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Operator
Good day, and welcome to the SEVA, Inc. Fourth Quarter and Year-End 2023 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Richard Kingston, Vice President of Market Intelligence, Investor and Public Relations. Please go ahead.
Richard Kingston
Thank you. Good morning, everyone, and welcome to SEVA's fourth quarter and full year 2023 earnings conference call. Joining me today are Amir Panoush, Chief Executive Officer, and Yaniv Ariyeli, Chief Financial Officer of SEVA. Before handing the call over to Amir, I would like to remind everyone that today's discussion contains forward-looking statements that involve risks and uncertainties, as well as assumptions that if they materialize or prove incorrect, could cause the results of CEVA to differ materially from those expressed or implied by such forward-looking statements and assumptions. These forward-looking statements include statements regarding our market positioning, strategy and growth opportunities, including expectations for expansion into new markets and use cases, as well as expectations regarding our customers' production of products using our IP, market trends and dynamics, demand for and benefits of our technologies, and our expectations and financial goals and guidance regarding future performance. VIVA assumes no obligation to update any forward-looking statements or information which speak as of the respective dates. In addition, following the divestment of the Intrinsics business to Cadence, financial results from Intrinsics were transitioned to a discontinued operation beginning in the third quarter of 2023, and all prior period financial results have been recast accordingly. We will also be discussing certain non-GAAP financial measures, which we believe provide a more meaningful analysis of our core operating results and comparison of quarterly results. A reconciliation of non-GAAP financial measures is included in the earnings release we issued this morning and in the SEC filing section of our investor relations website. With that said, I'd now like to turn the call over to Amir, who will review our business performance for the quarter, review the year and provide some insight into our ongoing business. I'm here.
Amir Panoush
Thank you, Richard, and good morning, everyone, and thank you for joining us today. 2023 was the beginning of a transformational journey for SIVA, and I'm very pleased with the progress we made in my first year with the company. Following the recent in-depth strategic review, to really understand our strengths and technology leadership, we have positioned SIVA as a trusted partner for semiconductor companies and OEMs We need our IP to enable three fundamental use cases for smart edge devices. The ability to connect, send, and infer data more reliably and efficiently. We have realigned our business to focus our investments and R&D efforts around these use cases and on mega end markets where we see very strong growth opportunities. Consumer, automotive, industrial, and infrastructure. Even against a difficult business backdrop in 2023 that continues to affect the semiconductor industry and its end markets, we are already seeing evidence that our updated strategy is producing results. Our customer engagements are deeper across the value chain, across our entire technology portfolio, and expanding into new end markets and strategic opportunities. I will provide a review of the year shortly, but before that, I will review the fourth quarter. For the fourth quarter, our total revenues were in line with our expectations. I'm proud of how we have and continue to manage through the challenges in the markets we serve and significantly improve our profitability and earnings power through our focus on operating efficiency. In licensing, while the total licensing revenue recognized in the quarter was lower than usual, the interest in our diversified portfolio and potential new customer opportunities remained solid. We saw good progress on a number of fronts, including a strategic license deal with a US-based MCU leader for our Wi-Fi 6 IP and a licensing deal with one of our major automotive customers, to integrate our AI software compiler into their ADAS chips. In royalties, we saw a return to a year-over-year growth for the first time since Q3 2022, with a rebound in mobile and across consumer IoT and industrial IoT, where we have a large and diversified customer base. Both mobile and IoT markets produced their strongest royalty revenues of the year. Units volume in the quarter were up 21% from the fourth quarter 2022 level. Overall in licensing, we signed 17 deals in the quarter, 11 of which were for our IPs enabling Connect use cases, where we continue to leverage our broad portfolio of long and short-range wireless IPs to build our leadership position and market share in connectivity for smart edge devices. This is evidenced by agreements spanning Bluetooth, Wi-Fi, UWB, cellular IoT, and 5G REDCap signed in the quarter, as more and more chips designs integrate connectivity as a mandatory requirement. As I mentioned a few months ago, one of the deals was a leading US MCU company for Wi-Fi 6 IP. This company licensed a Wi-Fi 6 IP to augment their internal wireless connectivity development efforts and ensure they have a leading solution for their customers. This is a trend that we are seeing more and more recently, where established companies with internal R&D teams and major investments around wireless connectivity need help to advance their product roadmap and stay competitive. DIVA is constantly at the leading edge with the latest standards developed in the same timeframe as the market leaders. As these technologies become more complex and the demands on the customers to consistently be in the market with the latest features, we are viewed as a trusted partner who can help these companies reach their product development goals while reducing the risk and time to market. This is why we are increasingly being recognized as the de facto choice for wireless connectivity IP globally, which