CEVA - Earnings Call - Q2 2017
August 3, 2017
Transcript
Speaker 0
Good morning, and welcome to the CEVA, Inc. Second Quarter twenty seventeen Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this 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.
Speaker 1
Thank you, Andrew. Good morning, everyone, and welcome to CEVA's Second Quarter twenty seventeen Earnings Conference Call. I'm joined today by Gideon Wertheiser, Chief Executive Officer of CEVA and Yaniv Arieli, Chief Financial Officer of CEVA. Gideon will cover the business aspects and the highlights from the quarter and provide general qualitative data. Yaniv will then cover the financial results for the second quarter and provide guidance for the 2017.
I will start with the forward looking statements. Today's conference call contains forward looking statements that involve risks and uncertainties as well as assumptions that if they materialize or prove incorrect, could cause the results of CEVA to differ materially from those expressed or implied by such forward looking statements and assumptions. Forward looking statements include our financial guidance for the third quarter and full year 2017, including the degree of confidence in the guidance general market outlook and revenue drivers for 2017 optimism about the licensing pipeline and our product portfolio anticipated benefits of the newly executed portfolio agreement adoption of new CEVA technologies in the Chinese smartphones and market opportunities and ability to leverage market trends for vision and imaging, five gs, base station and other strategic opportunities and projected customer ramp up schedules, market trends and resultant royalty revenues. The risks, uncertainties and assumptions include the ability of the CEVA signal processing IPs for smarter connected devices to be strong continue to be strong growth drivers for us our success in penetrating new markets, specifically non baseband markets and maintaining our market position in existing markets the ability of new products incorporating our technologies to achieve mass to achieve market acceptance the speed and extent of the expansion of the three gs LTE and five gs networks, Bluetooth five and the IoT space our ability to execute more broad portfolio license agreements customers' ramp up schedules and the impact on royalty revenues the effect of intense industry competition and consolidation global chip market trends and general market conditions and other risks relating to our business, including, but not limited to, those that are described from time to time in our SEC filings.
CEVA assumes no obligation to update any forward looking statements or information, which speak as of their respective dates. With that said, I would now like to turn the call over to Gideon.
Speaker 2
Thank you, Richard, and welcome, everyone. The momentum in our business continued to build with the second quarter and deliver strong financial results. We exceeded the high end of our guidance. Our licensing business continued to accelerate. And in addition to 12 licensing agreements completed, we signed a second portfolio agreement with a major customer.
The visibility in our licensing business continue to strengthen with record high backlog and solid pipeline. Therefore, we are setting another record high licensing guidance for the third quarter, and we revised upward our annual licensing guidance as well. This licensing performance reaffirms the value our product portfolio presents to broad customer base and the potential for CEVA to address the smart and connected world. Revenue for the second quarter came in $20,600,000 up 20% year over year. Licensing and related revenue was record high at $10,400,000 up 38% year over year.
During the second quarter, we concluded thirteen days, of which seven were for our DSP core asset platform, five were for connectivity safety, and one was the portfolio agreement that I just mentioned. 11 of the bids were for non handset baseband applications, and four were with first time customers. Customers' target markets for relationships include smartphone, automotive ADAS, drones, surveillance cameras, gigabit industrial IoT and variety of Bluetooth and Wi Fi connected consumer and medical products. On royalties, revenue came as expected at $10,200,000 up 6% year over year, primarily driven by new non handset products, including initial shipments of vision processor and smartphone and base station chips. Let me take the next few minutes to highlight a few of the agreements signed in the quarter.
As I remarked earlier, we signed a portfolio agreement with a major customer during the quarter, our second portfolio built in the last twelve months. This portfolio agreement grant broad access to our cellular connectivity, vision and sound technology as well as early adoption of our future we
Speaker 0
we We made very
Speaker 2
decision We are very delighted to have two of our major customers now signed up under this comprehensive agreement. Due to the nature of this agreement, revenue will be recognized in equal installments over the next few years. Two other elements that I would like to highlight during the quarter are for our vision platforms. One is a large and the other with the top rated grower. Both are aiming to internalize the development of vision chips as a means to differentiate their camera experience.
