CEVA, Inc. (CEVA) Earnings Call Transcript & Summary

Are we live? Okay. I guess we're live. Good morning, everybody. Great to see you all here today. Thank you for coming out to hear the CEVA story. And I know it's been a few years. We just found out it's been 5 years since our last Investor Day. So very pleased to come out and share the vision of CEVA. As I said, it's been a while. You might have noticed this morning and from the slide deck as well that part of today, we've done a brand refresh, changing the company, kind of bringing it to where we believe the company has evolved to. It's not really reflected in the brand and the image and we'll talk a lot about that today and the different markets we're playing in. But we announced this morning that the company going forward, it's really an IP powerhouse or an IP company that many different products, not just DSP. So we're changing out a few things, and we're going to go through that. But before we start, going through the slides in the agenda for today, we just have a quick video, it will take about 2 minutes. We want to show and give you an idea about what CEVA is doing these days and what the company is about. [Presentation]

Okay. So for those of you who don't know me, my name is Richard Kingston. I run Investor Relations, Market Intelligence, public relations, a few different roles at the company. Been with the company for about 20 years or so. So been through a few different changes, and it's always nice to see the next evolution and the next era of CEVA, and Amir will talk about that during his presentation as well about where the company has come from and where we're going. Before we start, just I have to quickly look at the legal notices here. Forward-looking statements are in the deck. And then we could see it also, by the way, we filed this deck this morning with the SEC. So it's all available to the public online. And one other piece of important information, all the numbers and the information and the data today we share about CEVA is with CEVA recognized as a stand-alone company after the divestment of Intrinsix, the design services business we recently sold and closed in Q4. All the numbers represented are CEVA stand-alone. So for many of the previous years when we had Intrinsix part of the business, you may not have seen those numbers previously. They are included in the back of the deck, we have an appendix with different P&Ls and so on, where CEVA is listed as a stand-alone and the Intrinsix numbers are not included here. So like I said, as part of today, one of the items or the plans we've been working on behind the scenes is to really give CEVA a brand refresh after many years of being known as a DSP powerhouse and a handset focused company. We realized in the last few years, the company has come a long way, and that's not really reflected in the brand that we've had since the early 2000s, and the decision was made to give it a facelift and bring it more up to date to where CEVA is today. Just to give you an idea, there is a lot of thought went into the logo and where the company is and we kind of tried to explain the logo a little bit, as you see it, it's different, obviously, to what we had previously from a couple of different elements. But when you see the C and the E together, they're connected, and that really reflects the strength of our wireless communications and connectivity business. That brings that to the forefront of the brand. The V, we've -- it's shaped in a verified or trusted way. We want to be a trusted partner to our customers, and we believe that we're making great headway in that respect, many great customers who rely on CEVA over the years for IP. And in many cases, not just 1 or 2 IPs but a portfolio of IP. And the triangle that you probably all remember for a long time at the top of the V is now being replaced with circle or a rising sun and a burned orange, giving the impression of a new beginning or a rising sun towards a new tomorrow. And the reality of it is, a lot of the technology that we're working on in R&D today will be in the market in 4 or 5 years' time, powering the next generation of devices. And a lot of the devices today, the IP was developed a few years back. And I think when you hear the story today, you'll realize that a lot of what we've been working on has changed the profile of the company, the customer base of the company and the different markets we serve, and we're looking forward to sharing that with you. I finally should say, as part of this as well, the domain or the web URL for many years has been ceva-dsp.com. Today, it's changed for the first time to ceva-ip.com. So all our e-mails, everything now is ceva-ip, not DSP anymore. DSP continues to be a very nice, important technology within our portfolio, but it's not the core focus. It's 1 piece of a big broad portfolio, and I think CEVA-IP is a much better reflection of where the company is today. And the Smart Edge, you'll learn a lot more about the Smart Edge today what we believe or what defines a Smart Edge for CEVA and the opportunities that we have in that space, I think it's going to be pretty compelling. So just to look at the CEVA team. Today, we'll have 3 presenters. Amir Panush, our CEO, will present first session, followed by Yaniv and Michael will follow on with their sessions. But we want to give you sort of a look at the CEVA management team today as it stands. We don't have, obviously, all the R&D people and the different general managers. But from a corporate perspective, there's been some nice refresh and good change in the company in the last few years. Gweltaz Toquet, for example, he's been with CEVA for a long time. He's our Chief Commercial Officer now after running sales in Europe and Asia for many years. He's now running sales worldwide and responsible for all the commercial activities. And when you look to the left of the slide, I should also say today we have, Iri Trashanski, here standing on the side. Iri joined us about 4 months ago, came in, in the new role of Chief Strategy Officer. The role was created under Amir to help focus the company on a strategy going forward and look at opportunities and different areas like that, and Iri brings a lot of experience in other big corporations that can help to give CEVA some new ideas and new directions. And when you look at the left side of the slide today between Iri, Amir and Dana, who runs our HR, they blend very well with the members of the company like Yaniv, Michael Boukaya and myself, who've been around for a long time. And now we have this very nice mix of seasoned veterans from outside the company who bring experience and knowledge and know-how from companies like Qualcomm, InvenSense, Marvell, GlobalFoundries and so on, and that's blended very well with CEVA's internal team that has a lot of in-house experience developing IP and running products. Now we have a much more rounded management team that has great experience inside and outside of CEVA. And together, we can bring CEVA forward to the next level. So just a quick look at what the agenda looks like for today. So we're going to start now with Amir. His presentation is about the Smart Edge era. We'll have a Q&A with Amir directly after that, as I know a lot of you are keen to hear from him, and we want to give him the spotlight for that. So we'll -- you can answer questions or ask questions at least about his session because there's no point in talking about the financials and stuff like that until after Yaniv has presented. But certainly for the CEO Q&A, let's try and focus on what he's going to present and questions around that. Then we'll have a break. Just a quick coffee or whatever and we'll come back with Michael, our Chief Operating Officer, will present a technology-focused presentation about what we're doing and innovating around the Smart Edge opportunity. And after that, Yaniv will finish up the day, [indiscernible] financial presentation talking about the operating leverage and the margins that we can bring back to CEVA now that we're a stand-alone IP company again. And then, of course, at the end of the day, we'll have a wrap-up with a Q&A where all of our members and Iri will be available for questions. And from there, we'll head out for lunch or whatever you want to do. So that's how we're going to look today. But for now, I'll pass it over to Amir and enjoy the day and enjoy the sessions. Thank you.