forms the backbone of our smart edge strategy. We also had a good quarter in licensing for our hardware and software IPs for sensing and inference, with six deal signs highlighted by a licensing deal with one of our major automotive customers to integrate our AI software compiler into their ADAS chips. This customer has already licensed and deployed our AI engine to add high compute performance in their automotive systems on cheap product family targeting ADAS and autonomous driving. These SOCs are now in production and are expected to be deployed in mass market vehicle by the end of 2024. The licensing deal we completed this quarter with this customer enables automotive tier one suppliers and OEMs direct access to our AI engine in the SOC to deploy the proprietary AI software algorithms and allow them to bring value add functionality and differentiation to the performance of the production vehicle. This is an important milestone for our customers and for SIVA, as the automotive industry is constantly looking for open ADAS architectures as an alternative to closed vertical solution that don't allow for differentiation. We anticipate that we will generate meaningful royalty revenues from automotive SFCs with initial royalties contributing to our growth in 2024 and continuing to grow in 2025 and beyond. Other deals in the quarter under this category include customers for our audio AI and sensor fusion AI DSPs and our voice processing software. At SIVA, when we speak about Edge AI and Smart Edge devices, we are not just focusing on the inference workload that most people associate with these devices. Every one of these devices needs to be connected in order to get data off the device and connect via the internet. Every one of these devices needs to be able to sense its environment using vision, sound, and motion, and generate data. Every one of these devices will increasingly need some inference capabilities to interpret and act upon this data. This is what the smart edge is, and we are the only IP company capable of delivering the technology required to address all three use cases. Turning now to royalties for the quarter, we saw a strong recovery in mobile, driven by restocking demand for Android smartphones in emerging markets. In consumer IoT and the board industrial IoT markets, demonstrating our diversified offering and customer base, we recorded our best quarter of the year with notable trends for our connectivity customers. This was our third consecutive quarter of royalty growth as we built momentum throughout the year. More significantly, this was the first quarter to surpass $12 million in royalty since Q4 2021. and serves as a strong proof point for our royalty business potential going forward. For the full year 2023, we reported total revenue of $97.4 million, 19% lower than 2022, primarily due to a return to a more normal licensing environment following a couple of years in which we were able to capitalize on a surge in design activity driven by exceptional consumer and market demand resulting from post-COVID spending and the shift to work from home. Licensing and related revenue was $57.6 million, down 23%. We signed 53 licensing agreements across our extensive IP portfolio. Ten of those deals were with OEMs who are integrating our IPs into their end products. In terms of end markets, 29 of these deals target consumer and 23 for industrial IoT, including seven for automotive and one for other markets. This deal breakdown serves as another indicator of our focus on the end markets with the largest licensing base and the greatest projected growth potential. In full year royalties, Despite the slow start to the year and the soft end market throughout 2023, royalty grew sequentially each quarter throughout the year to reach $39.8 million, down 12% year-over-year. The decline is mainly attributed to mobile and 5G RAN-related royalties, which combined to be down 22% year-over-year. On the positive side, and in line with the trends of our connectivity products, Royalty revenues related to our Bluetooth, Wi-Fi, and cellular IoT business lines combined to grow 5% year-over-year, mainly due to the higher royalty rate contribution from our new Wi-Fi 6 customers. In terms of end markets, consumer IoT was 41% of royalties, followed by mobile at 36%, and the growing industrial IoT end markets at 23%. Looking ahead to 2024, we are excited by the royalty growth potential of our Y56 royalties, the continuing momentum in our Bluetooth and cellular IoT customer base across consumer and industrial markets, and the expected initial ramp of automotive ADAS royalties in the second half of the year. Looking back on the year in terms of achievements and milestones, there are a few that I would like to elaborate on. As I mentioned earlier, we started the year with a strategic review of the business and decided to focus all our efforts on being a pure IP player. This led to the decision to diverse the intrinsic aerospace and defense design services business. In line with this strategy, in April we acquired Visisonics, a small special audio software business, which bolsters our software business and enable us to address the high-volume headsets and earbuds space with value-add software. This culminated with our first special audio deal with Bose, India's number one wearables and hearables OEM and number two worldwide behind only Apple. The strategic review also led to the decision to give the company a brand refresh to better reflect our position as the trusted partner or transformative IP for the smart edge. Collectively, these efforts have enabled us to align our investments and focus, and were implemented in tandem with a stringent plan to control expenses and ensure we create operating leverage for the betterment of our shareholders. All of this culminated in our investors and analyst days in December, where we shared our vision and strategy
Richard
for the company.
spk11
Pardon me. It seems like we've lost connection with our speaker. Please wait while we reconnect. Pardon me, ladies and gentlemen. We've reconnected with our speaker line.
