million to a hundred million dollars a year with non-GAAP topics slightly
Amir Panush: Amir Panush, Richard Kingston, Amir Panush, Amir Panush, Amir Panush, Amir Panush, Amir
Based on these changes, we anticipated double-digit percentage increase.
Amir Panush: non-GAAP operating income, non-GAAP operating margins, non-GAAP management income, and fully limited non-GAP-PPS relative to 2024, but in a lower percentage than our earlier guy.
specifically for the second quarter of 2025.
Amir Panush: On all of these, we expect sequential growth due to the seasonality and expansion of the CEVA powered 5D smartphone modern in the second quarter and beyond.
Amir Panush: Total revenue is forecasted to be $23.7 million to $27.7 million [inaudible]
Amir Panush: More smart than expected to be similar to the first quarter we just reported, we forecast approximately 86% on non-GAAP basis and 87% on non-GAAP basis.
Amir Panush: Excluding an aggregate of $0.1 million for equity-based compensation expenses of $0.1 million and motivation of acquiring cashables.
Amir Panush: Jack Opix for the second quarter of 2025 is expected to be in the range of 25.1 to 26.1 million
and then test if there is total operating expenses for the first quarter.
Amir Panush: 4.5 million dollars is expected to be attributed to the equity-based compensation expense, 0.2 million dollars for cost-associated with business acquisitions.
Amir Panush: non-GAAP Optics, you'd expect it to be similar to the first score level in the range of 20.3 to 21.3 million dollars. Also lower in the second floor of 2024, Optics level.
Amir Panush: Amir Panush, Richard Kingston, Amir Panush, Amir Panush, Amir Panush, Amir Panush, Amir
Amir Panush: Net Interest Income is expected to be approximately $1.3 million, taxes for the second quarter, expected to be approximately $1.2 million, and the share count for the second quarter is expected to be $2.5.6 million shares.
The mail, you could open the key right there, should please [inaudible]
Speaker Change: 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. If you are using a speaker phone, please pick up your hand so that before pressing the keys.
Amir Panush: If at any time a question has been addressed and you would like to withdraw your question, please press star 1-2
Speaker Change: The first question comes from Kevin Cassidy from Rosenblatt Securities. Please go ahead.
Yes, thanks for taking my question.
Congratulations on the AI-NPU-A-DAS win!
Speaker Change: But can you say whether was this just the win with the Tier 1 supplier or just the Tier 1 supplier have a program at an automotive OEM that's...
you know, it's secured.
Speaker Change: Yes, Kevin, thanks for the question. First, this is a very important design wings for our school with the new plan. This is really holiday, the technology and the maturity to go all the way into Ada's automotive market segment.
Speaker Change: And we believe that also we propel a significant addition of design ways as we go into key to and the rest of the year.
Speaker Change: Specifically to your question, this is a design with the T1, we already have secure, it's called OEM Customers.
Speaker Change: But it's not going to go into only one specific OEM, but that it will be part of the next generation platform that we're going to multiple topics.
Speaker Change: Okay, great, congratulations. You showed great increase with the transition to Wi-Fi 6 with Wi-Fi 7 designs being won now. Is there a similar, I guess increase in ASPs with Wi-Fi 7 or is it even greater than the transition from 5 to 6?
Amir Panush: Yes, thanks for the question, Kevin. So, this is Amir. So, a few things here too. I'm back and talk about the whole life of the thing is because this quarter and the impact for us are so-called moving forward in the long term.
Amir Panush: So first, we are really happy to see multiple of our customers that had licensed the previous generation now adding I did Bluetooth Wi-Fi or the combination and we had two new deals of a Bluetooth Wi-Fi 6 combination this quarter.
Amir Panush: But also, we are very happy to see one of our high-volume customers.
of Wi-Fi 4 that is already migrating to Wi-Fi 6.
Amir Panush: Now, life is seen, life is seen for us. Again, greatest delight to see how our customers trust our technology and overall we keep expanding our leadership position in the marketplace.