Richard, thanks a lot. Good morning, everyone. First, thanks a lot for coming. And we really appreciate the investments in our company and your interest in company. Today, I will talk about the Smart Edge era. But before I start with that, I want to share a little bit about my background. It's the first time for me to present to you. This has started about 20 years ago when I was a software embedded development engineer. And actually, that was my first interaction with CEVA where I started using the TeakLite processor. And I found that our processors at CEVA, we have very low power and capabilities to develop the next generation of wireless technologies. Then I moved to Texas Instruments and then to Atheros driving lots of wireless LAN communication technologies, starting the new business with the team over there for the automotive market, spreading from outside the mobile into new frontiers. With that integration into Qualcomm over there, I built a team and enlarged it to develop and drive a new business unit related to connecting MCUs, we have the wireless LAN and the WiFi technologies and really bringing the new devices into the smart home applications. So from automotive to smart home. And in the last decades, I joined InvenSense that later on acquired by TDK. Over there, I ran the InvenSense group and I was able, fortunately, with a great team, to double the revenue in the last few years and diversify the company from an early success in the mobile area. We have the motion sensor to very diversified sensor portfolio of technologies as well as very diversified sets of markets. And a lot of that, I will talk today also how we are doing things at CEVA. I'm very happy to join the team and work with the team here and the rest of the group moving forward as we build the company. So before I go into the details of today's presentation, just a little bit about how it's been my first year with the company. The first 90 days was really to assess and understand the capabilities of the technologies, the team, our focus areas, going and traveling to meet with key customers and to assess the perceptions of CEVA in the marketplace. What I found is that we have a very, very motivated team with great talent. We have a very broad portfolio of technologies and that are very innovative. And also when I talk with customers, I was very happy and pleased to see that we are perceived as a very trusted partner and for many years, we have lots of the different customers out there. But also, as I dig more with the team, I realized that there is need to focus more on the strategy to create clarity of how we invest our resources and with that, I work with the team on creating clarity on that. We are aligning some of the R&D resources. We made a decision to divest the Intrinsix business and take it back to a pure IP play that I believe, and we believe as a team, have a very great future moving forward. And as we look into the next era of our company, we see a very strong growth opportunities as part of this Smart Edge era. And I will talk about how with that, we will focus moving forward on a profitable growth for the company in the coming few years. This is our mission. As we look at the Smart Edge in the era of the company is to be the partner of choice for transformative IP solutions for the Smart Edge. The partner of choice. It's very important as an IP company to work with our customers and build with them the long-term road map in order to be successful in the marketplace to have a transformative IP. We'll talk today more about our AI solutions, how we're supporting early on and looking forward into transformers capabilities. And all that in order to support the Smart Edge, and this is growing very, very rapidly in front of us. So let me take a little bit step back about the history of us as a company, how CEVA started and how this is moving forward. With CEVA started about in the 1990s in the PC area with our DSP technology. And then it grew very, very nicely in the smartphone area where we developed our DSP to propagate it very nicely in that marketplace and grew the company. But also over time, that market became more consolidated, while the data era really came to place and we start propagating our different technologies across many different markets and much higher volume in the marketplace. And as we look forward into -- towards 2030, this is where we see even more significant growth of the Smart Edge era, but even more importantly, what we see is more integration of technology and needs of these different devices. It was started with those devices become unconnected. Now we see those devices all becoming more contextually aware with more sensors and other capabilities around that. And also smarter in terms of localization of inference and ability to make decisions and also some personalization of those decisions. All that also there is the tailwind of the overall semiconductor market. Based on market reports, McKinsey and so on, the expectation in the semiconductor market will go to [indiscernible], so if we combine the overall semiconductor markets potential growth towards the end of the decade as well as the overall number of units and capabilities that are needed, this provides for us significant growth opportunities as we move forward. But what really drives -- what are the key megatrends? What drives the growth towards 30 billion units and how this is related to us at CEVA? There are 5 key megatrends that we are tracking, the IoT, the 5G, AI, automotive and cloud. For IoT, it's really the whole Industrial 4.0 and the smart home where more devices are becoming connected. Today, it's almost -- we can't find a device that is not connected. 5G going to 5G advance and 6G, that's what drives the infrastructure to be much more capable, with higher capacity, lower latency, enabling use cases, new use cases that are very important for us because with our 5G, 5G advance, 6G in the future technology that will propagate more use cases and markets and customer base. AI, which is, of course, a focus area for us and overall in the marketplace. This is really transforming the marketplace where we see those devices needed the AI localize with more capabilities integrated. Automotive with electrification, digitalization. Automotive has been a strong market for us, and we will keep building in that market. And cloud with the hybrid edge to cloud solution, we are, at CEVA, focusing more on the IoT, 5G, AI and automotive. The cloud is less of a focus area for us, but with the hybrid network between the cloud and the edge, this is where we play very strongly moving forward as well. But just to explain what we mean at CEVA Smart Edge and how we look at that, there is that cloud infrastructure, we have the edge platform and gateway is communicating to the cloud, those edge platform and gateways are part of the Smart Edge market that we are targeting as well as all the end devices that communicate to the gateways and between them. The right side is what we call Smart Edge, and that's our target markets moving forward very clearly. Within that market, every device is pretty much is unconnected and requires all the different wireless technologies. As well as, as I mentioned, they are becoming smart and more integrated. Actually, quite interestingly, Morgan Stanley just had a survey with all the top MCU suppliers out there. And they asked what are the things that you see potentially are going to get integrated with the MCU? They said, first, we will need audio capabilities because the interface to all those machines are basically become audio and voice triggered. But also what we will need is, of course, all the connectivity integrated with that, and that's a great opportunity for us. We have all the DSP and all MCU partners out there to add a different connectivity fully integrated. And what we see also OEMs or end customers, they want to have more integration of those capabilities. Last but not least, those devices are moving from so-called being dumb to being smart, but this is where AI really becomes more localized in a different level of performance. There are the edge devices that need very low power and still some basic AI capabilities for voice activation for some video -- basic video capabilities. There are, of course, the more sophisticated solutions out there that need more so-called local smartness in order to run big newer networks and to drive those capabilities. Just to quantify the Smart Edge in the overall markets and how this translates to us at CEVA, overall, the semi revenue CAGR between 2020 and '23 is expected to be 8%. Out of which, for the IP market is expected to be above $10 billion IP TAM. Overall, as I mentioned, about 30 billion new devices annually. The Smart Edge semi markets, which, for us, basically excluding, again, data centers, memory and those type of things that are less relevant is about $600 billion. So overall, both from SAM for IP as well as unit, this is definitely a very significant market for us to go and address. But this is not new for CEVA. We have been addressing this different type of market segments as well as so-called the Smart Edge applications for many, many years. We have shipped more than 17 billion devices to date. Out of which, about 10 billion devices are in mobile. This is so-called our earlier years of ramp and success, but see how much we have diversified in terms of the different markets already deployed, all around us, 6 billion devices in the consumer IoT. And that's where we see a lot of the different wireless communication and then now smartness coming to play. Automotive. I would say we are not necessarily perceived as the automotive type of a supplier, but we have already shipped more than 100 million devices, and we are looking to expand in that marketplace. Industrial, which is a great extension of our play and success in the consumer IoT, where we see the same type of suppliers want the technology to be able to be delivered across. They're using our IP, embedding that in their devices and then go to the different marketplaces. PC where with our sensor fusion and sensor IP capabilities, we'll talk more about later, very high volume already penetration and infrastructure chips, the micro base stations, lower volume, but very high performance and capability that we drive moving forward. Overall, a very broad base of customers. We like to win with the winners and really build the partnership with the key players in the market. So what that all means in terms of how we look at our technology and what we want to enable. What are so-called the core common use cases in the Smart Edge. There is the connect, the sense and then infer. Connect is where we see all devices using the different type of wireless connectivity technologies, and that's where we have been -- we have done very, very successful, and we'll continue driving that. The sense. The device needs to be contextually aware, where we see different type of sensors from audio, like microphones and others to vision, to touch with our DSP technology, processing technologies and the software that comes on top of that, we are addressing the different type of sensing application and use cases. And last but not least, which is a major extension for us moving forward is to address the infer use case. The localization of inference in order to create that intelligence across the Smart Edge marketplace. So what that all means to us in terms of SAM expansion. I talked about there are key megatrends that drive very high volume. There are the different applications out there, but how they translate to the SAM to the addressable market for us at CEVA. What we are projecting is that our SAM will go from $1.5 billion in 2022 to around $2.2 billion by 2027 or about 45% growth across the 3 use cases that we are now supporting moving forward, connect, sense and infer. And this is already based on a very strong market leadership that we have in the marketplace. We are today the only complete wireless IP portfolio provider. We have everything from Bluetooth to WiFi to ZigBee 15.4, now to UWB, Narrowband IoT and all the different cellular IoT technologies. We already have an established leadership as a Bluetooth connectivity supplier with about 30% market share. We are now at 7 at the 10 top MCU providers there using our IP already. And as a trusted partner, we see some of them and many of them are coming back to add more IP and technologies from asking us to go and support them. We have been an early innovator in vision and Edge AI, and Michael will talk more in his session about the new products that we are launching in the market and will come and we'll start licensing next year. And we already have very good established base of customers, hundreds of customers out there that we partner with. So with that to conclude, we are looking at about 45% of addressable markets for us growth based on our broad portfolio of technologies and capabilities. Speaking of which, when we look at our technologies, what we'll really -- so-called what we offer in the market and will drive that SAM growth, we are focusing on 3 major pillars of technologies. And that's how we think about our R&D investments and how we allocate that moving forward. First is we are already the #1 wireless communication IP provider. We want to maintain this leadership, expanded leadership and ensure that we are enlarging that business. In addition, as I mentioned, we are adding scalable agile AI sensing solution which is another important technology and pillar of growth for us, where we are already powering more than 500 million devices and looking to expand that. And last but not least, which is different than most of our competitors, as the silicon IP providers, we are also offering embedded application software. This is where we are helping our customers and many times the OEMs themselves to differentiate with our IP, very differently than what our competitors are doing. And that's why we have a more comprehensive portfolio of IP, so-called silicon IP, in addition software IP on top of it. All that to address the different market segments, which I'll go a little bit more deeply in the next few slides. And the key point as we look at profitable growth of how we invested R&D. What I focus very much with the team every time that we look into new product category or technologies or something that we want to launch, is that going to be scalable across markets as well as across customer base. And the more we are creating scalability of our IP, the more that we can drive the long-term profitable growth of the company. So just a little bit of each market. I will go through that quite quickly. Again, the 6 markets, consumer IoT, automotive, infrastructure, industrial, PC and mobile. At the top, you can see our estimation of the SAM and TAM and the CAGR for each. At the bottom is the CEVA TAM for each. And I would highlight a few things. Consumer IoT, of course, this is a very big market for us in terms of SAM potential, and TAM of close to $2 billion. Automotive, it's a potential additional significant TAM for us moving forward. Infrastructure is smaller, but it's where we drive a lot of innovation in order to leapfrog in our technology. Industrial, very good scalability from the consumer IoT and very high CAGR moving forward. And PC and mobile, they have been traditionally a very important market segments for us to address, and we'll continue to do that. But considering the consolidation in those markets as well as the low growth moving forward, those are the markets that will be less of a focus for the company. At CEVA, moving forward, our focus is on those 4 key market segments, which again, for -- as an IP company, it's very critical that we are playing in markets that have good diversification of customer base and technologies. The more consolidation, the more challenging is to really go and leverage our IP capabilities. So now I'll go a little bit more deeply about each of these markets to provide you a little bit of more insights how we are doing in each market. I will highlight that also so far when we reported our numbers and talked about, we're more talking about technologies. Here, we are giving you and sharing with you how we see our distribution of capabilities across the different market segments that we are addressing. The consumer IoT, definitely a very large market. And the most important thing is really how big is the SAM and TAM potential for us. We also have done very well in that market for the last 12 years with $250 million, but that shows also the annual potential for us moving forward as we keep increasing our capabilities in that marketplace. Across the 3 common use cases, connect, sense and infer, I will highlight several things like with our partners that are mentioned here. We see our partners, the MCU partners, taking our different type of wireless connectivity technologies, plugging that into all their devices in the connected home, like light bulbs and switches and other devices. All the different robot cleaners that are moving around to be contextually aware and understand where they are heading and moving. This is with our software solution, not just the silicon IP. We are providing additional value directly to those OEMs and with the latest acquisition of the 3D spatial audio from VisiSonics, we are basically partnering and we have a customers THX as the lead brand in the 3D audio space marketplace. Why we win in these markets? Why we are doing very well in these markets and will help us moving forward? First and foremost, we have a very broad portfolio of technologies to offer our customers. And we have lots of repeating customers that's coming from one technology and they want the next technology. Second, it's already proven in very high volume, very important to our customers, but the other thing is that we are hardwired our technology to ensure that it's the lowest power offering out there in the marketplace. So any customer that comes to license our IP in this marketplace, if they want this technology with proven and the lowest power, we are able to offer them from the previous standards all the way to the most advanced standards that will come in the future. And I will share later on a little bit analysis, very strong ROI, return on investment, to our customers which, again, propelling more and more the needs of our technologies. As we look at the automotive, this is a market that is an important focus area for us. We are investing in order to have verified automotive qualified products in the marketplace. As I mentioned, we already shipped quite a bit of volume 100 million units. We generated about $25 million to date. The SAM expansion is meaningful. I wouldn't say this is as big as consumer IoT. But you can see also that the TAM is very large. So the more technologies that we have, like the AI and other devices that we can deliver to that market, that will propel more and more potential growth for us. You can see several of the partners there with some of those partners that are right now going very soon to production with AI vision DSP for their ADAS systems. We have MCU partners that are using their MCU in the automotive space with our different wireless connectivities. And for vehicle-to-vehicle communication, using our core DSP again as a core wireless capable devices to enable all the difference, so-called 5G IoT use cases, and we will discuss a little bit more about that moving forward. Why they pick us? First, we truly have long-term commitment to those partners. We started very early, almost a decade ago in that space with our technologies, and we keep investing and supporting our customers as well as qualifying the technologies. The other things, we are working with them jointly, especially the big ones, the road map moving forward, which is very important to those customers and on the highest performance of what they need in their solution. And lastly, making sure that those solutions are scalable. What we see in the automotive even more than other markets, those customers need the scalability up and down of the technologies because they take 1 platform and they take you to the highest tier to the mid tier and the low tier, and they want a good return on that investment. They cannot afford to change the core every time that they need to go to a different level of tier of their technology. If we look at the infrastructure, so-called the micro base stations and now coming also the SATCOM, the satellite communication. This is a market, I would say, it's smaller than the others, but this is where we have established very strong leadership. And even more importantly, this is the markets where we drive the highest performance and we leapfrog in technology. We're partners with the leaders in that marketplace. We developed the most advanced in performance, lowest latency and lowest power that is needed for this type of devices. And then we leverage the technology across the other market segments and customer base. We have 2 of the top micro base station customers as the lead partners for us. And we see more and more expansion and potential in satellite communication as a new so-called infrastructure gateway opportunities for us, partnering with all these type of customers where the wireless communication is not core to their business necessarily, and that's where we come and enable them with our IP. Last but not least, Industrial. This is a market where we see very good leverage for the consumer IoT and we have done very well. We've already high volume shipments, now about $25 million. We have lots of partners that actually will go and scale in the coming few years very, very strongly. You can see some of the names here. What we are offering in the industrial space that is somewhat different. This is where they need so-called software-defined radio. What they need is the scalability to use similar core and support it across different type of wireless communication technologies because they want, again, to deploy the same core in different submarkets of the industrial space. So sometimes they will need, let's say, WiFi communications, something they will need Narrowband IoT communications, sometimes it's the 5G IoT next generation like RedCap, reduced capabilities. We have one core so-called software-defined radio. We're enabling them to propagate through all their so-called MCU or CPU capabilities into all the different submarkets. We are also working very closely with for imaging type of vision AI in this marketplace, and you can see some of the names here as well as smart meters and smart trackers. And if I go back before I move to the next slide, in every of those markets, what we see customers are starting with 1 technology with us, let's say, even smart speakers. Just with a simple core DSP at the beginning that they want to add the Bluetooth, then they come again and they ask for the WiFi. All those things are connected, they need contextual awareness. And now what we see, we have lots of engagement of how to enable so-called AI or the smartness, all the way from, again, high performance to lower performance of those devices. So now let's switch, as I mentioned, from the markets to our customer base. We at CEVA addressing the 3 major type of customer segments, the small Fabless, the large Fabless and the OEM with the OEM becoming stronger and stronger focus for us also moving forward. The small Fabless are the ones that are dynamic moving fast and enabling us to propagate the markets with our IP. The more we propagate our IP, we can basically drive the innovation in the market and enlarge their accessibility of our technologies. But we have a very, very strong focus with the large Fabless. Those are the ones that we are jointly working on the road map. They shared their needs, we shared our road maps. That's where we innovate in terms of the new technology capabilities that they need, and they drive scale and volume for us as we penetrate the market, like the different MCU, like the different vision AI solutions out there. And the OEMs, this is where we see more and more vertically integration by the OEMs, either by software and hardware combination that they want to drive in order to improve the performance and create special use cases and capabilities for their end customers or consumer as well as much more semiconductor integration to their solution. We're already engaging with OEMs where they have their own internal SoCs and they want to integrate more of other capabilities into that, and they want to do it internally, utilizing CEVA IP technologies in order to drive that to market. Also, that's where we are addressing directly a lot of our software IP capabilities, like 3D spatial audio, sensor fusion, other audio capabilities to grow and address that market. We are very fortunate to have a very large base of customers and across the different so-called customer base end markets. Now let me give you an example why those customers come to us and come again to work and utilize our IP. A little bit insight about the return on investment to our customers. I give you an example of Wi-Fi 7, the technology that we are developing currently. On the left side is what it's estimated to be internal development, not of the full solution, but development of that IP so-called internally, developments and then maintenance versus what does it mean to buy from us the technology, assuming multi-license deal over 5 years, assuming roughly 100 million units so-called volume just to give some perspective, how this model works. We see about 3 to 4x cost savings to our customers. With our IP technologies, the more that we do it with the different customers, the more we can scale it and provide the value, of course, similarly to so-called the Fab and the Fabless domain, in order to enable our customers to utilize that. The other things that we see more and more as we address it with customers, those IPs are complex, but sometimes are quite standard IP, not necessarily the core of what our customers want to develop. But the other things, they need time to market and also sometimes the market is moving so quickly, so-called building that IP every time, every 2 years, it's very, very non-cost effective or very high cost. And that's what we come in, help them basically to differentiate with what they want to differentiate. And the rest, we can offer them with a very, very good ROI on their internal investment. So here is much more statistics about our customer base that we want to share with you guys today. Over the last 5 years, we have licensed more than 275 deals, out of which, to more than 160 unique customers. More interestingly, an event more valuable is that we have about more than 100 new first customers in the last few years. But these are the 2 things that I think talks highly and the most about our IP and the value that we bring to the marketplace and how we are perceived as a trusted verified supplier in the marketplace. We have more than 60 customers that are repeating customers in the last 5 years. They license 1 thing and then they came again to license either extension of the technology or something else. And then with that, more than 60 license more than 1 technology from us. And this is very important moving forward, and I want to emphasize it even further. We are building a very diversified portfolio of technologies. We are moving from what originally was more a core technology in 1 core market to a very diversified technologies and diversified markets and use cases that we can address. This work will help us to propagate more and accelerate those customers coming back to us. Going back to the mission statement, this is why also to be a very strong partner that is trusted and codevelop so-called with our customers -- codeveloping with our customers super critical for our growth and success. And it's already validated in the last 5 years, and we expect it to expand more in the future. And here are some testimonies from very, very important customers that we have. We appreciate very much the relationship and the trust that they put in us, Renesas, very, very important partners. They actually have licensed all our wireless technologies. From Bluetooth to WiFi to UWB even, which is a new technology in the marketplace, to cellular IoT, a broad, broad, broad base of partnership between the 2 companies. And they are really great partners for us, and we appreciate so much their business as well as, of course, as I mentioned, as we go from connectivity use case to the Infer use case, we are now addressing more with them, they infer in the automotive space, the Vision AI type of DSP solution and so on. Then next, moving from connectivity to sensor IP solutions, LG as an OEM. We work with them directly. They actually, I believe, have really strongly innovated and differentiated the way that you can interact with the remote controller and with the TV. They have so-called what is called smart remote controller, where you can point, you can move things all by motion detection, and all the motion detection, all that smartness basically how to get very accurate positioning constantly without any drift run, any issues and very reliably is based on our technologies. It's so-called the webOS technology or their own operating system. They are propagating across all their so-called consumer devices, and that has been very, very great strong long-term relationship that we see that moving forward for the coming few years and keep propagating. The last, which is related to our AI and vision DSP and those things that are moving forward, Novatek, which is one of the top semiconductor suppliers in the marketplace. We have partnered with them on multi-generation of SoCs where they are using our DSP for Vision AI and we are looking forward to keep expanding that relationship with them for all the different devices they are deploying in the market. Again, very nice testimonial from the different partners that we have, and we appreciate their business across connect connectivity, sensing capabilities and software IP and the infer or the AI capabilities that we have developed, and we are moving forward developing even further. So what does it mean in terms of some expansions for us towards 2027? And why we believe that we will see a significant growth in SAM and from there our potential to drive more revenue. There are 3 major components that, again, when we look at what we invest in, we always analyze whether that really will drive for us. Those 3 core important ingredients to get to larger SAM or larger potential market for us. First, are we in markets that the devices -- number of devices is going to grow. We have the focus on the 4 key market segments of [indiscernible] and how we are addressing the Smart Edge. We're expecting a very significant growth of number of units. And with that, our ability to charge royalty and to drive our business. The other thing is really the number of IPs that are needed with each of this device. With our very diversified set of technologies, we are going to enable multiple technologies within 1 single device. So I hear a lot of your questions sometimes about this technology and the other technology, what will be the royalty for each. In addition to how royalty for each is really the combination of those things. And we'll talk about it, we are basically building more combined solutions to the marketplace. And last but not least, is how we drive the average ASP that we can get per unit. This is by the increased complexity of technology that we are offering as well as -- and this is where Michael will cover a little bit more deeply is the platform and the solution that we offer. And then the more complete offering, we have more capabilities, driving the average ASP up. All that together is expected to drive the SAM growth by 45%, as I mentioned previously, towards 2027. I want to switch a little bit here into M&A and how this is related to strategy, a little bit from so-called the organic to M&A and the history. And my direction with the team, how we look at that, analyze that and moving forward. I'll start with the RivieraWaves acquisition that was in 2014. That was originally for Bluetooth technology. We expanded to WiFi technology. That has been extremely successful acquisition with 20x more in revenue growth comparing to when we acquired the company. But the key here beyond the success is that, that was when we focus on wireless technologies that, back then, we knew very well and targeting the same type of market that we knew very well, the mobile and consumer. The second was in 2019, Hillcrest Labs. That was for software IP, sensor fusion and this type of technologies. Again, successful acquisition of 2x more in revenue and providing significant royalty contribution to the company. That's why we expanded more towards software IP, start working more directly with OEMs like LG that you saw and enabling more value in the value chain in the market. In this case, again, it was about technology that we know how to integrate quite well in the same markets, providing new value to our customers. Both of them with a pure IP business model that we know how to scale very well. Then in 2021, we acquired Intrinsix, that was for doing design services in the U.S. for the aerospace and defense industry. And that's where the fit wasn't to the same level as the others and what we want to move forward, which is focusing on the pure IP business model that we know to do very well and a business model that we want to scale across markets and across large customer base and globally. We are a very global company. All our customers are basically global. With that, we made a decision to divest the business and get back to pure IP model. Recently, we acquired spatial audio software VisiSonics. This is to augment the Hillcrest solution from sensor fusion to complete 3D spatial audio, working directly with multiple OEMs. I mentioned THX is a brand and our key customers, but that will propagate to many more customers as well. Moving forward, as we look into IP, my goal with the team is to drive a significant inorganic growth as well through M&As, but this is really to, again, going to the back of the core strategy, which is we deliver IP, we want to deliver a large portfolio of technologies that can scale across similar market segments and customer base. The more technologies that are synergetic with what we have, the more we can offer in the market and create more value to our partners and customers. And also, I will finish here that our team is already structured in terms of capabilities, in terms of reach and knowing how to integrate very well, different type of IP businesses related to the technologies and markets that we are already addressing. So let me now summarize all that, what that means for us financially moving forward. Yaniv will provide much more details about that later on. But if we talk about the megatrend that will drive the volume. Our focus on 4 key market segments moving forward. Our 3 pillars of technology, wireless communication, sensing AI and Edge AI within the Smart Edge, we are expecting to grow organically about 1.5x between 2023 and 2027. And I mentioned that we will look and we have here a new office working on strategy and M&A to look into other opportunities out there. Overall, I would say that the IP market -- within that market, you can see a lot of different assets that they have hard time to scale. Scaling in IP is not necessarily that easy and there are more opportunity for consolidation in that market, which I think will have the IP providers and, honestly, as well as to our partners and customers, they can get more from a 1 single place that is trusted and verified as a good partner. But in addition to the revenue growth, very important for me and the team is to be very strongly focused on how to drive operating margin growth. So-called making sure that we're investing in the R&D where we see the scale. Scale in volume, scale across technologies and scale across customer base and markets. With that, we are targeting to reach about 10x of operating margins from where we are today by 2027. Yaniv will share more about so-called the model itself, and we can discuss it later. Before I finish, I want to summarize several things about really where we were and where we are heading as a company. Historically, and how we enable the growth in the early days in the marketplace was about the mobile handset market. Today, we are really a different company. We are addressing the Smart Edge very broad wide of market segments and use cases. From the use cases, we have been more focusing in the past on wireless cellular technologies. Today, we have the technologies in connect, sense and infer, and that's what we will want to look and augment more technologies as we develop organically or inorganically. We have been selling and that is still core and strong asset that we have as a DSP technology, but we have expanded way beyond DSP. And to some degree, what I found that when I go to customers that we are still perceived more as a DSP company than the broad wide of products that we have. And clearly, we have very good assets in wireless, sensing and Edge AI. Edge AI is a big frontier for us moving forward to drive additional growth. And with that, we changed the URL from ceva-dsp to ceva-ip. My vision with the team is to build a strong IP company that is diversified across the key markets that we target, across the use cases that we're already addressing and making sure we're creating a profitable growth as we're moving forward. So just to summarize that, we have the market tailwinds in terms of more connected devices and data-driven era. We are already addressing and the [indiscernible] Smart Edge markets, those 4 markets are the ones that really will grow and help us with the tailwind. Diversified, as I mentioned, growing customer base in our journey, and that will continue as well as innovative technologies that are very well diversified. The more we diversify and have those capabilities, but using the same core engine, and that's what Michael will talk a lot about, how we use the same core IP across, we will drive more and more of the profitable growth engines that we are looking forward. With that, thank you very much, and I'm open for Q&A.