Amir Panoush
Let me continue from where I think you stopped hearing us. In terms of new product launches, we had multiple achievements. For connectivity, we launched our most powerful DSP architecture to date, addressing 5G advanced use cases for infrastructure, industrial, mobile, and new use cases like 5G satellite communication and 5G vehicle to everything. our UWB radar platform for automotive child presence detection, and our Bluetooth solution for electronic shelf labels, an emerging high-volume market. For sensing, we launched our channel-sounding Bluetooth solution, enabling high-accuracy secure positioning for automotive, industrial, and IoT. For inference, we launched our scalable NPU AI architecture, capable of running generative AI in smart edge devices with industry-leading efficiency. All of these product introductions demonstrate our commitment to the smart edge and our diversified IP portfolio position and have been very well received by our customer base. Moreover, these products will serve our licensing business in 2024, along with recent product introductions like our Wi-Fi 7 IP. Overall, looking across our corporate, product, customer, and end markets milestones in 2023, I'm extremely proud of what we have achieved and I'm excited about what's ahead for 2024 and beyond. None of this would have been possible without the dedication, patience, and incredible efforts of our employees worldwide, and I would like to take this opportunity to thank them. Looking ahead into 2024 and our expectation, the Semiconductor Industry Association expects the global semiconductor industry to return to healthier growth following a weak 2023. There still remains, however, some short-term challenging conditions in the industrial and automotive end markets, which are not expected to clear until the second half of the year, and possible inventory buildup that will need to be walked down in the first part of the year. Yaniv will provide quantitative guidance shortly. Finally, I want to sincerely wish you and your families a successful and peaceful 2024. I look forward to meeting many of you at conferences, trade shows, and other industry events throughout the year. Now, I will turn the call over to Yaniv for the financials.
Yaniv
Thank you, Amir. I'll now start by reviewing the results of our operations for the fourth quarter of 2023. Revenue for the fourth quarter was $24.2 million as compared to $30.3 million for the same quarter last year. Revenue breakdown is as follows. Licensing and related revenues were $11.8 million, reflecting 49% of our total revenue. compared to 19.4 million in the fourth quarter of 2022. Royalty revenue was $12.3 million, reflecting 51% of total revenues, up 13% from 10.9 million in the same quarter last year. And this is a return to year-over-year growth in royalties for the first time since Q3 of 2022. Quality growth margins, came slightly better as expected on GAAP and in line with non-GAAP basis. Gross margins were 91% on GAAP and 92% on non-GAAP basis. Our total operating expense for the fourth quarter was in line with the mid-range of our guidance at $24.7 million. Total non-GAAP operating expenses for the fourth quarter, excluding equity-based compensation expenses, amortizations, intangibles, and deal costs, were $20.3 million at the lower end of our guidance. GAAP operating loss for the fourth quarter was $2.8 million, down from GAAP operating profit of $1 million in the same quarter a year ago. Our gap taxes were $7.2 million, and non-gap taxes were $1.4 million. Gap taxes expenses included $1.3 million charges as a result of completion of a tax audit for prior years, and a $4.5 million tax charge, including a one-time write-off of a deferred tax asset related to Section 174 of the U.S. Tax Code. Gap net loss for the fourth quarter of 2023 was $8.1 million, and diluted loss per share was $0.34, as compared to net income of $4.5 million and diluted income per share of $0.19 for the fourth quarter of 2022. Non-GAAP non-income and diluted EPS for the fourth quarter of 2023 were $2.4 million and 10 cents respectively as compared to $7 million and 29 cents reported for the same quarter last year.
Richard
With respect to other related data.