Specifically for FBS, either stretch it from the numbers this quarter [inaudible]
Amir Panush: Lam, the volume sheetment is good by about 12% year over year, the revenue is good by more than 80% and this is really contributed to the transition from lifeline 4 to lifeline 6.
Amir Panush: So with that migration, we'll see a major uplift in the average ASP.
Amir Panush: On top of that, as customers will remind me of the boiling production device I said there, we expect to see another uplift But of course, this is that those designing production involvement will come later in the future years
Amir Panush: So, already through 25 and as we talked also 26 and beyond, we will see tremendous so-called increase in volume as well as
Speaker Change: Avergates before Wi-Fi, the transition to Wi-Fi 6, on a top of that Wi-Fi 7 will generate another update.
Okay, great. Thank you.
Thank you very much.
Speaker Change: The next question comes from David O'Connor, from B&P Parabas. Please go ahead.
Yeah, great. Good morning and thanks for taking my questions.
David O'Connor: Maybe just carrying on from Kevin's question there, just on the new part, the A-dass win, Amir, can you kind of give us a sense of the competitive environments that kind of around that win, kind of what other types of solutions were the customer looking at, was the kind of internal, was the other off-the-shelf solutions, and kind of just the key metrics really that allow you to kind of get that design went over at the line and I have another follow-up.
Thanks.
Amir Panush: Yeah, definitely David. So, if we look overall and the market right now for AI, NPU, high insulation for the edge, what is happening is really demigrating to the more advanced models using Transformers and that's the specific case vision Transformers.
Amir Panush: And but for the edge, it really requires a combination of extremely power efficient solution.
and as well as the small size of cloth structure.
Amir Panush: and very, very importantly for a tumultuous, extremely low latency. The reaction and so-called the ability to interrupt the data needs to be in very, very quickly and nanoseconds only
Amir Panush: Our technology is really expanding those metrics as it is given to be ever coming for our ability and history and DNA in edge devices and low power devices.
Amir Panush: But on top of that is really the combination of the hardware and the software integrated.
Amir Panush: and scalable to go into the different tiers of performance that those customers need. As I mentioned for the last several quarters, we have really dealt a scalable architecture for an interview that can go small.
CEVA interrupts all the way to hundreds of trot [inaudible]
Amir Panush: And with that all the software structure is supported. And I think these are really great advantages in the market. And I strongly believe that we will see more and more design ways so far. A new VM or I and NPU in the marketplace this year and through the quarters.
That's very helpful. Great colour there, Amir. Thank you.
David O'Connor: David, one last comment just to remind everyone. We talked about two other customers that are already renting right now in 2025 based on our Vision AI USB technology. And so not only are we winning designs, but also we see a warranty rent this year. And automotive space. And automotive space. Thanks.
Speaker Change: Awesome, thank you Amir for that. Maybe just another question. Just on the salt and the tea stall on the kind of low end of the smartphone market, was that kind of anything tire-related in your view was a kind of customer product transition? Is that just kind of expectation? They're just a one-quarter impact, you'd expect that to recover? Any color around that kind of low end of the market there, that kind of stands out to you guys and I have one last bottle. Thank you.
Speaker Change: Yeah, David, great question. Let me unpack really what happens in Q1 related to our smartphone on customers and just overall how we see the market.
Speaker Change: And so overall Yang, Q1, we have seen a slower start than what we expected. And this is an monarchy of this customer from Q4 to Q1 throughout modern, we anticipated.
Speaker Change: And this is really some of it related to some of the supply chain activities that people need to address in Q1.
Speaker Change: But after my discussion with the customers and all the old minds of the standing of the market...
Speaker Change: James, very well, and according to basically what we've seen in 2024. So, over, we anticipate that the customer is going to contribute nicely with them as we saw in 2024.
Speaker Change: And the last thing that we mentioned about it is these customer shifts...
Speaker Change: The majority of the volume worldwide outside the US, so we don't expect so close direct the impact of coverage on this customer, and we definitely expect much more to the year.