For this purpose, these customers will capitalize on our vision platform along with the CDNN, our deep neural network software and hardware solution. Smartphone OEMs are consistently enhancing their camera with advancements in low light performance, image stabilization, zoom, and neural net enabled application like scene detection, facial recognition, and more. In the voice space, our deep learning platform enables the most sophisticated drone workload called SentinelVault, which allows the drones to fly autonomously the two in static and moving obstacles. Overall, we have another excellent quarter for our Vision platform with four gs side. We now have more than 30 customers actively designing products for a range of end markets, including automotive data, ARVR headset, smartphone drone surveillance camera, mirrorless cameras, and more.
In connectivity, we signed an important agreement for our Bluetooth and Wi Fi product with a China based SoC company that will soon emerge as a contender to the incumbents in the smartphone SoC space. This company is targeting the China domestic market, in particular, the low and the mid tier smartphone segment. It already licensed our vision and audio platforms and is now expanding its use of our IP to include Bluetooth and Wi Fi for connectivity portion of its chipset. In addition to our incumbency in basement processing, this agreement provides us with additional royalty opportunity from the mass market of China made smartphone, where 84% of the world manufacturing takes place. Turning to market.
The second quarter royalty revenue reflects a seasonal weakness of post Christmas and the inventory adjustment. Smartphone OEMs are making to set the stage for new SKUs shipments in the second half of the year. Non baseline shipments were particularly notable with units up 39% year over year, including first time volume shipment of vision and base stations product. On a year over year basis, royalty revenue was up six percent with units up 19%. In fact, despite the muted growth in the overall handset market, the unit potential for mobile Internet enabled smartphone continued to be sizable.
Out of the total 7,600,000,000 subscribers, of which only 2,100,000,000 are using LTE. Beyond the growth opportunity we have in LTE based processing, to actively address two other substantial growth vectors in smartphone space. The first growth vector is increased content via our vision, voice, and connectivity technology. On vision, advancement in photography, as low light zoom, and the expected proliferation of augmentation reality application as seen by Google Tango and Efforts ART are already driving customers to incorporate our vision platforms along with our deep network framework. In this context, Vivo, one of the fastest growing companies in the smartphone space, announced last month the adoption of our Vision DSP platform in its latest x nine s plus flagship smartphone.
On voice, use of multiple microphone for noise suppression to enable the growing use of voice assistant services such as Epson or Google Assistant as well as Voice over IDE require reduced high performance and low power DSPs along with advanced algorithms that we are set to offer. In connectivity, new classes of wireless earbuds like the Apple Air four that could potentially displace the current wired earbuds as well as the Android eighty two eleven AC MIMO in mid range phones offer us additional additional opportunities to our connectivity portfolio with a major incumbent in the company. The second growth vector is five Our strategy here is to address both ends of the network, the base stations and the edge devices, which include handsets and the anticipated billions of IoT nodes. Our platform solution comply with the performance and the power requirement of all five g verticals, mainly jittery per second for smartphone, mission critical for automotive, and the next We are uniquely positioned as the forefront of these high end areas technology, which encourage key players in the space to engage with us on the long term and collaborative efforts. So to summarize, I'm happy with the strength of our licensing business and the substantial opportunity we possess in developing long lasting customer relationship and loyalty revenue streams.
I'm also encouraged by the recent quality traction in the lucrative vision and base station spaces. Both are expected to be a strong contributor to our royalty revenue next year and year. With that said, let me turn the call to Yaniv for the financial and the guidance. Thank you, Guido. I'll start by reviewing the results of our operations for the 2017.
Revenue for the second quarter was $20,600,000 up 20% on a yearly basis. The revenue breakdown is solid. Licensing and related revenue was approximately $10,400,000 reflecting just over half of total revenues, 38% higher as compared to the 2016, a new record high. Royalty revenue was $10,200,000 reflecting just about half of total revenue and 6% higher on a year over year basis. Quarterly gross margin was 92% on U.