Yaniv
Grouped units by SIVA licensees during the fourth quarter of 2023 were 453 million units, up 21% from the fourth quarter of 2022. Of the 453 million units reported, 101 million units, or 22%, were attributed to mobile handset modem. 325 million units were for consumer IoT products, up from 286 million units in Q4 of 2022. 27 million units were for industrial IoT products, up from 21 million a year ago. Bluetooth shipments were 244 million units in the quarter, up 11% year over year. Cellular IoT shipments were a quarterly record high with 45 million units, up 82% year-over-year. Wi-Fi shipments were 31 million units, down 17% year-over-year. However, Wi-Fi royalties were up 86% year-over-year, reflecting the higher per unit royalty we get for Wi-Fi 6 shipments versus older generation of Wi-Fi standards. As for the year, our total unit ships were 1.6 billion units in 2023, down slightly for 1.7 billion in 2022, which equates to approximately 50 SIVA power devices sold every second in 2023. Annual mobile modem shipments were down 13% year over year to 286 million units, reflecting the soft smartphone market in 2023, particularly in the first part of the year. Annual consumer IoT-related shipments were 1.25 billion units, down just 4% year over year. And our annual IoT-related, industrial IoT-related shipments were 84 million units, up 17% year-over-year. Televore IoT and Audio AI DSP shipments both experienced growth in 2023, up 64% and 56% respectively from 2022. In terms of royalty contribution highlights, Cellular IoT royalty revenue were at all-time record high, up 47% year-over-year. Audio AI DSP royalty were up 111% year-over-year. And Wi-Fi royalty revenue were up 40% year-over-year. As of for the balance sheet items, as of December 31st, 2023, SEVA's cash, cash equivalent balances, marketable securities, and bank deposits were $166 million. In 2023, we purchased approximately 279,000 shares for approximately $6.2 million. And as of today, we have around 700,000 shares that are available for repurchase under the repurchase program has expanded back in November of 2023. Our DSOs for the fourth quarter of last year continue to be lower than the norm at 32 days, similar to the prior quarter. During the fourth quarter, we generated $5.5 million cash from operating activities. Our ongoing depreciation and amortizations were $1 million and purchase of fixed assets was $0.8 million. At the end of the fourth quarter, our headcount was 424 people, of whom 350 were engineers.
Richard
Now for the guidance.
Yaniv
As we recently presented and shared in our December 23 Analyst Day, SIVA's long-term vision is to achieve a four-year revenue growth of 8% to 12% CAGR. This will enable and generate significant earnings power, operating leverage, and net income growth. Amir highlighted earlier our key 2023 achievements and our new focus on pure IP play, and we are executing this plan one step at a time to address these three pillars of connect, sense, and infer. Our licensing-related revenue business will continue to expand into new markets and use cases in the industrial IoT and consumer IoT, offering connectivity platform, AI solutions, including AI engines, NPUs, and software, audio AI, and more. On royalties, we expect our connectivity products to continue to show strength in 2024 with the royalty revenue related to our Bluetooth, Wi-Fi, and cellular IoT business lines to grow. Smartphones have their seasonality, trends, and known headwinds. The consumer IoT and industrial IoT markets are large, diversified, and present us with a solid platform for long-term growth. On an annual basis, our revenue is expected to grow 4% to 8% over 2023, with lower growth in the first half of the year and higher in the second half. On the expense side, as we discussed, we implemented cost control measures to plan and keep our 2023 overall expenses, including both cost of revenues and OPEX, flattish at a range of $93 to $96. million non-GAAP. On the non-GAAP, overall non-GAAP COGS expense is expected to decrease approximately $1.5 million year-over-year, and our non-GAAP OPEX is expected to increase of approximately $2 million year-over-year. Specifically for the first quarter of 2024, With typical seasonality and shipments of consumer IoT and mobile products post the holiday season, we expect overall revenues to be 2 to 6% lower sequentially and with a different mix of licensing and royalty revenues than from the quarter we just reported. Gross margin is expected to be approximately 91% on GAAP basis and 92% on non-GAAP basis. including an aggregate $0.2 million of equity-based compensation expenses and $0.1 million of amortization of required intangibles. Our gap OPEX for the first quarter of 24 is expected to be in the range of $24.5 to $25.5 million. Of the anticipated total operating expenses for the first quarter, $4 million is expected to be attributed to equity-based compensation expenses, $0.2 million for amortization of acquired intangibles. Therefore, our non-GAAP OPEX is expected to be in the range of $20.3 to $21.3 million. Then interest income is expected to be approximately $1.4 million. Taxes for the first quarter is expected to be approximately $1.2 million. And share count for the first quarter is expected to be approximately 25.3 million shares.
Richard
And we could now open the Q&A session, please. Betsy?
Operator
We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Suji De Silva with Roth MKM. Please go ahead.