Thanks for the presentation. Suji Desilva, ROTH MKM. You talked about 3 vectors of royalty growth, units, content per device and ASP. Of those 3, which do you think is the most potent in the next year or 2, just to kind of get a framework on your vision here?

I would say the first 2 are the largest driver first, but it's really the mix of 3. But the average ASP, keep in mind, when we talk about average ASP, it's necessarily that the technology itself only going in ASP, which will happen as well. It's our ability to go to a more sophisticated type of a solution, even from going from a Bluetooth to WiFi to 5G as well as creating a platform. So out of the 3, the 2 are the more dominated, but overall, it's really a mix of the all 3. So we are going to see growth in number of units, both market as well as how much we are delivering in terms of volume. We are going to see also more of our portfolio within 1 single device of our customers, so-called delivering much more technologies. And this is something we see again and again and more and more. Customers that use one of our technology, coming to add more technologies that are fully integrated into 1 single SoC. And then of all the complexity of our technology that will drive up the average ASP.

And then one other question on the inorganic element. Of all the technologies you have in place since quite a few, are there any you perceived to be holes in the marketplace versus your strategy overall? Or do you feel like you have the pieces you need, by and large, do you want to scale more things through? So I'm wondering if there's any kind of obvious kind of [indiscernible] holes there?

So the inorganic is really split between 2. They are so called, I would call it, the tuck-ins where we see that we have a gap in our technology portfolio, and then we add it. For example, what we did with 3D spatial audio, we had sensor fusion, we want to combine this 1 solution. Honestly, we already partnered and delivered that to some of our customers. We want to plug that in on the whole solution and provide it as a value-add technology to our customers. There will probably be in the future also some kind of so-called tuck-ins to make our technology portfolio more complete or more comprehensive. But on top of that, we are looking for more significant acquisitions to add additional technologies within our portfolio to scale up. As I mentioned, I think the IP marketplace, there is a need for more consolidation. We are well positioned for that for many, many different aspects. And we really know how to take multiple technologies to the same market segments and the same customer base and deliver that value. And if you look at even that marketplace, the strong IP suppliers are the ones that adding more of those capabilities. And when they go to the big guys, to the big customers out there, they don't come with 1 technology, they come with a portfolio.

Jeff Bernstein, Silverberg Bernstein Capital. Just on the satellite opportunity you talked about. I think you referred to it as ground station. But is there an endpoint part of that? And what's the ASP like? Is that closer to a base station kind of opportunity?

So first, the communication is between satellites and the endpoint and the idea is basically to provide the technology in both ends and with that, let's say, on the ground, that will help to propagate much larger volume. So the idea is to provide ubiquitous so-called 1 connectivity through the satellite. And we see some of those satellite players are moving from low bandwidth just so-called SOS type of communication to provide you a really good broadband communication, no matter where you are. And we see those customers investing in that. And with that, they need the next-generation so-called 5G advance, wireless communication between their edge devices to their satellites. And this is a great opportunity for us. In terms of the ASP, I'm not going to go specifically into ASP, but it's definitely more than the lower end of the scale that we are selling. It's not necessarily all the level to micro base stations, but [indiscernible].

Is there a relationship on the satellite side between having your DSP, your IP up in the satellite as well as on the terrestrial device, whether it's edge or mobile?

So I'm not sure I got your question clearly, but the technology -- the DSP wireless communication is a platform. Actually, in this case, we are providing more as a platform. Michael will talk about it. It's not just the core DSP, it's fully [ encoded-decoded ] and the software stack that come with that because again, the difference with those players, those are not the smartphone mobile guys that have done it for 20 years, and they are so-called internally consolidated and they know how to develop this technology. Those are new players that are not experts in 5G and 5G advance. We provide a more solution. That solution definitely go to the satellite infrastructure side that they need and potentially the devices that they want to deploy basically to so-called end users and so on, right, through our partners.