S. GAAP basis and rose to 93% on a non GAAP basis. Our non GAAP quarterly gross margin excludes approximately $100,000 of equity based compensation expenses. Total operating expenses for the second quarter were above the guidance range at $16,800,000 This was primarily due to almost no R and D grant payments in the quarter and high employee related costs. OpEx also included an aggregated equity based compensation expenses of approximately $2,100,000 and $300,000 for the amortization of acquired intangible of Riviera.
Total operating expenses for the second quarter excluded equity based compensation expenses and amortization of intangibles were $14,400,000 again over the high end of our guidance due to the same reasons I just mentioned. Taxes. And regarding our last earnings call, the quarterly tax the second quarter included a tax benefit regardless of the conclusion of the tax audit, following which we recorded an additional onetime tax benefit of approximately $1,800,000 on both GAAP and non GAAP basis. Our U. S.
GAAP based net income and diluted EPS for the quarter increased 2430% to $3,900,000 and $0.17 respectively, over the 2016. Our non GAAP net income and diluted EPS for the second quarter increased 3833% year over year to $6,300,000 and $0.28 respectively. Those figures exclude equity based compensation expenses net of taxes of $2,100,000 and the impact of amortization of acquired intangible of $300,000 Other related data. Shift units by CEVA licensees during the 2017 were 268,000,000, down 24% sequentially, but up 19% from the second quarter shipment of 02/1960. Of the 268,000,000 units shipped, 222,000,000 or 83% were for handset baseband chips, reflecting a sequential decrease of 20% from two seventy six million units of handset baseband shipped during the 2007, but a 16% increase from 192,000,000 units shipped year to year ago.
In non baseband, volume shipments decreased 39% sequentially due to the post Christmas seasonality, but continued to increase on a year over year basis, this time by 39%. The year over year increase is also due to higher quarterly Bluetooth, vision and first time base station shipments in 2017 compared to 02/2006. From a revenue perspective, second quarter non baseband growth revenue increased by strong double digit sequential, although volume increased, and on a year over year basis, more than doubled. As for the balance sheet items, as of 06/30/2017, CBA's cash, cash equivalent balances, marketable securities, and bank deposits grew to approximately a $170,000,000. Our DSOs for the 2017 was down to forty six days, third sequential time and down from the prior quarter of sixty eight days.
During the second quarter, we generated $4,300,000,000 of net cash from operations. Our depreciation was $500,000 and the purchase of fixed assets was $800,000 At the June, our headcount was 301 people, of which 241 were engineers. Now for the guidance. On licensing, as given described, we continue to experience robust demand across the entire range of products we offer. Therefore, we anticipate another strong licensing performance for the third quarter, in line or better than the second quarter's all time record high achievement.
Moreover, we're also raising our annual licensing target from the old $34,000,000 to $36,000,000 range to over $40,000,000 for the first time net. On royalty, we expect a slight sequential increase in the third quarter led by strength in our non handset baseband product line and offset by softness in the baseband business, attributable to access inventory in the Chinese low tier market, smart home market. For the remainder of the year, on royalty revenue, we still lack the visibility of the timing and magnitude of recovery of the Chinese market and the timing of introduction of new CEBA powered flagships. Our guidance for the 2017 is as follows: Revenue for the third quarter of 'seventeen is expected to be in the range of $21,000,000 to $22,000,000 Gross margin is expected to be approximately 92% on GAAP and 98% on non GAAP basis, excluding an aggregate $100,000 for equity based compensation expense. Overall OpEx should be lower for the third and fourth quarter compared to the second quarter.