Suji De Silva
Hi, Yaniv. Go back to the progress here. Maybe we can talk about the guidance and the first quarter and the full year. Curious, you know, you talked about the different mix, Yaniv, in the decline two to six. Curious what the license royalty implications are there. And then for the quarter and the full year, what are the expectations for mobile, maybe even for the full year, versus non-mobile? It would be helpful to understand some color there.
Yaniv
Sure. Good morning. So overall, we're talking about 4% to 8% annual revenue growth for 2023. We're looking at a similar start than we had in 2023, that the first half may be a bit more milder, and then things will pick up. Some of the products we're in and the consumer side also have that typical seasonality, and we have seen that in the past. So those are some of the assumptions that we have built in the model. Obviously, licensing is a lumpy type of business. When we look at it on an overall longer basis, that generates the revenues, although in the last couple of years, we also added software solutions and capabilities, which have a limited licensing, if at all, upfront fee, but a much, much higher royalty contribution. And the immediate effect on an annual base, for example, our audio and AI royalties grew more than double in dollars year over year, but they don't necessarily contribute to licensing. So when we look at the full mix, we're looking at growth in both of these segments, both licensing and royalties. On a quarterly basis, it's harder to guess up front, and ASC 606 made our lives more difficult to know in advance how the royalty are going to look like. So our starting point is coming with the strongest quarter in royalties in 2023 and a gradual improvement from Q1 all the way to Q4. That would probably go down due to the typical seasonality in consumer and mobile that you asked about. And with that said, licensing should be higher Q1 over Q4 for sure. That is the plan. A lot of moving pieces, but from the product portfolio and the revenue mix, these are sort of the high pieces in the puzzle.
Amir Panoush
And maybe I can add a little bit more colors here, Sujit. First of all, good morning to everyone. And on top of what Yaniv said, so if we look at royalty going to 2024, There are several things that we are very encouraged by and we see as a potential growth in 2024 versus last year. One that we talk about quite a bit is our Wi-Fi penetration and the transition from Wi-Fi 4 to Wi-Fi 6, and with that, higher average ASP and volume increase. The other thing that will probably come more towards the end of the year is the automotive AI. Some of those products are going into production. As well as I would say overall our customer base in the consumer IoT and industrial IoT on average are doing quite well and we expect that to be a good tailwind and a strong force to go the royalty moving forward. On the more so-called muted side, it's really the situation with the all 5G installment base. That's a market that's probably in 2024 as far as what we see today. is not going to recover significantly, maybe more towards the second half, and then probably more in 2025, in terms of the overall mix. In terms of licensing, we have several new products that will and should generate for us increased licensing in 2024, Wi-Fi 7 that we already start licensing, as well as the new AI products that's right now in significant evaluation across multiple potential customers, and we expect to be able to close some of those deals in 2024. Okay, great.
Suji De Silva
And then my other question is on the auto ADAS win. Congrats on that. I just want to understand the circumstances for that win. Was that a customer who had their own AI and they swapped it out for yours? What kind of tops? And you talked about seven auto wins. I'm curious if those are all ADAS AI or a variety of products.
Yaniv
Let's start with the first one. So the first thing is an existing customer. They licensed our technology, the hardware side of it, a while back and built their own chip. The nice part, the interesting part for them is that the chip is programmable. The deal that we closed now is to add software capabilities that also their customers could add different sources of AI use cases and program it. the final product to be much more flexible. So it's an existing customer that is going into production this year, and they've added the software piece on top of the hardware solution that is ready now, and it was a very interesting and nice achievement that they're coming back and offering this type of solution in cars today, this year. Overall, Amir, you want to talk about the overall?
Amir Panoush
Yeah, the other seven deals are not AI only. It's across our product portfolio. Overall, we signed, I believe, four AI deals this quarter, three of them related, let's call it, more to vision AI capabilities and ADAS, and one related to audio AI capabilities.
Richard
Okay. Thanks, guys. You're welcome. Thank you.
Operator
The next question comes from Kevin Cassidy with Rosenblatt Securities. Please go ahead.
Kevin Cassidy
Hi. Congratulations on the good quarter. Can you let us know, how's the trend for licensing? Are there customer programs that are getting delayed or even being canceled in this market? Are you seeing more deals or fewer deals, and what are the issues that your customers are seeing?