So your opportunity is more up in the satellite initially and then later at the ground station or...

It's really both. But if you want to put time line a little bit, yes. At the end of day, they need to make sure it's going to work on the satellite. But definitely, it's both because they are coming with those end devices. They don't want to rely on external partners to deploy that in high volume, not high volume as mobile, but still high volume.

Kevin Cassidy from Rosenblatt Securities. Just is there any change to your strategy for the split of revenue between licensing and royalties? And then along with that, are there -- as you go to more complex, is the royalty rates go up? Is there any upside to your estimates based on royalty or licensing...

Yes. So definitely, our expectation is that royalty will go up. As I mentioned, both by the product mix that we are offering, as you mentioned, the complexity of the solution. Good example is just what I was asking. Instead of developing and providing the DSP only, we are providing a more -- we call it platform of DSP [ encoded-decoded ] the whole stack and the software stack that will elevate the ASP versus so-called just the core DSP. What was the other question you had on that?

The split between license...

Yes. I wouldn't say that our business is only changing such that there will be a dramatically different split between the 2. Both we expect them to grow. I would say with our software assets that we have. And we'll talk about it later, the potential of our WiFi growth in terms of royalty because we have lots of technology that haven't matured yet in terms of volume penetration, like WiFi, like the IoT, so called the industrial IoT that we have. Those are the things that will drive more the royalty growth. But generally speaking, we are expecting both to grow as we move forward.

This is Martin Yang from Oppenheimer. Can you elaborate on your comments on OEM becoming a stronger focus? Do you need a different set of go-to-market to expand on your OEM opportunities?

It's not different sets of go-to market. Definitely, it's a different set of customer base. The focus is already started a few years ago, and I'm basically focusing the team and putting more efforts into this. It started with the software application that we are offering to our OEMs, but really what in addition drives it and where we see a lot of potential and value is those OEMs are more becoming vertically integrated with their semiconductors needs and want to integrate it. So we have multiple partners that are coming to us and say, okay, this is what we want to bid. We've used to -- get it supplied for many different type of players. We want to own it. Help us with your IP to go and bid it as a complete solution. Those are the OEMs, the big brands out there in the consumer space and other places, we know how to reach them. They are within the same ecosystem. In many cases, even when we sell silicon IP to the semiconductor companies, we are still working so-called with the OEMs to talk about road map and other things, like, for example, automotive, we talk with the car makers and so on, so called more, even we don't sell to them. So I wouldn't say it's a new go-to-market, but it's definitely more market opportunities and stronger focus for us moving forward.

Gus Richard from Northland Securities. An adjacent IP to your wireless base bands are the transceiver, a lot of companies have trouble with that. Is that something that you guys are working on? Or is that something you might acquire or do you have partners for that?

Transceiver, you mean the [ RSIP ]? You mean the RS part of transceiver? Okay, yes. Very good questions. Let's start with where we are today. Today, we are not supplying on -- we don't have internal [ RSIP ], our so-called technology that we offer to our customers. Today, we partner with different partners in the marketplace. That's definitely a potential expansion for us. I was asking about how -- what are the gaps in our technologies? And do I see more additional capabilities there to grow and augment that. That's one option. We are looking into all those things, but that's definitely something that we would consider moving forward.

What's the bigger opportunity for the company? Is it moving customers from a make-to-buy philosophy? Or is it competitive displacement?

Very good question. It's -- honestly, it really depends on not necessarily the type of customers, but where they are and what they are looking for, okay? So when I talk, for example, on those OEMs, it's less about with competition, it's more about how they internalize that. That's technologies. When we look at the semiconductor companies, I would say, first, in some cases, we deal with the mix versus buy. And that goes back to the slide that I showed, the ROI, number one. And then how core and how much they want so-called to uniquely own this technology internally. And honestly, sometimes a little bit their own internal [indiscernible] and how they allocate resources and all that. So that's definitely there. In technologies that we dominate in terms of capabilities, it's mostly mix versus buy. And technology that there is more competition. In addition, it's competition, let's [indiscernible] and decision that comes with that, yes.

Okay. So if there's no more questions for now, we'll take a quick break. You can grab a coffee or whatever you want, and we'll come back in about 15 minutes or so, and Michael Boukaya will be up next with the innovation section, talking about R&D. Thank you. [Break]

