CEVA, Inc.

Good day, and welcome to the SEVA Inc. second quarter 2024 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your 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.

Thank you, Jason, and good morning, everyone. Welcome to SEVA's second quarter 2024 earnings conference call. Joining me today on the call are Amir Panoush, SEVA Chief Executive Officer, and Yaniv Ariely, Chief Financial Officer of SEVA. Before handing 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 materialise or prove incorrect, could cause the results of SEVA to differ materially from those expressed or implied by such forward-looking statements and assumptions. Forward-looking statements include statements regarding our market positioning, strategy and growth opportunities, market trends and dynamics, expectations regarding demand for and benefits of our technologies, our expectations and financial goals, and guidance regarding future performance, and our plans and expectations regarding our recently filed registration statement on Form S3 and any potential future offering or capital raises and the use of proceeds therefrom. DIVA assumes no obligation to update any forward-looking statements or information which speak as of their respective dates. In addition, following the divestment of the Intrinsics business, 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, which we issued this morning and in the SEC filing section of our investor relations website at investors.ceva-ip.com. With that said, I'd like to turn the call over to Amir now. who will review our business performance for the quarter, review the year, and provide some insight into our ongoing business. Amir?

Thank you, Richard, and good morning, everyone, and thank you for joining us today. We are pleased to report an excellent second quarter that exceeded our estimates with strong licensing execution from our team worldwide. coupled with royalty growth driven by board market strength in IoT and robust smartphone shipments. We also surpassed the milestones of 18 billion SIVA-powered smart edge devices shipped to date, as our shipments volumes continue to accelerate rapidly in our IoT and markets. Our strategy to be focused on developing and licensing leading IPs that enables smart edge devices to connect, sense, and infer data is effective and highly synergistic with the growing adoption of AI across every industry. We are seeing more and more licensing deals that are driven by customer needs to incorporate more processing power, more sensing capabilities, more wireless connectivity options, and highly efficient NPUs to run AI workloads on device. No other IP company has the technology portfolio capable of addressing these three pillars required by every age AI-enabled device. And we are fully focused on maximizing our leadership position and extracting better economics per deal as a result. Licensing revenue was up 28% year over year. And our backlog heading into the third quarter is healthy, on the back of signing some very significant deals in the quarter. In particular, we signed new strategic agreements with two infrastructure OEM customers for their development of custom silicon that will enable the infrastructure that is essential for the successful deployment of hybrid AI. The future path of AI inference needs to be hybrid. with AI processing distributed between the cloud and edge devices, with more and more inferencing being performed on the end device for cost, security, privacy, and user experience reasons. Generative AI has accelerated these requirements, where GenAI developers and providers utilize multiple GenAI models using a mix of computing the cloud, data centers, and on-device. depending on latency, connectivity, availability, security, and privacy requirements. The communications infrastructure that enable hybrid AI is constantly evolving to improve performance and ensure the experience is seamless. Our customers have repeatedly chosen us for the long-term roadmap due to our DSP leadership in compute efficiency and the value we created together in past platforms. The step-up in performance we have delivered to these customers with our latest processor architecture has enabled us to extract more value per deal and will drive higher royalties per chip from the next generation products. Another notable licensing achievement in the quarter, we signed a strategic Bluetooth portfolio licensing deal with a top three US semiconductor analog company that is expanding from sensing to connectivity and AI. This customer is adding connectivity capabilities across its product offering and consolidating their Bluetooth product roadmap around Siva's IP going forward. We believe these customers have the potential to become a very high volume shipper of our IP in future years. We have a significant royalty opportunity. This deal follows on from a deal with another U.S. leading MCU player late last year, where we licensed our Wi-Fi 6 IP for their MCUs. We continue to uncover new opportunities within the U.S. semiconductor industry across our entire portfolio of IPs. As we have stated previously, the U.S. market forms an important part of our growth strategy. And these deals are clear indicators that our strategy for growth in the U.S. is achieving success. Overall, we signed 11 deals in the quarter, addressing AI solutions for industrial and consumer edge AI devices, next-generation wireless infrastructure to enable ubiquitous AI, 5G satellites, 5G REDCap, and Bluetooth connectivity for wearables and hearables. Five of the deals were with OEMs, and one deal was with a first-time customer. Now turning to royalties, board market trends across our smart edge customer base, including