Amir Panoush
Yeah, Kevin, a few things I would say. First, if we take a step back and look at 2023 overall, definitely that was a year that started with lots of inventory corrections that our customers need to go through. With that, so-called more pressure on the business overall. And with that, generally speaking, the customers on average taking more time to go and launch new products and new programs in place. So that's definitely drove some of the delays in 2023. Specifically for Q4, we are actually very encouraged with the number of deals that we signed, 17 deals in the quarter. And more specifically, we had at least one deal for each of our product technology categories. So really across our diversified product portfolio, very good engagement with customers with a good significant number of deals. Just to mix, every quarter can change in terms of the type of deals and the size of deals. And definitely as we go to 2024, from the first half to the second half, we expected also to see the larger or more meaningful deals also in that mix, which will drive overall with the rest of our deals at the growth between 2023 and 2024. Overall, I would say if we look at the different market segments, automotive and industrials a little bit weaker in the first half, and we expect inventory correction and overall interest to go back in second half. Consumer IFT and consumer overall is holding up very nicely for us, so that's we expected to be with the some seasonality of typically the Q1, and with that specifically more in mobile. Beyond that, we expect a good growth during the rest of the 2024.
Yaniv
The last part of Amir's answer, though, was related to royalties. not necessarily to the licensing question that you had. So you've got both angles.
Kevin Cassidy
Right, okay, great. And maybe just geographically, how is China's licensing opportunities?
Richard
Yeah, go ahead.
Yaniv
China is still an important and big geography for us. A lot of... innovation and existing and repeating customers that come back for newer generations of different technologies, whether it's Bluetooth or Wi-Fi or other connectivity solutions that we have today, because I think that we have a very strong portfolio around that. What was very interesting for us this quarter round is that the U.S. was stronger than usual for us and a very, very a strategic deal with an MCU player that we mentioned earlier in Amir's prepared remark, and that was a positive change for Q4 revenue mix. It wasn't just China, but here was an interesting development in the U.S.
Richard
Great. Okay. Thank you. Thank you.
Operator
The next question comes from Martin Yang with Oppenheimer. Please go ahead.
Martin Yang
Thank you for taking my question. Can you first talk about the revenue outlook broken down by consumer IoT and industrial IoT in 24? In which segment should we expect stronger relative strength comparing to your overall revenue growth outlook?
Yaniv
A great question, Martin. Thanks for that. So let's repeat some of the highlights that we ended up 2023. Not a simple year for us and more of a transition year. If we still look and do the analysis now at the end of the year, here is how it looks like. On the audio AI front, the royalty, let's start with royalties, more than doubled for us. We showed growth both in units, 56%, I believe we said, and revenue was up more than 100%. Look at the seller IoT, which is one of the top markets that we have continued to show separately from the modem and the Bluetooth and Wi-Fi. This was the third element that we started breaking down maybe a year or so or two years ago. Units were up 64%, revenues were up 47%, almost 50% in cellular IoT. So that has been working well. Bluetooth sort of flattish year over year, mainly because of the slower start of 2023. So we are flattish in revenues, which were about, or units, which were about a billion units, if you recall last year, were flattish. Very close to that, but slightly lower. And Wi-Fi continues to be one of the strongest royalty contributors, both licensing and later royalties. The units were down year over year because it was a transition year also to Wi-Fi 6, which is a newer technology and a new generation. But because of having... a new product and new customers that got in, the ASP is much, much higher. And we reached 40% higher revenues for Wi-Fi royalties in 2023. So four very or three very strong royalty contributors, that should continue in 2024. We don't know the pace. We don't know when it's going to pick up and what, but we know that the industrial... is very strong, and all of these different connectivity solutions are addressed to that as much as the consumer side. The lowlights, and Amir mentioned, is mainly the mobile, which started very low but ramped up and corrected itself. Yet to be seen how 2024 looks like on an annual basis. It's difficult to forecast. But for now, that's not one of our growth drivers. And the base station market, which suffered not just SEVA, but overall was very muted and lower in 2023, just because 5G didn't bring for the cellular networks anything. key or star use case that happens with deployment or increased deployment. That's probably going to be muted also in 2024. The rest of the technologies and the markets that we target around edge AI should work out well.
Amir Panoush
Maybe just another comment to that, Martin, related to the industrial IoT. I would say overall, completely finished this year with 23% of our total revenue. So this is definitely a significant portion of our revenue also moving forward. We expect it to grow in 2024. And more specifically, if you look at the technology that we're offering, we're getting more and more embedded with the MCU ecosystems, and specifically the industrial and automotive MCU ecosystem, with some of our connectivity offering extended to Wi-Fi more recently. and now also to some other capabilities. And in the future, we expect also Infer. And that's where we see also the synergy of our technology into the smart edge and MCU ecosystem, and specifically there for the industrial IoT market space.