Q3 OpEx is expected to be in the range of 15,400,000 to 16,400,000.0 Of the anticipated total operating expenses for the third quarter, dollars 2,100,000.0 is expected to be attributable to equity based compensation expenses and $300,000 for the amortization of the flight and engine. Our non GAAP OpEx is expected to be in the range of $13,000,000 to $14,000,000 Net interest income is expected to be approximately 600,000.0 tax rate in the third quarter on GAAP basis, 16% and on a non GAAP basis, 11%. Share count in the third quarter is expected to be approximately 23,000,000 shares. U. S.
GAAP fully diluted earnings per share is expected to be in the range of $0.16 to $0.18 Non GAAP EPS forecast, excluding the aggregate $2,100,000 for equity based compensation expenses, net of taxes and amortization expenses of $300,000 is expected to be in the range of $0.27 to $0.29 per share on non GAAP basis. Andrew, you can now open the Q and A session.
Speaker 0
We will now begin the question and answer session. The first question comes from Matt Ramsay of Canaccord Genuity. Please go ahead.
Speaker 3
Thank you very much. Good afternoon, guys, and good morning, everyone. I guess I wanted to start with, first of all, obviously, big congratulations on the licensing momentum in the business and the diversification of it. I don't know for Gideon or any of either one of you guys, how do we think about the licensing potential long term being sustainable at these levels versus the amount that you might need to invest in the business and grow operating expenses over that period of time? I'm just trying to look at the relative growth rates of that licensing business and the cost that you're pouring into R and D to develop these new technologies and how we should think about the two growth rates of those going forward.
Thank you.
Speaker 2
Thanks, Matt. It's a good question. You know, the no doubt that we have extremely interest in our product. And, of course, on the the small business lines that we have, and it's not it's a market leader. So if you take, for example, the vision, six months ago, we did it we barely saw interest of use of embedding vision processor in smartphone.
I think last quarter, we had two deals in this respect, and we have few in our pipeline. Five g is an area that people will slow. Now we are hearing Nokia speaking about acceleration, and they are speaking about 2019 deployment. So we believe this kind of thing creates a demand, and and we are set to support. So to quantify it at this stage is how we are extremely happy about this '25.
Basically, we are now guiding 25% yearly increase in life. We'll see it as we go to next year, but this is very good about it. Matt, let me add some color on the expense line. I think the increase in expense, some of it is associated with higher headcount, but we did increase that hardly this last quarter just shy of the 10 engineers in that front, and that's some of the answer that Guillaume also was referring to. But the higher expense level in the second quarter specifically, to some extent, the rest of the year is more to do with lower R and D grants, specifically for this year compared to prior year.
We're still trying to understand why they try to come up with some new different program to fill the gap, but this is something that we were not expecting, and did have higher levels in the prior year. And a a little bit also contribution to the US dollar is not being as strong from an FX perspective as we are perceived to be earlier in the year. And you saw the euro between some other local currencies in Israel as well, it's being much stronger than the than the dollar, and that's hurting us a little bit on the FX this second half of the year. So those are the main reasons for the expense. With that said, we're putting more effort in in the R and D by giving expense at the additional.
Speaker 3
Got it. Thank you for that color. I much appreciate it. And I guess this is my follow-up. Gideon, there's been a lot of movement in both unit dynamics and in baseband market share within the Chinese handset market over the last, I know, couple of quarters.
No secret, some pretty big share gains from Qualcomm and Gidec. But I wonder if you might talk about that market a little bit more in detail, where we are in terms of an inventory correction and coming out of it and how the share shifts between two of the big suppliers there that are not typically your licensees might have affected some of the dynamics with the companies that are. I I appreciate any color there. Thank you.
Speaker 2
Yeah. First of all, when it comes to Qualcomm, as far as we could see here, Qualcomm's strength is in the mid high end space. Those companies like Vivo, Oppo, that are targeting global expansion to western companies tend to pick Qualcomm in this respect. By the way, very interestingly, in the conference call, we said that we have the design and provision. So we for with Vivo.