Speaker Change: Thank you for that, and maybe just one for me and you just on the...
Licensing Pipeline
Speaker Change: Like, how would you kind of describe that? I know you've given the guide for the year, but just kind of...
Speaker Change: Over to true Q1, you think kind of an acceleration in that in terms of design activity, any kind of change in customer kind of behavior, pushing of design decisions maybe, anything kind of along those lines just kind of with the an eye on kind of tariff and macro concern in the background.
Speaker Change: Any color around that kind of activity and momentum would be much appreciated. Thank you.
Speaker Change: It's a good question, I think this is a concern that allows many, many companies in the technology space.
Speaker Change: We haven't seen such in the first quarter.
Speaker Change: or the Storming Deal or the Decisions because of the macro obvious key, this is a concern that is out there and this is why we're taking the decided to take a more cautious approach for the rest of the year.
Speaker Change: He's been in a level that he likes to continue to see with a license certificate. And obviously, it seems that he looks better than maybe saying that the doctor has a case, and it seems like he's done a prescription that he's concerned by a different kind of illness to the point of macro, not necessarily pale or slightly, but just not overall.
Speaker Change: And there may be some decisions in life as it may be, but so now is not the theme that happened in person.
David O'Connor: The other thing, David, I will add on that. I think also what we see actually is an IP supplier. There's also the opportunity for potentially picking up.
David O'Connor: Thanks to the localization and they need to have the technology so-called within those specific regions.
And so, yeah, on the mix.
David O'Connor: He's definitely a risk of headwinds coming with just the supplements of the market potentially because of tires and consumer demand. On the other hand, the definitely there are the 10 wins of our customers and looking to have their own access and capabilities to drive the on technology and what that's the thing that people must.
Amir Panush: Amir Panush, Richard Kingston, Amir Panush, Amir Panush, Amir Panush, Amir Panush
very helpful clutter. Thank you guys.
Thanks to all of you.
Chris Reimer: The next question comes from Chris Reimer from Barclays, please go ahead [inaudible]
Chris Reimer: Yeah, hi. Thanks for taking my question. I'm sorry if this is asked already. I was cut off earlier and didn't hear the first part of the question. I'm just wondering about the gross margin and this one design customer that you mentioned. Can you give us an idea of maybe what...
Hello?
Mayor, we are here.
Speaker Change: Yeah, can you give us an idea of what percent that actually is of the overall and how much longer do you expect?
to continue with the extra allocation there.
Speaker Change: Sure, so last year we talked about women's view design lens with 5G advanced solution, very high end, very sophisticated. To many new use cases, some of it are satellite, some are base patient and not necessarily those new customers and those new spaces know how to deal with the modern and how to build the right use case that they need.
Speaker Change: One of the advantages that we could offer is some customization and some help in the design activity of changing or adopting from an off-the-shelf type of modem to something that fits their use case in a more efficient way. So, we have a group of engineers that are dedicated to that project.
Speaker Change: It's usually a couple of corners where anywhere between one to a year type of project.
Speaker Change: And if you look at an example in the first quarter of last year, when we recorded 90% a gross margin, about $2.2 million, the following quarter of the two and a half, $2.6 million. That's probably a pretty clean quarter of the dials. There's an effort and about $1 million or more above that. This is some of the allocation just from R&D. It doesn't change the overall cost of the company. It's just recall.
for taking that risk.
and Amir Panush.
Speaker Change: of Pluce Minus, Percent, Pluce Margin, every once in a while if you have these activities you would have a million and a million and a half and when that being done and the services are done then we bring them back to dollar D-line and focus those costs and with the technology and future developments.
Amir Panush: Yeah, the other thing I will add on top of that, this is Amir, is that all that customization and enhanced features that we are building, it's all our IP and we intend and can leverage that to other customers as well.
Amir Panush: So while there is so-called a short term, it puts on potential one or two like a percentage of the growth margin. At the end of the day, this is all being asked to secure those sockets, very high-end sockets as well as the advanced technology of movement.