Perfect. Richard, let me know when I can start. Right. So good morning, guys. I'm very happy to be with you today. My name is Michael Boukaya, and I serve as the COO for CEVA. With CEVA for the first beginning for many years, one of the founder of the company and heading technology and engineering in CEVA. So following Amir, I would like to focus today how our technology portfolio is unlocking the next generation of Smart Edge devices. And the way we structured that into 3 main pillars, one is connect. Connect is the ability to give to these edge devices to be connected everywhere with seamless wireless user experience with very high data rate, super low latency, meaning you don't want to wait for a prompt on ChatGPT. You want things happen now without latency, with very, very long battery life, meaning very strict budget for power consumption. So in that front, we manage with the team to be and become #1 in the wireless IP. And we have today a comprehensive portfolio for all wireless technology, starting from connectivity technology like WiFi, Bluetooth and we recently added UWB. And beyond that, all the cellular expertise that we had for years, and we add more and more capabilities and new innovation, looking for 5G, 5G advance and beyond to horizon of 6G. So all these portfolio and the way we come very holistic, positions us as really #1 in the market today to lead and enable smart edge devices to be connected in such a way from very tiny connections from a few megabit per second up to multi-gigabit per second. I will share with you more detail on that front. The second one is sense. Smart Edge devices need to offer much more a next level of immersive user experience, meaning the way to have a more natural experience surrounding you, more contextual awareness. The way we go to the market here is via embedded software technology where we made strategic acquisition a few years ago with Hillcrest Labs, recently with VisiSonics to combine things together and offer a unique portfolio of software packages to enable really new level of immersive realism for Smart Edge devices. Last but not least, is infer. And here, I'm talking about AI technology. And here we are in facing a new era of technology coming from classical AI use cases like classification, segmentation, making the edge more intelligent to take decision and predict something to the era of generative AI giving the ability to create content. This will reshape our life, and we see that with the mega boom with OpenAI and reshape completed technology and the way architectures are done for Smart Edge devices. That's the reason we innovate new NPU technology, stands for neural processor unit, and I will share with you today how we are looking to this new era of AI capabilities and offering scalability, which is extremely, extremely important for us, as Amir said before, how we leveraged 1 single IP development and technology over multiple use cases and give very high scalability from very low hand use cases with few tops up to more than 1,000 tops for very high-end use cases in, for example, for ADAS system. But to be really a leader in IP, there is a DNA. The DNA is to really predict and anticipate the future needs of our customers. Meaning that the way -- the time zero, our customer design, start the design, we need 2 years, even 3 years before to be in the position to predict what will be the key pains, the key issues that we want to solve. And that's the reason we put in place in our 3 segments in wireless, in sensing and AI, research labs, the very talent guys what I call the forward thinking about identifying the key trends and [indiscernible] of our customers. That's number one. Number two, you don't want to make a bet, but you want to validate your trajectory. And what we created with large customers, bet what we have a very deep relationship with the top guys in the industry, the big guys that drive the market, that shape the market and we have this relationship with our customers to collaborate together and make sure we are in the right direction. In this way, the combination of our ability to predict and to anticipate the future needs way -- far away from the design start, enable us to come and to do the right things. Number three, in the DNA is, of course, to be able to execute and deliver with a high quality, on time, and that enable us to continue a very long relationship with our customer to come and make the integration, to escort them during their shipment. Our goals, by the end of the day, is to go to shipment to create volume. So we support them. And in that way, we can collect more royalty for the future. Taking that into consideration, taking the 3 pillars in our technologies, the wireless, the sensing and the inference on AI, we are leveraging and combining a unique portfolio to leverage our investment to come to many markets with many customers and have the scalability to go up and down in terms of efficiency or high-end use cases. And this enabled us to really leverage on our investment and to come from the key markets that Amir just related before. Consumer IoT needs connectivity, needs sensing. So we have to combine them together and create value. Here we go. Great. Thank you, Richard. All right. So I would like to start with our first pillar on connectivity, technology. When we look to how the future for Smart Edge in wireless opportunities and edge, we see that the next generation of connectivity standards, for example, moving from Wi-Fi 6 to Wi-Fi 7 will come with a very, very big step in terms of how -- depend we go up with 4.8x data throughput. This means enable you to go and transmit 46 gigabit per second in Wi-Fi 7. This is enabled by the way the technology is giving multi-linked operation, meaning that today on your IP, access points, you can select on 2.4 gig or 5 gigahertz. Wi-Fi 7 is offering you the ability to transmit over multiple bands at the same time at 2.4, 5 gig and 6G, giving much more capacity. The modulation of [indiscernible] giving much more bits in the transmission overall offering to the users 46 gigabit per second. So moving from the 2 standards, a huge step of 4.8x in more throughput. And nowadays, it is really urgent because we all need more data, home office is a fact today with all what we experienced in recent years, users need much more [indiscernible] Internet in a fluent way, virtual collaboration between people, large data files without any latencies. Wi-Fi 7 is a must for the next generation. But for us, it's not only about technology, it's also about new opportunities, creating more new wave of devices. It's not only for smartphone and PC, but everything connected home like gaming, audio system, TVs, et cetera. So Wi-Fi 7 is a key core technology update for offering new opportunities for us. Same comes from Bluetooth technology, moving from Bluetooth 5 to Bluetooth 6.0. Bluetooth connected in Consumer IoT connects everything. Now giving the ability for Bluetooth standard to support 8 megabit per second with much higher modulation of 16-QAM, open new edge -- a new wave of use cases. Imagine your earbuds now able to come and transit much more data with lossless audio, high-definition audio on your earbuds. This creates a new wave of new earbuds, headphone, gaming headset, et cetera. So overall, this big step of these 2 guys, which are the 2 main cores in the connectivity world are opening us many new opportunities. And we believe that we are really, really well positioned today. I think with the perseverance over the years, acquisition we made, the team that we have, we have managed to have a very good partnership with more than 100 licenses. And the market validates us with very nice volume of more than 5 billion devices CEVA Insight. And these things are possible when you invest and you perceive an investment. One other thing and one of the question I heard today, how we come versus the competition, to provide the Wi-Fi 7 solution in the market, you need Wi-Fi 4, Wi-Fi 5, Wi-Fi 6, Wi-Fi 7, you need all the backward compatibility. For each one of them, you need to design, optimize, certify, deliver, go to production and make sure you are carrying IP. It's -- we put here a new investment to get all these backward compatibility in-house. And this created a very, very high entry barrier for potential competition. And the value that we have today, with this investment is the holistic portfolio that we have on all the technologies on WiFi, Bluetooth, UWB and ZigBee and the ability to combine things together when you come to a consumer IoT, our customers need WiFi solution plus Bluetooth. They come to CEVA. Or you can imagine combination of UWB and BLE, they come to CEVA. No reason to go to someone else. So the fact that we have all the combination, all the portfolio in-house create a real power for us to deliver. Beyond connectivity, let's have a look how CEVA plays an important role in cellular technology. We are in this market for years and let's take a look to the evolution of cellular technologies, starting from 4G with LTE that puts strong foundation for -- with OFDM technology insight and the transformative leaps of 5G and 5G advance, but offers much more bit waves to 20 gigabit per second and reduce the overall latency of 1 millisecond latency. Looking to the [ horizon ] of 6G, it's an amazing capability and capacities with 1 terabit per second and take a look to the latency, opened 1 millisecond latency. So what does it mean for us is at the first beginning, 4G really targeted mobile phone, smartphone. 5G and 5G-Advanced and looking to the horizon of 6G are operating much beyond smartphones, much more use cases, and Amir related to some of them today, 5G-Advanced, for example, open ability to create 5G technology on satellite. And that's applicable, but your question for the base satellite and the consumer and the handset itself. So it's a big opportunity on the 2 sides. And we are targeting the 2 sides point-to-point. As we made for base station and mobile, same strategy, and I will explain later how. But other use cases like vehicle to vehicle, vehicle to network, vehicle to pedestrians that needs super low latency. You cannot have low -- bigger latency when going from such systems. And to the future for 6G, the ultra-low latency, the so-called EULLC, extended ultra low-latency communication will really unlock the metaverse vision. But today is starting, but needs really strong cellular backbone to enable that. So to enable these new opportunities, new use cases, we have 2 pillars in our portfolio. Number 1 is our DSP. We delivered CEVA-XC, which is a famous product line for baseband processor. We announced this year the sixth generation of our XC technology. Why it is so important? Because our customer need programmability for future-proof, programmability to differentiate and also scalability to come with different use cases from low-end use cases, like massive IoT up to mobile broadband with very super high-end data rate. So for that reason, we crafted a new innovate -- a new solution XC20, which is designed really for advanced node, achieving 2.5 gigahertz, which is super high frequency in this node. And we improved the performance 3x comparing to previous generation, giving the ability to support new standards, new use cases with special instruction, special mechanism. And we are proud to say that we are the first in the market that introduced dynamic multi-threading in baseband processor. This feature is critical to achieve super high efficiency. Our customer cares about power, our customer cares about cost and die size, having multi-threading mechanism inside, create and enable us to achieve very high efficiency in these 2 fronts. Last is the scalability. And here, again, is the way we invest and leverage our investment in R&D. We are not to create 1 product for 1 use case, but we are creating a family of DSP. XC20 is a family -- architectural family that can go down for very low-end use cases and give an optimal efficiency and up for very high performance. The second pillar for that is the ability to help our customer to go to the market. These new use cases like V2X, like RedCap, reduced capacity modem, like satellite modems. There are new -- many new players and newcomers in the market. The fact that they lack wireless expertise, they are not the big guys, like Qualcomm, like MediaTek, they want to integrate IP to save cost, but not going to Qualcomm because it's very expensive. They will not be ready to help them to customize their need. The natural way is to go to IP. And here, it's not enough to deliver one single component like a DSP, but we need something much more comprehensive. That's the reason we introduced the second generation of our mobile platform, PentaG2, which is a platform composed of our backbone technology of DSP, the XC20. But on top of that, we deliver a comprehensive platform, including 5G advance hardware accelerators, AI NPU, which is completely brand-new technology for wireless that we introduced in our mobile platform. We are also providing on top of that software, which is qualified and ability to make simulation and FPGA. All that together is a combination of very strong portfolio and offering that can enable our customers to reduce risk and time to market since we integrate everything, we qualified everything. It's a modular architecture. So again, in terms of investment for us, we invest in one platform and address multiple use cases, from RedCap up to satellite or ORAN use cases with this platform. So overall, the performance is also scalable for massive IoT, with few megabit per second up to more than 10 gigabit per second. So if I summarize the wireless pillar, why we win? There are 4 main reasons for that. First, our perseverance. We are invested. We've invested in this domain for years, the first beginning. And as I said, the compatibility, the way we go one standard after one [indiscernible] over and make another layer make us really in a very strong position in terms of entry barrier for overcomers. Second point is time to market. It's extremely important for us to come ahead of time and ready for our customers to be there for our design, and timing is super, super important. I want to say something here, even equipment -- test equipment for wireless standards are coming to us, with us and working with us to test their equipment because they know that we are matured and we are ahead of time. Number 3 is performance, best-in-class. You cannot mislead here. We need to be careful about ultra-low power and highest performance. These are the 2 KPIs when I run the team, it's in front of us, make sure you are not above what we need to do. Ultra low power and highest performance is super important and completeness. As I explained before, it's the completeness of the portfolio. It's not only Wi-Fi, it's not only Bluetooth, it's the ability to have all the technology in-house and offering something comprehensive but can serve multiple technologies. I'm moving to the next pillar on, sense. New smart edge devices need to serve today and deliver much superior sensing and immersive realism user experience. And this needs much more sophisticated technologies to enable that. We are categorizing that into 4 main cores. One is spatial audio technology, giving you the ability to have a 3D sensing and a sound experience around you, which is important for earbuds, gaming, AR, VR devices. It's a key parameter, and our customers are willing to pay to have these features as a must to have. Number 2 is motion tracking. The ability to track movements, [indiscernible] just on the cursor, it is your head, like head tracking, and think about earbuds, to wireless earbuds, you need these 2 technology together in order to track the head movement in 6D -- 6 dimension in the space and giving this spatial audio. The combination of the 2 is very, very valuable. That's the reason we made the strategic acquisitions of Hillcrest Lab, that gives us and contribute to motion technology, and VisiSonics recently, that gives us the ability to add spatial audio. The combination of the 2 gives you the opportunity to give and address multiple use cases again. Last but not least is AI. It's AI voice assistant and voice clarity. The voice technology is critical. Voice assistant today at home, super important. And it's deeply, deeply based on AI because it started from very simple command, like, Hey Siri, Hey, Alexa, that's all, okay, but with much more sophisticated detection and recognition of much complex sentence and commands. So you can imagine why AI is so important here. And last is the voice clarity, is the ability for, for example, smart speakers to recognize the user in a very noisy environment and to be informed someone and to really understand what you say and to cancel the noise to have a very clarity of your voice and your command. So these, for us, are the 4 core technology that enable our partners and OEMs to differentiate and giving more value, more immersive realism. The way to go here, the go-to-market strategy for us here is to go with software, software embedded software versus standard IP silicon development. And we go directly to the OEM, enabled OEM to differentiate on this platform and deliver. So if we look to the portfolio that we have, we have all the pieces. The RealSpace is a product that gives immersive 3D sound with head tracking together with the motion tracking from Hillcrest Lab. Today, we have the MotionEngine ability to track everything. We have voice technology, with voice clarity of ClearVox and WhisPro that gives all the voice assistance and clearance, as I explained before. And if we look why we win, there are a couple of key reasons. Number 1 is the flagship, spatial audio technology. It's really, really, really demanding with our OEM insist on that and with VisiSonics acquisition, we are able to show and demonstrate very high quality. But it's not enough. The combination of technologies together, as I explained before, is a very valuable by our customers. OEMs want to have one-stop shop for everything, for example, take an earbuds, the TWS players like boAt, for example. They come to us for one simple reason. We offer all the portfolio and all the technology in one delivery. The spatial audio with motion tracking to head tracking, plus the voice -- the voice technology gives a full solution for a headset design. Last is the quality. This must be qualified to go to production very quickly. Remember, the life cycle of an OEM is much quicker than regular silicon development. We deliver our software technology and the go-to shipment very, very fast. So it must be qualified. And today, we have a track record of more than 300 million devices shipped with our software. The third pillar, and that's a very, very important growth engine for us is Edge AI. And when we look to the trend in the future, I would like to spend some time with you to talk about how we see the future with Generative AI. Generative AI is the next frontier and the catalyst for the evolution of Edge AI. But the first beginning, generative AI starts with the cloud. We've -- and that's the reason NVIDIA was and still very successful. But when you look to the future, the workload on generate AIs will be hybrid and will come to the Edge. And there are very good reasons for that, why coming to the Edge? First, economic reasons. An inference on -- with generative AIs. And for example, you asked the Google, it's 10x more expensive than a simple, simple ask an inference, 10x more expensive. So now if you want to scale up with millions of users and millions of accesses to the cloud, it's become more problematic. So one reason is a cost reason, having a low-cost reason to decongest the volume of workload on the cloud and moving on the Edge. Second point, which is super important, is privacy. You don't want your data, you don't want your prompt to be available for everyone. You want to keep your privacy, you want to generate things, which is generative AIs gives you the ability to create new contents, create text, create image, create sound. The sky is the limit, but you don't want that to be available and you want to share that everywhere. Second -- and the second point is lower latency. You make a prompt. You don't want to wait for 1 minute to get something. You want to go to the cloud, you want to have your answer very, very quickly. But if we look at that, these are the drivers, the opportunity is here. 2.7 billion gen Edge devices are expected to be in the market in 2027. And 30% of the inferences will happen on the Edge. So that's a great, great opportunity for us. But here are the challenges. On the other hand, an inference with generative AI is 30x more consuming in terms of battery and power consumption. On the compute, it's 10x more complex than a classical inference, like a vision inference or audio NLP inference on the Edge, 10x more complex. And last, but not least, is the cost. When you have such network with generative AI, classical AI networks mix hundreds of parameters, let's say, 5k parameters. Now generative AI on the Edge today consumes 1 billion parameters. When you look to the future, we talk about 10 billion of parameters on the Edge. So there is a cost issue, and we need to treat that. So these, we have, on one hand, a big opportunity, but on the other hand, also big challenges. So how we treat the problem. And here, I want to say something super important classical AI architecture like GPU on the Edge or CPU plus something on the Edge or even NPU, neural network processor, the classical architecture will not fly anymore to treat such a big problems. We need to rethink, we need to recreate the architecture, we need to re-innovate it. And that's -- and when I said before, we have -- we need to anticipate problems to be on time, our research lab, our AR research lab already understood this [ paradigm ] more than 1 year ago to treat this problem. And today, we are proud to say that we announced in August this year, a new NPU version of our NeuPro-M to treat and to be the best gen AI NPU for the Edge. And for me, the best things need to be measured with some KPIs. Number 1 is performance. Performance means how many token. Token is a word if you put on ChatGPT some prompt, is how many words you can compute at the same time, okay? And this imposes a latency. You don't want to wait for 2 minutes to get your answer on your prompt. You want to get it in 1 second, no more, right? So for that, you need to proceed a lot of token per second. Today, our NeuPro-M is able to calculate 3.4 million token per second. KPI number 2 is energy, power consumption. You remember the problem. We invested a lot of intelligence and innovation to create super low-power design, and the way to reduce dramatically the compute and the power consumption. And today, where we achieved 1.6 million token per second per watt, which is a metric of efficiency in energy, which is today with our -- we scanned the competition, the best-in-class efficiency in power consumption looking to the landscape. Last but not least, is the cost savings. Remember, 10 billion of parameters we need, and we will share with you some techniques in my next slide to reduce the cost dramatically. And we put in place techniques, very advanced techniques to reduce the footprint reduction with 4x reduction. Last, I want to talk about scalability. Again and again, when we develop our IPs, we think about scalability, how we can leverage over multiple use cases from simple use cases to very high-end use cases. And that's the reason we provide in our NeuPro-M NPU scalability to go from 10 up to more than 1,000 tops. The second part in the problem to resolve it is not only another issue. But mostly if you ask AI users is software issue. And if you don't have a full stack comprehensive stack AI available on your NPU is useless. So that's the reason we deliver IP with a full stack AI with ability to make system optimization, model efficiency and retraining the network to go and to be much smaller, the ability to make a very good graph compilation of the networks and last to run an infer on the hardware. Here are some details how we come and treat the problem with our approach. Again and again, it's years of R&D and research to be really, really fit the problem and understand what are the real issues when you talk about Gen AI networks. First is the ability to have unstructured sparsity, means to take a full network, understand where we have a lot of zeroes in a network in weight and data and just remove them in unstructured way, meaning that there's no really good rule where the zero are located, randomly located. Our hardware is able to identify where the zeroes are, just remove them, make the network much more compact, reduce the compute, reduce the power. We have put in place very advanced system architecture to enable parallel processing to let all the units in the NPU to work in parallel, not to waste time, not in serial way to get to the performance I discussed before to treat huge number of tokens in parallel. Last is to understand what is the topology of the network, what are the basic components in the network when you talk about gen AI. Transformers, the transformers are the new type of elements that you need -- an operation that you need to treat comparing to classical AI networks and operation, which is more convolutions, yes. This new Gen AI is using transformers. So we designed the hardware to be super-efficient for this new type. And the last but not least, in the feature set is the comprehensive optimized mixed-precision, ability to take a network in floating point and to quantize it to be -- to have integer with 16-bit, 8-bit, 4-bit or 2 to stay in floating point or be floating point, [ blocking ] floating point with different types. The ability to have this mixed precision gives us the possibility to reduce the network, to reduce the complexity, reduce the power and the compute. And that's the bottom line. We achieved very, very network utilization. That's the key benchmark. 1995 [indiscernible] network, and we compare with -- we compare ourselves to serious competition. And you can see here how efficient we are in power efficiency with RoBertA, which is a large language model. That's the term very well used in Gen AI networks. RoBertA is very well known, 25 more efficient in top per second per watt. But also in classical AI use cases like ResNet-50, 35 more efficient than the competition. So overall, we have a very high confidence that with this new generation of NPU, we'll be able to conquer and to capture more and more value on Edge device. So just to summarize where we are, as you see that we have a very nice portfolio in our [ 3 ] segments. In infer, with a combination of NPUs with DSP technology; in sensing with software packages and connectivity; and with connect, cellular and wireless technology. During 2023, we upgraded nicely our portfolio with giving a very good focus on how we can leverage these new developments or multiple use cases for all the different segments. And we are really committed to continue to innovate looking forward. So stay tuned. We are going to announce in CS important announcement for different portfolio, new members in our portfolio and Mobile World Congress for Cellular Technology since we are very committed to Smart Edge innovation. So all together, we start from innovation to full solution, to create more value to our customers, starting from the ability to innovate, to anticipate with the right innovation, to bet on the right things with deep relationship with our customer, giving solution to the increased complexity of the system that we need to solve today if it is in AI, if it is in sensing or wireless technology that create more and more complexity. And going to the market with a comprehensive portfolio, not one single component, but really something holistic to go to the market and address each segment with not one component solution level, allowing us to give a much more nice offering, including combos technologies, software and baseband platform. This means higher ASP. This means they're able to capture much more value in our business. Thank you for your time, and we'll pass that to Yaniv, and we'll be really happy to answer your question later on.