So this is a a good example of people using a Qualcomm Snapdragon and add a chip without technology just for the camera performance. So in a way, we we share the success, with 585,000. You know, our customer and the the name the prepared remarks touched on it about some kind of softness. I don't think and this is by the in in the low end portion of this. I don't think this is a market maturity on the contrary.
We think this India and in the low end is a is a good opportunity. It's a transition there. They are moving from two g to LTE. There are new, what is called LTE feature phone, which are smartphones, but not Android based. The volume is there.
96% of the phones that ship in India in the second quarter was an LTE smartphone. So the volume is there. So there was some inventory, but to us, it looked like a post rather than, know,
Speaker 3
Got it. Thank you very much.
Speaker 2
Sure. Thank you.
Speaker 0
The next question comes from Joseph Wolf of Barclays. Please go ahead.
Speaker 4
Thank you, and thank you for the detail on some of the non baseband opportunities, which is what I wanted to start with. If you look at the base station win or the one that's contributing to revenues right now, can you talk about the technology and the application that you're seeing and the geographic location of that, of that win?
Speaker 2
So the the company that started to ship, our base station chips are going to ship it worldwide. It's not in geography oriented. This is what is called four and a half to 4.9 g. It's not just five g, but it's the most advanced ATE standard, the provision standard they just speak about gigabit speed. And these are very complicated chip with 20 and more DSP need DSP our DSPs into this chip, and the royalties is reflected.
Speaker 4
Okay. That's helpful. So and do you expect is if you look out for the next couple of quarters with the guidance that you've kind of given for the second half, there's no seasonality to this base station deployment yet. We're talking about early rollout?
Speaker 2
Yes. This industry is not seasonal. It's more like infrastructure investment cycles, investment infrastructure. You know, we started to ship to see shipments there, and we are it's the first time that we get what is on this space. We need to learn a bit more about the the, you know, the the practices in this business, you'll see that you're right.
It's not a seasonal type of business. And, of course, after that, the result of that next year, we believe that the the magnitude of growth is coming from that market, and we've said for a while, should be significantly larger than the initial shipment that we're seeing now. Hopefully, they also get to nice volume, but it it just stops.
Speaker 4
Okay. That's helpful. And then on the vision side, so the application right now is is more, I guess, advanced camera features, and then you mentioned some drones. So I just wanted to go into a little bit more detail there. So for the vision side, that's also that must can you is that the high end you talked about that being the high end of the market with the Vivo phone.
Are those the ones that are going into the market right now? And again but that those shipments, it would seem, would follow some sort of seasonality or new product introduction with the revenues coming as we see some take rates on higher priced smartphones? And then with the drone market, can you talk about how many or which segment how many markets you're in or what segment of the market you're in in terms of high end versus high performance or kind of kid toy kind of drones?
Speaker 2
Yeah. These are good questions. Let me, if I may, to elaborate on the vision addressable market. The big market for now are smartphones. This is I think I answered that question to Ned.
This is something that popped up or started to to flourish in the last six months. And here, what people are are looking is to put a a camera, a processor that's capable to run artificial intelligence or deep network. And by this achieving by far more better performance on the camera in terms of low light condition, stabilization, this is where this is what you need if you want to enable augmentation reality. So these are valuable features that you can do whenever processor and capability to run neural networks and algorithms. The second largest market today is surveillance market.
Just in China today, I'm speaking about public surveillance camera. You had 150,000,000 and expected to go in 2020 to 04/1950. These are just outdoor camera that runs all sorts of face recognition. They can identify you or anybody else working, and it is violating traffic lights and stuff like this. So this is the second largest market.
You know, you could take green in The US for smart dollar, so the camera has to be smart and using technology that's. And then comes the market that growing. You asked me about what's growing in the in the market. The primary use today is growing, at least from our standpoint, is industrial, agriculture, not necessarily consumer one. And these are also very smart using artificial intelligence for in the sensor and voice.
And things go ups and downs. It's it's it's somehow shared between the different verticals. So that's what I I asked the same agent from our 23 because there's only different markets in the x and six or x and four. But back to the question on R and D on this front, please, it's a very, very efficient solution that we came up with in in the market that we didn't discuss.