Richard
Thank you very much.
Martin Yang
Next question for mobile. In the longer term, maybe two to three years time horizon, do you think mobile could recover back to that 2021 level? Or what should we look at? How should we look at mobile in the longer term in terms of amount of contribution to your company?
Yaniv
The mobile market, as everybody knows, has consolidated significantly over the last couple of years. There is a handful of players in that industry. The biggest and well-known ones are the Qualcomm and the MediaTek. There are a few very successful for many years, lower-cost solutions like Unisoc and in recent years, ASR as well. There are still very big markets in the world, replacement and new markets for low-cost feature phones. Not everybody goes and buys a $1,000 phone high-end phone. Those markets, we have very strong penetration and solutions, so that could continue. The pace of all that is not that clear, because handsets haven't been that exciting on the market or use case in recent years. And there is one other OEM that may change its modem course, and maybe things will look different in two to three years. Yet to be seen a No, I don't think anybody has the answer for that piece. The other use cases of 5G and connectivity have gone into other segments and other markets, and there we have seen licensing activity over the last two to three years, and royalties should also come from that, not the handset market per se, but private RAN and lots of other solutions that could use 5G. Hopefully that helps to answer the question. Right now, the last three or four years, if we looked at the slides we presented also on the analyst day, you could see that the overall revenue of SIVA in the last five years doubled from just shy of $50 million to more than double, $100 million coming from edge AI, smart AI devices versus the mobile devices. So mobile is still there. But the big growth comes from the newer markets that we've added on.
Amir Panoush
Yeah, and just more specifically on that, Martin, specifically on cellular IoT, that is extension of the 5G and mobile. That's where we've seen already this year very significant growth, both in consumer industrial, consumer more in smart, smart watches and those type of things where 5G or other types of technologies or technologies is getting more and more embedded. and in the industrial space also for all the different type of logistical, logistic tracking, smart tracking, and other so-called industry 4.0 use cases. And beyond, as we move towards this year and the next year, also for different type of satellite type of use cases where 5G, 5G advance will also propagate. And we believe it can create for us a nice growth trajectory moving forward.
Richard
Got it. Great, Connor. Thank you. That's all for me.
Operator
The next question comes from Chris Reimer with Barclays. Please go ahead.
Chris Reimer
Yeah, hi. Thanks for taking my question, and congratulations on the strong results. I wanted to ask about your long-term guidance around operating margin. At the conference recently, you gave a target of 20% operating margin. I'm just wondering, I realize it's a long-term target, but I'm just wondering what's the constellation, what's the makeup of actually getting there? Does that consist of increasing, expanding gross margins, or is that specifically no... expense expansion whatsoever. I'm just wondering what the moving parts around that are until you get to that number.
spk10
Deep magic. That's the way how we do it.
Yaniv
One step at a time with much more focus and this is what Amir undertook last year and we have shared with you in the prepared remarks. If you look at the overall non-GAAP operating margin of the year, we ended up with about 4%. It was stronger in the second half, 7%, 8% in Q3 and Q4. And when you look into 2024, based on the guidance that we gave, we are planning to probably double it, maybe slightly do even better than doubling it for 2024. So that's one milestone. If you reach the revenue levels that we talked about, if we execute our R&D plans and focus with the right expense levels that we have talked about, that's what that milestone will get you to. And if that continues over a few years, that's how we could, and with more royalties which bear fruit, very high gross margins and fall to the pre-tax line, that could get us to the next milestone or few milestones, it's not going to happen overnight, to taking that next stage to a 20% non-GAAP operating margin. So hopefully that gave you a little bit more color on the timeline.
Amir Panoush
Maybe just to add on that, just from the top level strategic view of that. So first this year, when we, or 20, sorry, last year, 2023, we came back to a PYP business model after the divestment of intrinsics. And with that, we guided, we will be 90% or above gross margin. And so that's on the gross margin. On the operating margin, it's really twofold. One is a continuous improvement and growth in our top line, where the guidance is just good for this year. And from that, on the long-term model that we gave in the analyst day, And then on the OPEC side is really maintaining strong focus on where we see and where we believe we'll see a long-term growth potential. One example of that is also the acquisition that we did last year of Visisonic for 3D special audio software capabilities. And very quickly, we'll be able to convert it into licensing agreements and royalty bearing with the customer, which overall has been very synergetic on the OPEC side And with that, bringing a very good profitability moving forward to our business. So both organically and non-organically, we are heavily focusing on the bottom line of how we can drive that synergy as well as the operational margin leverage as we move forward.