Amir Panush: Great, thanks, that's really great color. And just touching on shipments, you mentioned the slowness and the sartones and that the customer would begin ramping up. So given your reduced outlook, is there any other area you're concerned about or is it just an overall proactive conservatism?
Amir Panush: There's two aspects to that question. One is Amir explained, there is no cost-marked phone. One is a bit slower for the beginning of the year. We believe it's just a time issue.
Amir Panush: Q3 and Q4, we have seen that trend for many years, the extent of how the year starts, and we've said that the follow-up from Q4 to Q1 varies from year to year, but the Q1 is usually
Amir Panush: for many, for a long, long period of time, and then it kicks in with the highest number than volumes, and work is for us to provide it for a quarter.
Speaker Change: The other new design way, not a designer that's really going into production, and we all know didn't have a full quarter, so we'll be much more of that being recorded to us and sold on a three months full quarter basis and the second quarter. And that's here to stay for the foreseeable future. So we're looking at, we're very excited about this opportunity, for sure to do, we're going to have higher numbers and this is why we've got it to quench it.
and Amir Panush.
Speaker Change: Selva IP, a very nice start for the viewer on the volume perspective and also the Wi-Fi ASP. And so if you didn't have that timing issue and we wish...
Speaker Change: could have posted a very nice start to the year, but the rest of the cost is due to the market conditions.
Amir Panush: Yeah, maybe this is Amir. Maybe I'll unpack that a little bit further and provide more
Amir Panush: So, as we look at Q1, we are very happy to see a very solid licensing execution, and we really solidifying our leadership in wireless communication, as well as penetrating more and winning in the AI space.
Amir Panush: And so forth, we are extremely encouraged by the licensing that we got in Q1.
Definitely on the righty, that can be our expectation.
Amir Panush: Due to the two customers that we mentioned in the paper Dremelk's [inaudible]
and Patrick Bedford on the mobile side, mobile handset.
Amir Panush: One with that customer as we expect the revenue to pick up 90 to the years.
to basically admit what we have seen in 2024.
Amir Panush: As well as, of course, the new customers overall are gaining market share, so this is a very strong kind of influence for us this year. The other one is on Wi-Fi 6 that we have talked about for a while, both volume range as well as ASB, so it's got the ASB increased.
Amir Panush: And for those two tenements, and overall the portfolio that we have in IP to Drug Licensing, we feel good about it, and overall perspective for the year.
Amir Panush: We did that, considering Q1 can show our expectation on the top line, as well as just the macroeconomics.
and that type of change.
Amir Panush: Quite a bit since our last call on three months ago. We believe it's put in to take more cautious approach.
Amir Panush: for the rest of the year. And with that, we basically guide any down, still a glove here, but we guide them down the expectation for the revenue glove.
Amir Panush: So all in all, in terms of our technologies and our ability to go through our growth and success
both in 2025 and in the long run.
Amir Panush: We are very confident about that, but we cannot ignore all of the market sentiment out there and that we have a Q1 that will go within our expectation on top line.
Got it. It's a lot for the color. That's it for me.
Thank you, Chris.
Speaker Change: There's a follow-up question from Kevin Cassidy from Rosenblatt, please go ahead [inaudible]
Kevin Cassidy: Oh, yeah, thanks for taking my follow-up. And, you know, just as far as-
Kevin Cassidy: customer behavior goes, you know, investors got into a bit of a panic, we'll say about a deep seek and these other low cost and say smaller LLMs that are coming into the market. Can you say how that's changing your demand for your NPU IT?
Speaker Change: Yeah, that's good for the question. Actually, this is a debt transition is great for AI. We've seen the success and the growth.
Thank you very much.
Speaker Change: Hasn't really a big number started yet. Now it's really happening. It's so called the beginning of 2024 and now moving into the next few years.