Speaker 4
Thank you.
Speaker 2
And, Joseph, and watch out when you cross the the street. I'm only in green light.
Speaker 0
The next question comes from Gary Mobley of Benchmark. Congrats
Speaker 5
on the continuation of strong licensing trends. On that topic, this new portfolio agreement, I'm curious to know, is this with a first time licensee or an existing licensee?
Speaker 2
Existing. A significant customer of ours, that, right now, we enable them to use not just one segment of technology that's been used in the past, but everything, especially vision, sound, connectivity, Bluetooth, Wi Fi, base station, handsets, really nice diversification of technology. And, hopefully, that will carry also these new designers will carry new royalties down the road.
Speaker 5
Okay. Did this portfolio agreement contribute at all to deferred revenue and and relating to deferred revenue was down roughly $3,000,000 sequentially? And I know that's just one I'm just know that's just one component of the total backlog. But
Speaker 2
No. Not yet. That $3,000,000 was an older deal. The new deal hasn't been yet recorded on the balance sheet, and it probably should increase the first revenue next quarter, right, if it needs to get paid Okay. To the very back end of the deal.
That's the 55.
Speaker 5
Alright. Last question for me. You you did not disclose this time the LTE royalty units. Could you give us that number?
Speaker 2
The LTE was 71,000,000 units in the second quarter.
Speaker 5
Okay. I I lied. I do have one additional metric question. The non mobile handset baseband royalty unit growth, I believe, was 39%. I think that was the number you quoted, but more than a doubling in overall revenue, obviously implying a per unit royalty rate increase probably fairly substantially.
And is all is that mix related? Is that base station SoC related royalty contribution driving that? And could you give us a sense of what that base station SOC royalty unit contribution might be?
Speaker 2
Sure. Let me first add on the LTE count that you answered earlier. It's a good question that you talk about. To start off on the monthly account. On the nonbased and low fee.
So now that overall number is still relatively small because the 10.2, it it still contributes not a big portion of that overall. With that said, as I mentioned, it's more than doubled on the on the lending per se. The business and and ASP ASP in the base station market, I think it's very similar to to other segments that we have. In some cases, you can take more than 1% of ASP. These are very expensive.
It could be a 100, a $150 type of devices. So the ASP is much, much higher. Of course, we extrapolate that than what we have there in any other market in the past. Add to that, a little bit higher vision royalties than our average, that also has an interesting element of ASP. But as low as you think ourselves, you know, the blended ASP is so far move so many moving pieces, some lower, some higher that, you know, you missed the point as long as the the overall dollar is are in the right trends.
I think we're we're happy with the happy to analyze that because the market, but the mix doesn't make too much sense overall. We have some of the higher than the. Our
Speaker 4
next question comes from David O'Connor from BNP Paribas.
Speaker 6
Great. Thanks for taking my question, gentlemen, and congratulations on the solid results. I have a question about the China smartphone weakness that you're calling out. If I remember back to Q1 call, you mentioned that your Chinese based customers were mainly shipping into India, where smartphone growth continues to be very strong. I'm just wondering, has there been some change in the dynamics this quarter versus last quarter among your Chinese handset customers?
That's my first question.
Speaker 2
Yeah. Hi. It's Miguel. The that's exactly how it works. The more the supply to India is coming from Chinese OEMs and ODMs that specialize in the the low cost segment.
Because in India, it's it's primarily low cost
Speaker 6
power.
Speaker 2
In India, if you look that, you know, we are using India twenty, twenty five percent in the calls. We are speaking more 4% in smartphone. So I believe as a result of the this market demand, and I think we know the reason for that, created inventory in China, and that's the reason that our customers specialize, our chief customer who specialize in China He didn't ship that much, that many in into into the market of India. India is a is a very dynamic market of 20. There are a lot of initiatives to move past 20, It's a pause.