Chris Reimer
Got it. Thanks. That's a great color. That's it for me.
Richard
Thank you.
Operator
The next question comes from Gus Richard with Northland. Please go ahead.
Gus Richard
Yes, good morning or afternoon. Thank you for taking the question. I just want to make sure I understand the revenue guidance for the full year. Does the comp include intrinsic revenue or is it just continuing ops in terms of the growth expectation?
Yaniv
No, no, continuing. It's just the SEVA IP part of it. In transits, we took that out last quarter. This continued operation. It's not in your top line. It's not in your expense. It's just in the gap one line before the end there of this continued operation. So it's not included in the numbers. The numbers, the revenue, overall revenue numbers for last year were 97.4, and that is the basis for the growth and the percentages that we gave.
Gus Richard
That was the number I needed.
Richard
Thank you so much. No problem. Sure.
Operator
The next question comes from David O'Connor with BNP Paribas. Please go ahead.
David O'Connor
Great, good morning, afternoon, gentlemen, and thanks for taking my questions. Just one or two from my side. Maybe, Amir, firstly, one for you. Given the excitement that we're hearing around the AI PC and the AI smartphone, just wondering with your strong positioning at the edge and around IoT devices, do you think there is a wave of edge AI licensing that's in front of you that has yet to happen and you just haven't kind of seen that yet? That's my first question. And then maybe for Yaniv, just on the model again for that 6% sales growth for 2024, can you rank for us kind of licensing versus royalties, which is higher or lower than that 6% just to get an idea of the trend there? And also, do you expect to grow revenues on a quarterly basis through 2024? Thanks, guys.
Richard
Sure, David. I'll take the first one. Good morning. Sorry, can you repeat the question, David? Sorry for that.
David O'Connor
Yeah, sure. So I'm just with the excitement around the AIPC and AI smartphone and your positioning at the edge. I'm just thinking, you know, is there a way of licensing at the edge has yet to happen? Because you talked in your opening comments that kind of licensing is a bit lumpy. So just trying to put that in context with all the what we're hearing around AI.
Amir Panoush
Yeah, so definitely, David. So first, this is a focus area for us in 2024, basically delivering our NPU and overall AI portfolio into the smart edge market segments. including automotive, industrial, the consumer IoT, and later also into the infrastructure. We have already several customers that are evaluating our technology in very deep evaluation, and we expect to be able to close some of those deals during 2024. So that's definitely part of our target and also part of our expectation in terms of the revenue growth in 2024.
Yaniv
And with regards to the model, we don't break out. We never did. Again, because we don't have that crystal ball in royalties and volumes between licensing and royalties on an annual basis, we believe both could grow year over year. So again, if you look at the numbers, including intrinsic that we were just asked about, $57.6 million is the licensing and related revenue basis from 2023. We believe it should go higher and be higher in 2024. And the $39.9 million of royalties, which suffered year over year, mainly because of the base station market that we talked about earlier, should also be the basis for the growth. Not sure where it's going to end up. Both, we have them growing. Our model shows incremental growth on the overall quarter by quarter as the year progresses, with Q1 being the lowest because of the seasonality of the modem and consumer devices in royalties. Here we have a little bit more insight because we have seen that trend in recent years. And I hope I answered the question. That's high level how we see the model for next year.
Richard
Yeah, that's very clear. Thanks, guys. Thank you.
Operator
This concludes our question and answer session. I would like to turn the conference back over to Richard Kingston for any closing remarks.
Richard Kingston
Thank you, Betsy. And thank you, everyone, for joining us today and for your continued interest in SEVA. As a reminder, the prepared remarks for this conference call are filed as an exhibit to the current report on Form 8K and accessible through the investor section of our website. And with regards to upcoming events, we will be participating in the following conferences. Mobile World Congress from February 26th to 29th in Barcelona, Spain. The Loop Capital Markets 5th Annual Investor Conference, March 12th in New York. the 36th Annual Roth Conference, March 18 and 19 in Dana Point, California, and the Mizzou America's Israel Growth Conference, March 25 in New York. For further information on these events and all events we will be participating in can be found on the investor section of our website. Thank you all and goodbye.
Operator
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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