Okay. Thank you, Michael. Okay. I'll start. So good morning, everyone. Great to see you and see the faces and get back to New York and to this type of event. Obviously, as Richard said, time flies, 5 years, bless a month, has gone by from the recent or the last first Analyst Day presentation that we have done here, same room. And it's -- we wanted to do this much earlier. We wanted to do it sometime early in 2022. But then with management changes, that didn't really make sense to do it. With Gideon talking about the future, and we needed to give Amir some time, and you heard him earlier today to learn, understand where we are and really make the decisions about the next steps and the focus. So we're back here today. With that said, I do want to recap 2019, what we had in mind there and what we achieved and didn't achieve by the end of 2022. We want to talk about some interesting different perspective and different way that we are showing today, the revenues, and we have done some work around that. Talk about and explain what Michael said, all these R&D efforts, how do they work out on an IP business model, talk about the product life cycles translated into the financial models and obviously, capital allocation in ESG are topics that you're all interested in, and then I'll summarize and then talk about future models as well. So in 2019, January, 5 years ago, we talked about 3 main revenue targets. We talked about licensing revenue growing 10% to 20% of a $40-ish million level from 2018. We talked about royalties doubling from a $40 million to $45 million level. And we talked about unit shipments of the 3 billion devices by 2022. Obviously, with more royalties and more units, the gross margin plan was to increase significantly to double around 30% non-GAAP and the bottom line to triple as well from the 2018-ish non-GAAP levels. That was the plan back in 2019. Let's share with you what worked and what did not work as well. So on the licensing front, we did manage to increase the number of deals, got over 60-ish. Again, CEVA stand-alone, without the Intrinsix business. So that 50 to 60 new deals a year was achieved. The Bluetooth and Wi-Fi business plan exceeded our expectation. We had a lot of very successful deals that we shared with some of you -- we shared with you earlier today. We managed to grow licensing much more than the 10% to 20% that we had in our initial models. We doubled our royalty growth from the base station IoT. So on that part of the targets that was met. And we did increase the volume quite significantly back in 2018, we ended up with shy of 1 billion devices. 70% growth there got us to 1.7 billion devices by the end of 2022. Last but not least, and we talked about it today, very nice and successful acquisition of Hillcrest happened in 2019 after the Analyst Day, doubled the revenue so far. So this has worked out extremely nice for us in the last 4 years. What didn't work out? Obviously, handsets. The handset market undertook significant consolidation. There was a lot of changes in the industry. Obviously, Apple had its issues with its suppliers, Qualcomm, Intel, and that changed the plans for us and for others in this industry. Some of the markets we talked about today and back in 2019 took longer to grow. We're talking about cellular IoT, 5G base station, automotive, industrial. The whole market, some here and their customers, but overall market was slower. And with an Intrinsix acquisition that Amir talked about earlier, had it stalled both from a profitability and a focus point of view with not having enough royalties to back up the story, obviously, the operating margins and EPS were missed, and they were not in line with the targets we have put at the beginning of 2019. I want to show you now the focus that we have talked about earlier today of a pure IP play. And one of the easier examples to give is ARM. Obviously, ARM is public again after quite a few years, 7 years of being private. What we said a decade ago and where -- what we could today discuss and show investors is that the CEVA business model, obviously, much, much smaller, is identical to ARM. It's a licensing and royalty business model. And I'll talk about and give you again the high sign of how this works for us and how this works in the industry. On top of that, this is something that we have added that ARM does not have is software. And it has a little bit of different characteristics than the traditional core technology licensing business. So today, what we call hardware, these are the cores, these are the different technologies that Amir and Michael talked about earlier. We are managing to run 4 to 5 different R&D programs simultaneously a year. It is a long design cycle. It still takes a year to 2 years to design something from scratch. It's shorter if it's using the same technology like Michael explained and enhancing it. And then we have the next phase of taking our IP, offering it to different licensing companies, semiconductor companies, sometimes OEMs that integrate that IP into a chip. They design a chip. It takes some time. Today, we're talking about 50 to 60 new designs every year. And the next stage of that is going into production and enjoying the royalty rate. If you look at the concentration of royalty payers today in 2023 versus 2019, at the time, we had a concentration of the top 5 royalty payers contribute north of 80%. Today, we're about 50%. So it's a very nice expansion and diversification in markets and technologies in royalty payers, we're about 80 versus 60 4 or 5 years ago. And we have north of 100 customers today in different segments with different technologies that are working on their developments or ICs and chips that potentially could go into production over the next couple of years. So that's the traditional IP business model. This is something that we are very focused on. And after clearing up the service business, this is what we are doing. On top of that, there is an interesting element of software. And here, the time frame for achieving the revenue and the royalty growth is much, much shorter. First, when we start the design, it's less than a year in most cases of a design of a software piece or package or product. We could run 2 to 3 different projects simultaneously every year. The design cycle with the OEM or with the customer is much shorter within a few months up to 6 months maximum. And we talked -- Michael mentioned that earlier. The OEMs have a much shorter lead time. They need the product, they want the product to work, they need the software implemented and out to the market. It's a matter of month before we could see the royalties kick in. And royalties, higher ASPs because we deal with OEMS, and it's a locking mechanism. Those OEMs want those products to have the right set of features. They want to enhance those features every year that the product gets -- or every few years that the product gets enhanced and improved, and we are there for a multiyear relationship with most of our customer -- with most of our OEM customers. So here, we have a nice add-on that start with the Hillcrest acquisition, moved into sensor and the spatial audio with the VisiSonics recently, which adds on top of the traditional IP business model. The next few slides is looking a little bit different -- sorry, 1 more -- 1 more slide before revenues and summarizing where the typical IP play is today. So if we are talking about an IP company, about 50% to 60% of their R&D is invested -- revenues invested in R&D. CEVA is probably on the higher end, 60-ish percent in the last 2 years. The market is probably closer to 50%. This is something that we will talk about in a minute that we want to focus and change. We're talking about off-the-shelf reusable technologies. This is one of the advantages of the IP business model, and you saw some of the products that we come up and generate. And when you have a pure IP business model, we are talking about back to 90% gross margin business. This is what we like in the business. This is what investors like. And this is with having no manufacturing needs, but it's pure IP and R&D efforts, this is what generates the revenues and the high profitability. With the royalty streams coming in and control over -- overall expenses, the operating margins and the bottom line should improve. And this is something that we are putting an emphasis, and this is something that we are changing today and have talked about it throughout 2023 is really diversifying our R&D expenditure and markets, but being much more focused in higher ROI in those R&D dollars. And to try to focus those to generate more revenues, reusable revenues and so on. With having more control on our overall expenses and expense growth, being lower than the overall top line growth, this should cause and generate overall margin expansion. And this is the plan for us going forward, when I'll share with you in a few minutes the slides and the forecast for the next 4 years. This is one of the more interesting slides, I think, in my presentation deck and today to understand where CEVA is today because this is something that on the left-hand side, you know and have worked with us and followed the company. And this is the total revenue, licensing and royalties of the company for the last 5 years, CEVA Solo, 11% CAGR from '19 -- through 2019 to 2022. What you probably don't know is that inside that, if you look at Smart Edge, which is the theme of today and going forward, this is the blue versus our traditional modem business, when we look at the overall business, we have managed in the last 5 years to more than double it from $50 million to $103 million of revenues -- overall revenues coming from that market. The whole -- that segment of the market for us grew 27% from '19 to '22. What you are suffering is the royalties and the deals around the handsets, which I talked about in the previous slide, this is what has changed in the overall handset market, the mobile space and took the numbers down from where we were in 2019. The Smart Edge enables us going forward to be -- to participate in a much, much larger market, many more markets than we were focused on in a single solution in a single market back a few years ago. And the growth for us is coming from that $100 million full year 2022 and onwards, with a much more diversified market, customers and applications. Another way to look at the markets and the revenue split for us is to consolidate the 6 different pillars that Michael and Amir talked about into 3 major ones. One is the consumer IoT, the other is the mobile, and then the third is the industrial IoT that here, we also just for simplicity, we added the automotive infrastructure and the industrial. What you could see here that back in 2019, almost half or 45% of our revenues came from mobile. Four years later, the first 9 months of 2023, only 15% came from mobile. And we were able to offset that and to grow the consumer IoT essentially to double from 30% to 60% of our overall revenues, royalties and licensing together, there's time differences between them, but this is for the whole use case. On top of that, the industrial IoT is still an interesting market or markets for growth. We kept that at about 25-ish percent, 23%, 24% of the business. Different use cases back then, but this is still an opportunity of growth for us going forward, and we are still investing our R&D dollars into that market. So this is a little bit of a different understanding, what did work out very nice, and this is what we have talked about today earlier, and what could grow and drive growth going forward versus the handset market, which is how CEVA started, single market, single type of technology and much more focused years ago. In order to get to those revenues, there's a lot of R&D efforts, and Michael discussed about the different R&D projects that we are working on these days. If you want to take a snapshot and look at the last 5 years of R&D spend were $274 million non-GAAP. Those R&D investments managed to generate or more than cover itself with $285 million of new licensing deals. But on top of that, also the $210 million of royalties that came in, in those same 5 years. Obviously, there is a time lag between the 2. This doesn't -- the investments that you do in the same 5 years, usually represent royalties in the years to come. And the licensing also has a little bit of a 1-, 2-year or 3-year type of delta as well. But if we just take a snapshot of 5 years, this means that the focused R&D efforts that we are putting today do represent and cover themselves both in licensing and with more opportunities into the royalties. Three slides and market segments now on different product lines and how they contributed revenues and how they sucked in those R&D investments over the last couple of years. And I'll start with Bluetooth. Bluetooth is one of the more successful products line, very mature, that we started back in 2014. And if we look at the first 4 years of investment years, this is where the R&D dollars were put in place, this is where Bluetooth 4 and then later on 5 was actually developed, some of it even before, we started gaining a good market share, and we started gaining customer base. And from 12 deals, we went to 16 and 18 deals in the first couple of years and from almost no volume of 40 million devices, we reached 200 million devices here, single-digit market share, and that was the -- this was the initial ramp-up of the product line. When we had a critical mass of customers, when we had a critical mass of use cases and when we add new technology, next-generation technology, like Bluetooth 5, and Michael talked about some of the differences in the different standards that evolved in the different technologies, the numbers started to look completely different. And from single digit, we reached 30% market share and from 200 million, we reached 1 billion devices, and we have over 100 customers. And this overall product line in the last 5 years alone, generated $107 million Bluetooth product line, royalties and licensing. Obviously, it's quite combined. In those $107 million, this was just the last 5 years. There's much more royalties because we are in high volume, and it also represents new deals of licensing. So this is one of the first successful diversified products that we added on back in 2014. If we look at Wi-Fi that started much, much later, the market was not mature yet, the use cases were not there. We started the investment around 2018. First 4 years, again, of investment, R&D dollars are working on in the first Wi-Fi 4, Wi-Fi 5, move to Wi-Fi 6 standard, 4 deals going up to 12, 15 deals, single-digit 5 million units of Wi-Fi going up to 170-ish and still a single-digit market share. This is where we are today. But if you look at the Bluetooth and extrapolate that, that Wi-Fi is about to start the maturity with 50-plus customers, the market demand that Wi-Fi is all over the place, the jump, a significant jump in performance and capabilities of Wi-Fi 6 and 7 versus the older technologies and older standard, that gives us the ability to forecast much, much growth much faster over the next couple of years, reaching 25% market share, maybe somewhere in the neighborhood of 1 billion devices with much higher ASPs as these are much more expensive, sophisticated chips. So if we look at the -- where we are today, and this is just the initial part of the Wi-Fi opportunity for us, we're at $75 million of revenues, licensing and royalties. But because we are still in the initial stage, most of it is still coming from licensing activities and not yet the royalties. So from a much, much younger product line versus the Bluetooth were $75 million versus $107 million, but still most of it in licensing, there are still a lot of interesting opportunities for growth in revenues from the Wi-Fi product line. Another third example of a separate product line that we talked about earlier, the family of the XC. XC is a very old type of product. We started that a decade ago, but we have continued to evolve. It's the same platform with different features, with different add-ons, with different adjustments in order to win different market segments with that same platform. We started with the basic 4G modems, went into 5G, base station, cellular IoT, satellites, drones, vehicle-to-vehicle communication, one of the advantages that those same R&D dollars do not need to jump from one market to the other and from one technology to the next technology, but it's the same platform, the same base, just using and extrapolating it into different markets and different customer base. $65 million of combined revenues coming from that in the last 5 years. Richard, by the way, it doesn't work the timing, so just give me the time. Thanks. Moving on to capital allocation. So as you heard today, the most important focus today in the company as a pure-play IP is M&A. And M&A in the right place, M&A in the IP core segment. We talked about earlier 4 years ago, the Hillcrest Labs. Now we've talked about VisiSonics today, smaller acquisitions, add-ons to software pieces or other technologies that we need to fill the puzzle and to build a broader product portfolio. We have done that. We have diverse -- divested Intrinsix. And this is the key focus going forward, also Amir talked about this in length of our capital allocation. On top of that, we continue to be active in buyback. We have done $24 million of buyback over the last 5 years. We have just authorized the plan of 700,000 shares, representing anywhere between $14 million to $20 million are active in the market these days with that. And this is something that we believe will continue as we go along. Next topic of the top of the capital allocation is ESG. It was mentioned earlier, a topic that may be around COVID got a little bit under the radar. I wanted just to share with you that an IP company with no manufacturing facility with pure R&D play, which is computers and office slides, we are very, very clean and friendly company and business model to the environment and to the planet. The fact that we have mentioned here over and over again about cost savings and power efficiency and if you take that power efficiency and extrapolate that to connecting the home, the house, the cities, the seller networks, the IoT networks, that power saving or battery could save a lot, a lot of trees probably much more like forests. And we probably need to improve our reporting capabilities because we are behind that. But if we do that, that's a little bit on top of [ OpEx ]. So we'll have to work along, but we are very, very friendly to the environment, save a lot of money. Our customers are able to do that. And of course, corporate responsibility, code of business ethics and all that is something that we believe in, that's in the DNA of a company and has been with us. So we'll try to improve also the grades and around ESG in the years to come. Summarizing all the different opportunities in front of CEVA in the -- that you have heard today, and I'll try to present it in 4 different pillars. One is the ubiquitous connectivity. This is the strong stand of CEVA in the markets and the technologies and the design wins that we have. We are going to target billion devices, 25% of the worldwide market in Wi-Fi. These are higher ASP chips, higher royalty contribution and another opportunity in gaining market share in the new version like Wi-Fi 7. We're going to continue the licensing expansion in 5G-Advance. That means RedCap, that means satellite. There's a lot of demand outside the handset business. And higher -- that will enable us to have a higher ASP product mix than we had with 1 billion devices of Bluetooth exiting 2022. On the industrial IoT, automotive, we saw some of the examples today. AI ramp up with 2 leading OEMs that generates royalties and still more design activities around that, a robust pipeline for sensing AI connectivity. This is where most of our R&D efforts are put today, the AI segment and the connectivity Wi-Fi segment. We are anticipating in both of these industrial IoT spaces to ramp up in the next couple of quarters and years with volume and revenue. Edge AI, market tailwinds. It's one of the hottest markets that are out there today. Michael talked about how difficult it is for newcomers to get into that and how advance our solution is to win market share into this space. We're talking about new innovative product offerings. We're talking about a good pipeline in those, in this market and cross-sell of those different technologies. And the software piece, we talked about that. It's a shorter time to market. We have invested 2 acquisitions around that. That's a nice add-on to our business, faster time to market from royalties. The special audio has a lot of interesting design wins ahead of us to enhance the growth and comprehensive software offering and sensing experience. To all the different use cases in the world. All that gets us to the model. And if we look at the 2023 start with the base of where this year is looking like, I'm using the first 3 quarters of actual non-GAAP results and the guidance that we gave in the last earnings call or talked about shy of $98 million of revenues. We're back to the 89% gross margins, operating expenses anywhere between 84% to 85-ish. Still with more investments and less royalties and licensing this year, only 2% to 3% operating margins this year and $0.13 to $0.15. This is a snapshot of 2023. For next year, you'll see a few TBDs. We'll leave it for next earnings call to talk about what we believe the licensing royalties revenue could look like for next year. And obviously, that also will talk about the operating margins and the EPS expansion in our next earnings call. What we did say and what we do still repeat and believe is that we want to keep the gross margin back to the 90%. That's the target, for the next couple of years, not just 2024. And from 2024, we want to keep the same expense levels, non-GAAP, overall OpEx and cost of goods like we had last year. So with some revenue contribution. There should be an expansion in operating margins, but we'll give more insight around that when we have our next earnings call. When we look at the longer-term models of the next 4 years, '25 to '27. Here, we're coming out with the combined CAGR of 8% to 12% of our overall revenues. This is a combination of both licensing and royalties contributing from all these different markets, the 4 pillars that I just talked about. We are going to keep as an IP pure play, the 90% gross margin in this business. And we want to increase the expenses of the company at a lower pace than the top line, meaning if we are at 4% to 8% CAGR for the next 4 years, this can and should contribute to about 20% operating margins. Numbers that we have seen in the past, we know how to get there, but this is what we're sharing here is how we want to get there, which is 10x more or less where we are in 2023. And obviously, if all this also falls to the bottom line. We're looking at north or dollar-ish type of EPS, non-GAAP in 2027, significantly better than where we are today. And all of this is based on the combination of continued growth in all these markets that we have mentioned, a bit more disciplined investments, continue to invest in R&D, but at a slower pace and much more focused on return ROIs. And there, the model works. If that's -- if those are the parameters, then the rest falls to the bottom line, to you guys and to create shareholders' value. So this is the model. And Amir, let's summarize the day and the formal presentation.

