CEVA(US:CEVA)2024-05-09 20:35Financial Data and Key Metrics Changes - Revenue for Q1 2024 was $22.1 million, down from $26.3 million in the same quarter last year, with licensing revenue at $11.4 million and royalty revenue at $10.7 million, reflecting a year-over-year growth of 33% in royalty revenue [26][28] - Gross margin was 89% on a GAAP basis and 90% on a non-GAAP basis, compared to 87% and 88% respectively a year ago [26] - GAAP operating loss for Q1 2024 was $5 million, compared to a loss of $2.6 million in Q1 2023 [27][28] Business Line Data and Key Metrics Changes - Licensing and related revenue decreased to $11.4 million from $18.2 million year-over-year, while royalty revenue increased to $10.7 million from $8 million [26] - Shipments by licensees reached 371 million units, up 25% year-over-year, with significant increases in consumer IoT products and Wi-Fi shipments [29] Market Data and Key Metrics Changes - The infrastructure market remains soft due to low CapEx for 5G networks globally, but smartphone shipments are expected to improve in the second quarter [15][25] - ABI Research forecasts that Wi-Fi 7 chipset shipments will exceed 1.7 billion units annually by 2028, indicating a strong market opportunity for the company [10] Company Strategy and Development Direction - The company is focused on expanding its leadership in smart edge IP, with a diversified licensing pipeline and a strong backlog of deals [7][12] - A new partnership with Arm targets 5G Advanced infrastructure and non-terrestrial networks, aiming to lower barriers for product development in these markets [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting total revenue targets for the year, despite some licensing deals being delayed [25] - The company anticipates a growth year in 2024, driven by strong demand for next-generation IPs and a healthy backlog [25] Other Important Information - The company has invested in expanding product offerings and strengthening its ecosystem, including a new UWB wireless IP for consumer devices [16] - The first headset integrating the company's spatial audio technology has been launched, showcasing the company's ability to provide multiple IPs to a single product [20] Q&A Session Summary Question: Licensing deal delays - Management confirmed that some expected licensing deals were delayed but reassured that many have already been signed in Q2, with some potentially extending into later quarters due to evaluation processes [35][36] Question: Wi-Fi 7 and UWB technology adoption - Management indicated that Wi-Fi 7 adoption is ramping up, with existing customers transitioning from Wi-Fi 4 to Wi-Fi 6, and new customers beginning to license Wi-Fi 7 [40][41] - UWB technology is expected to penetrate the consumer market, with recent deals indicating strong demand [42] Question: Licensing agreements and technology integration - Management clarified that multiple technologies can be included in a single licensing agreement, which may lead to higher deal sizes and royalty rates [45][46] Question: Market conditions in China - Management reported no significant changes due to U.S. sanctions, with a stable market condition in China and encouraging signs of innovation and demand [49][50] Question: Year-end guidance and partnerships - Management reiterated the guidance for 4% to 8% top-line growth, emphasizing a stronger second half of the year, and highlighted the successful partnership with boAt in the hearable/wearable market [51][55]