It's a transition from where the AltiBerry in two g three g 12 g, and then they should recover one year or another. Whether the partition between q three, q four, this is something that we where we are today, we don't know. But I think what's important for us is the fact that the market is there and our customers are very established in supporting the market needs.
Speaker 6
Okay. That's helpful. And as a follow on as well, looking at your 40% baseband share, when you look at that, how sustainable do you think that level is? I mean can we expect it to still edge upwards when you look at the dynamics among the major players in the smartphone space at the moment? And I have one additional one question.
Speaker 2
Sure. And then the 40%, you were there before, you know, changed the they went from mid thirties to the 40, and then one or 2% jumps. Yeah, overall, it depends on the mix. And today, in two g, we have probably north of 85% to 90% in two g. So the major our low cost guys that run that business, and three g just shy of 60% of the market.
And, again, sometimes, any quarter, you have a little bit of a, you know, phones that are going to the market unless you use into that. And the LP is where we put most of them, and then maybe at about 20%. That's going about 20% worldwide market share. And the goal here, of course, over time is to increase it partially by using the markets that you didn't talk about, partially from high end well known SKUs that are coming out every every once in a while. So I think we're trying to tackle every market segment of the LTE.
A few years ago, our market share, there was 1%. Today, it's 20%, and the goal is to further increase that.
Speaker 6
Okay. And as a final question, I have a question on the your vision in automotive. Are you the main application you see with your automotive customers or licensees, is it primarily vision? Or do you think there's other applications in there that you're discussing with your customers as well as we go forward towards the autonomous car? Thanks.
Speaker 2
When it comes to vision, the this is a technology for cameras. So the customers that are taking the technology are looking for the ADAS, which means we chain address and already engage with customers both on the connectivity side, because we installed we we have in the current year five g. And we have customers with shipping modems into this space and also in in in Wi Fi and Bluetooth. So Wi Fi, most of the car today has a Wi Fi access point. So we have customer targeting this space and Bluetooth audio, what is calling containers, we are addressing the car market from this time, I guess, this time it helps.
Speaker 6
And
Speaker 0
the last question will come from Suji Desilva of Roth Capital.
Speaker 7
Congratulations on the strong progress here. The customers that are new to C, but can you talk about what areas you're seeing those customers in? Because you already have a very strong licensee base. I'm curious where the new ones are coming in.
Speaker 2
Well, the newer the the newer are smartphone. As I said, smartphone, the the SoC's
Speaker 7
Okay. Great. And then my other question is on the wireless infrastructure that started ramping here. What kind of linearity do you expect to that ramp?
Speaker 3
Will it be lumpy? Or do you have
Speaker 7
a sense of whether
Speaker 0
it will grow every quarter? Just to get an
Speaker 7
understanding how that will play out.
Speaker 2
The wireless infrastructure is set to that and. So as it's new, we don't know exactly at this stage where where these base stations are going and what are the cycles they are there. But we know it's it's a 4.5, 4.9 g, not 80 anymore. This this is what we know at this stage. We don't know and only share the information.
Speaker 7
Okay. That's helpful. Great. Thanks, guys.
Speaker 2
Thank you.
Speaker 0
This concludes our question and answer session. I would like to turn the conference back over to Richard Kingston for any closing remarks.
Speaker 1
Thank you, Andrew. Thanks, everybody, for joining us today and for your continued interest and support of CEVA. We will be attending the following upcoming conferences and events and invite you to meet us there. On August 8, we'll be in Boston at the Oppenheimer Annual TMT Conference. On August 9, we'll be in Boston at the thirty seventh Annual Canaccord Genuity Growth Conference.
September 6, we'll be in New York at the Drexel Hamilton TMT Conference. September 7, New York again for the Citi Global Technology Conference. And September 12, we'll be in Las Vegas for the Deutsche Bank Technology Conference. Please visit the Investors section of our website for further information on these events and other events we will be attending. Thank you, and goodbye.
Speaker 0
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.