Yes. I just want to summarize the whole day of what we have shown today. I want to thank my team and to you all of you also joining us today. The summary of where we are heading moving forward. First, we are back to pure IP business model. We believe we have all the capability to go and scale that business. We are addressing high-growth smart edge opportunities as we move towards 2027 and the rest of the decade. So we're expecting a tailwind as we go beyond this year and the next year, highly diversified customer base and end market. We truly believe as an IP business model, the more diversified it is in our offering, the more we can scale it up and provide operational margin and leverage. Innovative mindset and winning portfolio, again, it's about building the right portfolio. I was asking about do we miss other assets and all that, definitely, we keep looking for what assets in order to make it more comprehensive and complete as well as financial disciplines to drive that operating margin. As I came on board, we did lots of realignments of R&D and looking at what to invest more to discontinue in terms of investments, and we expect to go and continue that in the journey. And very M&A mindset focus, we truly believe in the IP business opportunities out there. There's lots of consolidation that can happen and we can take advantage of as we keep building our inorganic growth in addition to the organic growth. All that we're very focused on the smart edge, diversified market, we have our diversified technologies in the portfolio. and building that success moving forward. With that, any, of course, a question to the whole team here. If you guys want to join me, of course.

Thanks to the team for some great presentations today. So maybe with Yaniv, having presented all. I want to ask, re-ask this question...

You need to come here for the microphone to work.

Yes. I'll start again. So thanks, everybody, for the great presentation today. Very helpful. I want to reask the question perhaps about the 5-year growth, 1.5x. How the mix will be licensed versus royalty? And just to understand sort of whether the licensing environment now is improved or is continue to be challenged in sort of the near term flavoring the guidance you just gave?

Okay. So we're not breaking out the licensing and royalties. I think we're looking at it as one bucket. Obviously, it's going to come from both. Obviously, both are planned to grow over the next 4 years. We don't know the magnitude of it. And what we saw that last time, sometimes you're wrong and the royalties were super much better in licensing. So we decided this time to give CAGR and the 50% growth that you mentioned, but not to separate it to. It's a combined business and every. And then we were asked earlier this morning, the business model hasn't changed. We're still -- in every deal, we have a licensing aspect. We have a royalty aspect. In software, it's mainly royalties or only royalties. That hasn't changed, and that's going to continue as part of the IP business model. So that's what we guided today.

Maybe a little bit just to clarify on that. If I summarize really the growth engine that we were talking, and I'll bucket that by royalty and licensing, royalty, what we see 3 major growth within the so-called the time period that we are talking for royalty is the WiFi ramp that we shared is the overall IoT, where the so called the initial investments happened in the last few years. It's gotten -- it's now getting integrated into the platform, and we expect the royalty to grow. And our software business that will continue growing with the additional capabilities we added and the volume. Those will be the growth driver for royalty. For licensing, major growth driver is the AI to drive that growth, which is a whole new product line that we are coming to market and have significant growth. Again, it starts with licensing. Royalty will come, of course, quite a bit later. And then in addition is the 5G XE platform, penetrating the different IoT broad-based type of use cases from the licensing. We mentioned SATCOM, we mentioned RedCap, software-defined radio for the different so-called integration with MCU solutions. And in addition, basically the other new product, it will come overall in connectivity. We mentioned here WiFi 7, Bluetooth 6.0 and all that, that will be the so-called the new generation of licensing. So we are not providing the clear background -- the clear breakdown -- breakup, sorry. But you can see basically what are the key drivers for each of them that we joined.

And then my other question is really on the financial metrics. As we look ahead and try to track this 5-year plan, I think one of the things you said is the IP content per device. But the other one seems to be cross-selling the products to the same customer. Would you contemplate metrics such as revenue per customer and how that's growing over 5 years? To understand how the cross-sell is working or other metrics to help us understand these 2 key vectors of what you're trying to do?

Right now, of course, we are not sharing that type of a breakdown. We already shared today quite a bit of a new perspective of how we look at the revenue by market segments and so on. We'll take that as an input. And over time, we can assess that.

Maybe the next time -- something for next time soon.

Yaniv need to track it.

Yes. Even on earnings calls, we do, in the last 2 earnings calls, we pointed out that we did 3 combo Bluetooth WiFi deals in each quarter. So when there's use cases and applications where we can say there's a combination of IP, we'll do it to help you understand that we're layering it in. But as Yaniv and we talked about earlier as well, the revenues are so much more diversified now in terms of end customers with just about 50%. The top 5 royalties only coming from 50% of the customers these days, to track all the different customers and how much they're contributing, it's going to be a huge big spreadsheet that I know some of you here would love to manage. But as Amir said, it's difficult internally to keep an eye on all of that and share at our end.

A question about software and how you see that growing [indiscernible] cash rate. You contemplate monetizing software doing more [indiscernible] of that more network related or [indiscernible] related and if you make a software or an AI engine that you license, can you then create other software stacks that can run the same AI core that might do a different function, but on using the same core? And does that open up a whole new opportunity for the company licensing software and also growing a separate royalty stream?

Do you want to take, software, maybe, Michael, the software packages?

So first, when we talk about our software licensing business model today, we are really talking about where we provide a complete package as a product that provides a user experience, whether it's special audio, voice activation, voice enhancement and those type of things. When you were alluding to the software stack that goes on top of our silicon,or Silicon IP. Today, we are also licensing that, and in some cases, to some degree, so-called as a separate license agreement. But this is really to enable our penetration and stickiness within our silicon capabilities in those domains. Over time, there is a potential to take it just that alone, so called as a solution to offer in the marketplace. But when we do that, we want to come more with a complete experience, not just here is a software stack that enables a silicon. Okay.

Are you charging up? Or is that just part of the initial license? That software? Is it like, is it truly a separate royalty? Or is it when you sell that IP core is already bundled in there and that's just the price? But there happens to be software as part of that now.