Speaker Change: Models like BitSix, and actually what we see right now also from the other Western, large LNM companies building those models, they are all coming with more optimized
LLM Modules
Speaker Change: that can be run way more efficiently on edge devices. So we believe that we will see a major transition where smartphones, PC, tablets, automotive systems, other smart edge devices.
Speaker Change: We will integrate more and more AI or NPU capabilities and we will be able to run much more efficiently with those models because they will be smaller and optimized and with that lower latency and lower power.
Speaker Change: And so actually deep see coming with this technology and what's coming now on the Western world as well, extremely encouraging to enable our future growth in the marketplace. Thank you.
Speaker Change: Okay, great. Thanks for coming. And we, that we are looking to support those models, of course. Yes, sorry.
Right, yeah.
Speaker Change: The next question comes from Suji DeSilva from Roth Capital. Please go ahead.
Suzy DeSilva: Hi, I'm your Hi, I'm Aniv. Can you talk to me maybe with the given all the macro and tower of uncertainty, if you've seen any impact in the licensing environment, if you're seeing any programs that were underway being pushed, or if the activity remains unimpacted so far?
Amir Panush: Yeah, thanks to you for the question. So, for just to clarify, we don't see direct impact of starvation in terms of so-called paying taxes, a lot of customer need to pay taxes, unlike everything I work with the college meetings.
Amir Panush: In Q1, we've seen very strong demand, and that we have been able to close both good number of deals as well as very strategic deals for us. We have very good partners for Q2 in the rest of the year. We haven't seen that part line decreased.
Amir Panush: But, although all, when we talk with customers, let's say on the airbrush [inaudible]
Amir Panush: People are a little bit more cautious out there, and just more than anything, the most customer said, we don't know what we don't know, and we need to see how things will shape up, and I think that's overall what is here out there.
Amir Panush: So, this is of course, concerning Q1, and what we said, be more content with the cautious outlook. We guided them over the 40 years, but hey.
Amir Panush: When we go and specifically talk with customers and work on programs that are in the making, we haven't seen any but
Chris Reimer: Amir, appreciate the candid response there. And then looking at your royalty units and Wi-Fi, are those winds ramping and tracking to follow the success, the share success you've had with Bluetooth? Is there any impact there as well or are those programs coming to market?
If we actually understand that we are extremely encouraged then...
Chris Reimer: We have licensed to tens of customers our Wi-Fi 6 technology and many many of them are ramping.
and Amir Panush.
Chris Reimer: So we are absolutely, exactly on track to what we want to achieve in terms of the life of our lamp in the coming few years
Chris Reimer: And now, of course, with that, there will be the transition to what the Senate has learned.
Chris Reimer: Although I would say the competitive landscape is such that we are really becoming not only the de facto icons of Trial for Bluetooth, but as well as for Wi-Fi. And we get Wi-Fi 6 and then transition to Wi-Fi 7.
Okay, very good. Thanks, Amir. Thanks, everybody.
Thank you.
Chris Reimer: This concludes our question and answer session. I would like to turn the conference back over to Richard Kingston for closer remarks.
Richard Kingston: Thank you Daniel. And thank you everybody. As a reminder, the prepared remarks at this conference call are filed as an exhibit to the current report on Form 8K and accessible through the investor section of our website.
Speaker Change: With regards to upcoming events, we will be participating in the following conferences
Speaker Change: The J.P. Morgan 53rd Annual Global Technology, Media and Communications Conference, May 13 and 14 in Boston.
Oppenheimer 26th Annual Israeli Conference May 18th in Tel Aviv in Tel Aviv.
Speaker Change: The Stiefel Boston cross-sector, one-on-one conference, June 3rd and 4th in Boston, the Rosenblast 5th Annual Technology Summit, The Age of AI, on June 10th, being held virtually.
Speaker Change: The 15th annual Roth London Conference June 24th and 25th in London and the Northland Growth Conference 2025 on June 25th also being held virtually.
Speaker Change: For information on these events and all events we will be participating in can be found on the Investors section of our website. Thank you and goodbye.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now