So this is what Amir mentioned exactly. Some of those software pieces, especially around AI, are licensable. The idea right now around AI because it's still a new market for us is to enable that customer to pay royalties per the chip itself. So that's an enabler. You need to buy it separate, you license it separately, but the royalties will be part of the chip as well. On top of that, what Amir said is that we may think in the future to license, if we have a strong enough customer base of AI chips out there, we want to come up with different software version, maybe we could also charge royalties in the future on those specific software packages. Right now, it's a licensing piece on top of the AI license for the core itself.

I think it's about a bit more color on that. So if you look, for example, our software sensing technology that I referred before, is a separate software package that we can just take royalties on this piece of software. So today, we already exercised this modern business model, to take our voice technology with a special audio and the 3 pillars that I explained before on software and sensing, and you can charge royalties just on that.

I find your side-by-side comparison between Bluetooth and WiFi quite interesting. So I think in the past, maybe products such as TWS headsets has contributed nicely to the Bluetooth growth. Do you expect to see any products similarly in WiFi maybe helped you to jump start the growth? That's the first question. Second question is, can you comment on the competition you face in the respective markets in Bluetooth and Wi-Fi?

Yes. In terms of -- I'll start with the WiFi, in terms of so-called what drives the demand in the market. I would say, overall, the needs for the next generation of throughput of lower latency and higher capacity drive the needs. It's not necessarily there is one use case or application that drives the WiFi needs. WiFi market is already very established and large. The new things for us in the last several years is that we came with a very capable IP solution that lots of different companies decided to go and utilize, because they move from, let's say, being just an MCU and they need to connect the WiFi. They wanted to go and build a new solution based on WiFi they came to us. The other thing that is that we have done much more aggressively in the last few years and successfully is penetrating the WiFi access point. Lots of the new access points players today in the market and the newcomers that came in the last few years are using, or going to use in high-volume our WiFi IP. So that's where it drives significant. With that, you need to understand that as you look at the accumulation of the licenses that we have had in Bluetooth, the early days, it took time to accommodate it, let's say, to a 30, 40 type of licenses. Once we reach that, and we kept accumulating the same level every year that volumes start ramping up very nicely. We see the same thing is happening and will continue in WiFi. It's just with that shift in years, but much higher speed, the license was bigger. If you look at also the revenue that we generate on Wi-Fi in the last 5 years when the royalty was much, much lower than Bluetooth, still, it was a very significant number versus the Bluetooth because the value fair license and pair royalty-bearing unit is much higher than Bluetooth, so that's why we're expecting significant growth there. Both station and access point, in Bluetooth you don't have access point. So that helps a lot, and also the combination of the 2. You have...

About competition?

I would say, overall, we are clearly, clearly the #1 in the marketplace. It's an IP supplier. I would say overall, we have a dominant position versus competition. We see here and there a little bit solutions coming from potential competitors. I would say in Bluetooth may a little bit, but no one has that so-called backward compatibility and future-looking in terms of the standards, plus BLE and Bluetooth dual mode, plus the software stack on top of that, just the whole completeness we really don't have competition from that perspective. And then WiFi, we are clearly, this solution out there as an IP supplier provider.

I'll just add one more, Martin. You asked about the markets and potential drivers for volume. The WiFi 6 for IoT in the smart home is a good example. So most devices in the home today, you're talking about smart plugs and switches and so on that Amir talked about earlier, predominantly still using WiFi 4, the old 11n technology, we remember from a decade ago. WiFi 5 was not built to address IoT. And then Wi-Fi 6 was architected in the ground up to have this very low power Ultra- low-power profile that suits these types of connected devices around the home. The other thing to remember is now we're connecting 50 or 100 different devices in the house. So if you keep adding WiFi 4 devices, you're going to have a lot of interference and issues with your WiFi performance. WiFi 6 can handle many more connections on the same network. So this is why we're seeing a lot of our IoT-focused customers who've done really well in Bluetooth, going after that now they see there's a big opportunity to scale up into the connected home type of application for many devices, which never had WiFi or using the older WiFi. So that's a volume driver.

Yes. A quick question NPU. Beyond the 2 automotive customers you have, can you talk about the market validation with other end markets and sort of what those end markets might be, PC, auto, mobile? Any color there would be helpful.

I think the question was about NPUs, right, penetration in the market. So definitely, we talk about automotive, where we see it was also in [indiscernible] slides, the infrastructure type of customers. They are moving from so-called solar communication to generative AI as part of the overall capacity optimization. So that's another opportunity for us with NPU to come along with our wireless communication, DSP technologies. We see the NPUs going to client device. You mentioned PC, it's PC, tablets, those type of devices as well. We see it also in, not call it high-speed wired optical communication where you need to, and you want to use neural processing units with basically running a network in order to improve the, or do noise cancellation in a better way. We really see it's across many, many different type of implementation or applications. This is the high end. Also, slightly lower end, you will see NPUs or AI capabilities going in the broad base of the different devices, so called the smart edge devices. From smart speakers to other connected home devices, enabling audio type of use cases related to AI, as well, different type of assistance, audio assistance as well as more low-level image recognition for video applications, like camera, dual cameras and so on. So we see the really populating all across.

My question was along the same lines. But maybe just to go into a little more detail on that, if, would this be a companion chip with someone that already has a full CPU? Or is it integrated with the CPU? And then if they license from you today, when would they have a product in production? And I'm thinking for the, say, the home appliance market.

Yes. So the NPU, typically, the large NPU, the new point that we talked about is typically a companion to some internal processing that you need to run just what you need to run on that machine in terms of just control and understanding of an interface with operating system or the touch sensors or the touch display and so on. So the new plan is accelerator. It's accelerating to all the new networks in addition to some processor that is there. The opportunities, and I won't go into that too much into details to look at the different type of combination with our different technologies into one single solution, which we may talk about it in the future.

Another question is time to market, like say license today [indiscernible]?

Yes. So as we showed also with all the other Silicon IP technologies from the time that we license, it's typically on average, about 2 years until they go to production. If it's simpler system or already, they are quite advanced with their own developments. It can be even a year. If it's a very complicated system and they're very early in their development, when they license from us, the IP, it can take 3 years. It also depends really when they license for us, the technology is that just before they start the project or where they are made already some progress, but it's anywhere between 1 and 3 years, typically 2 years.

I have a couple of questions here that I'll just take that were sent into us. The first, it might be a question for Yaniv. But of the 250 deals done in the last 5 years, can you estimate how many are producing royalties today? And the second question is when a customer licenses an additional IP, is it faster for that customer to get to market when they're coming with the second IP as well?

Let's start with the second one. It's the same question and answer we just gave right now. The time of designing a chip is more or less the same. If you have the capabilities and the knowledge in-house, because you've done a first generation, and you need to add feature sets or new standard. And you already have done it once or twice, then the next use case will be probably take as much, but it may be a bit more efficient from the size of the team you need for that next-generation chip. But it does not change much the timing for, to create royalties or for the chip to go into production. The first question of how many people or customers out of the 250, it's a good one. We need to do an analysis. I'm not sure if I have a number off top of my head, but we could look at the delta of number of royalty shippers, as we presented earlier, we had about 60, not all of them are they the same, because some have changed. Today, we have about 80-ish. So those 20 for sure came as part of the 250 deal. But I think the number should be larger, because we did have some old-timers that finished their production and went and as the markets change and markets also changed for us and others got in from, in the last 4 years, mainly around the smart edge type of devices. So I would say probably anywhere between 20 to maybe double that is the right number over the last 5 years out of that 250 deals.

Amir, I just wanted to get a question into you about the framework for thinking about the competitive landscape in AI and NPUs as you start going out there. Is it really you guys as a coprocessor accelerator versus this an AI capability in the native chip there? Or are there people building coprocessors, competitive to you? Just to understand, I just want to get a framework for how to think about your Edge AI NPU and what the competitive landscape there looks like?

Just to clarify also, I would say, to the most part in the marketplace and as well as our competitors, when you go to very high performance level of requirement, and when you have that, what we showed like neural processing unit that needs to go to hundreds and thousands of tops. This is a separate accelerators that goes with some kind of coprocessor that is there to run the rest of the processing needs of the system. So it's also the overall landscape is moving there. So I'm not sure if I answer your questions, but...

I just want to make sure that your revenue got long-term revenue guidance didn't assume any M&A. That was just organic, correct?

Correct. This is the organic model, no M&A and no other fruit.

Okay. And as you look at the market in terms of pretty good growth markets you've identified, what type of opportunities are there for getting significant market share going into additional markets? Like how do you look at M&A?

Do you hear me now? So I think Amir mentioned that earlier today. I think we're going to look at 2 type of deals. We're augmenting our technical capabilities, bringing more features, but at the same time, growth, growth can be into expanding our capabilities with a scalable business into areas we play in. And I think we're going to still play in those 6 end markets, probably we're going to add additional use cases that can vary from everything. I don't want to talk about specific one. But there can be multiple use cases we can go and address later on and by that, decreasing our SAM across the end markets.

And where are we in sort of identifying what's attractive? What's not attractive? I know in the past, you've looked at going into other areas at...

I think we have a strategy and a plan. I think there was a game board, but the way I can share right now. We are looking at a lot of things. It doesn't mean that we're going to act on something really fast.

Right. And do you think this is just looking at the macro, it's probably a better time to be affecting the strategy in terms of valuations, given what's out there. Are you seeing more opportunities from that perspective? More companies are looking at divesting initiatives that may you can productize.

So there is definitely the divestment from larger companies that may fit our product portfolio very well. I think from a valuation goes both ways. It really depends on our share stock as well. But we do have a lot of, our balance sheet is very strong. When we look at the deal and another [indiscernible] coming around that, there are multiple ways to do that overall.

Some mobile OEMs are trying to design their own 5G basebands and haven't been successful or been able to get past 4G. Is there any possibility any time before in the next few years that actually could happen?

Yes. I would say, first, there was beyond so-called the Cupertino folks, okay? Beyond that, the discussion I won't go there. But just recently, there was a company that basically decided in China to stop doing their own sort of modern technology and they were actually using some of our IP and technology. So definitely, we see that so-called landscape change. But also what we see from the assets of that team and capabilities. We see that now potentially populating such that maybe others will try to internalize. So within the smartphone OEM , there is the Apple, the Samsung and Serval in China. There is a potential that one of them in the future, we'll try to go and bid or start building internal capabilities for some of our technology. And time will tell if they are going to be successful and whether they will really take it all the way. And I'm not talking about Apple, okay? But as everyone have seen, this is a major undertake and not easy to overcome.

I have 2 questions on Gen AI. So first is about the market forecasting $2.7 billion in Gen AI devices by '27. I think smartphone is a very obvious device that account for a lot of that forecast. Is there any other edge devices you feel like a very high potential device that counts towards that forecast? My second question is you talked about the scale you're capable from single tops to 1,000 tops. And then you also talk about the efficiencies CEVA has over a competitor. Does that mean you would maybe favor more low-power devices as the first end markets or end customers to utilize your Gen AI or NPU products in the future?

Yes. So for the second question, I think edge AI is technology is ubiquitous. As Amir explained, different use cases can be digital cameras, go to drones [ surveillance ], ADAS system and mobile phones, notebooks, ubiquity. So that's the reason we don't want to bet on one single use case. And strategically, we constructed the architecture to be super scalable in terms of how many engines because this architecture is very, very modular. How many engines you can integrate in different solution to start from a very low hand and that will enable us to go to the specific uses case of consumer and going, adding more and more engines and going to cluster architecture with many engines, many cores, all connected together to achieve the 1,000 tops, that I referred before. And that's for more high-end use cases like infrastructure cases ADAS, ADAS technology and more. So strategically, we invest to create modularity, scalability, not to target one specific use cases, but to give all our possibilities and it's a real asset to go to the market.

And about the devices, I think you may mobile for sure, PC tablets and some other devices you interact with. It is not going to go for earbuds most likely, but they have to compute, they're going to have some aspect of it. But again, those are more of the more compute intensive devices that can do everything locally. Again, as Michael mentioned in a second, there's going to be a lot of hybrid activity. So you're going to do and infer something on your small device, move it to somewhere else. So we're going to see a lot more around that. But those who can run it fully completed with the data sets attached to it, those are going to be probably the type of devices based on the requirements of memory and everything else.

Okay. So if we have no more questions, I think we can call an end to the day and thank you all for coming. We appreciate all of your attention for the last few hours and also to everybody on the webcast. Thank you. Good luck, and see you down the road. Thank you. Bye-bye.

Thank you.