strong global smartphone shipments, resulted in royalty revenue going 5% sequentially and 19% year-over-year. Shipments volume grew 24% year-over-year, driven predominantly by our customers taking more market share in Bluetooth, Wi-Fi, and cellular IoT in the growing industrial, healthcare, and consumer IoT and markets. Smartphone recovered well from Q1, and our large customer, addressing the low- to mid-range market segment, is expanding its customer base with new design wins at Vivo and Xiaomi, among others. Also of note, we received the first royalties from our special audio collaboration with both India's number one hearables and wearables OEM. And one of our largest Bluetooth customers reported the first shipments of their new Wi-Fi 6 and Bluetooth 5 combo chip aimed at high volume smart edge devices, including TWS earphones, smart watches, smart glasses, and smart hearing aids. Overall, the royalty momentum we are experiencing is underpinned by our strong licensing activities in the past three years. These customers are now starting to come to market with the latest chips powered by our IP, expanding our customer base across end markets. This will continue to be a strong tailwind for our royalty business for years to come. And we continue to partner closely with our customers to ensure they successfully reach the market with their increasingly intelligent and connected product. Now, taking a step back, it has become abundantly clear that AI is a key factor in driving our business both directly and indirectly. As we have stated previously, there is no AI without sensing or connectivity. Every smart edge device requires sensing to take data from its surroundings, to which AI is then applied in order to inform decisions. And each of these devices needs to be connected to transfer this data to other devices, to the cloud, or to the network. These three use cases are inextricably linked and provide incredible opportunities for SIVA to grow and flourish. During the second quarter, we launched two new IP products that continue our AI and connectivity momentum. The first of this relates to AI for IoT devices. AI is increasingly finding its way into every device, no matter how small or power constrained. TinyML is the field of machine learning that will bring AI inferencing to billions of devices in the coming years and represents a huge opportunity in AI beyond the cloud, which most of us are familiar with today. In fact, ABI research forecasts that tiny ML shipments in IoT devices are set to grow at a CAGR of 48% throughout the rest of the decade to reach almost $3.65 billion by 2030, all running on the device. In order for this market to reach its potential, specialized neural processor units, or NPUs, are required to run the tiny ML networks in many of these devices. in a power and cost-efficient manner. Leveraging our vast experience in AI, low power processing, and the ability to handle sensing workloads in parallel, we introduced a new NPI called NewPoNano during the quarter. This NPU, which is the first fully programmable NPU to efficiently execute any complete end-to-end binary application with an optimal balance of power, performance, and area, thanks to innovative features like SIVA NetSqueeze, which significantly reduces the memory footprint required for AI in these IoT devices. This ensures Newport Nano fits the market's requirements for TinyMM-based AI workloads, from factory maintenance to consumer audio enhancement, and appeals to our broad customer base as they begin to plan to incorporate AI in their next-generation products. Newport Nano is currently in evaluation with customers, and we expect the first licensing deal to close this year, and first products in the market as soon as 2026. This is a significant opportunity for us to cross-sell this NPU into our existing customer base, where we already command leadership and are a trusted partner to more than 100 customers today. We believe that this area of AI is an untapped market and that we have the right solution to this opportunity. The second significant product launch in the quarter is SIVA Waves Links, a new multi-protocol solution for wireless connectivity. The SIVA Waves Link 110, which is the first of Link series, is already in development and integration with a lead OEM customer. Increasingly, Devices require more than one wireless connectivity standard to get the best performance and enable all the features required. Our broad customer base of Bluetooth, Wi-Fi, and UWB customers increasingly are looking to license additional IPs from us and integrate them together in a single chip. Be it Bluetooth and Wi-Fi combo for smart home connectivity or Bluetooth and UWB for digital car keys, In our opinion, there is no other IP company capable of delivering these multi-standard wireless solutions. Waves make this even easier for our customers and allows us to provide more IP per deal, leading to higher value per deal through license fees and royalties. In closing, I would like to take this opportunity to thank our teams for strong execution this quarter and to our customers and partners, for putting their trust with us. Together, we're bringing more and more SIVA power devices to market. My belief in our people and technology grows every day, and the potential of our company is unlimited in the AI era. We have the right strategy to capitalize on our unique capabilities, and we are laser focused on our execution. We fully expect to deliver on our stated financial and business targets for the year. and are committed to ensuring everyone sees and understand the value that SIVA brings as an AI-focused company through our smart edge, connect, sense, and infer value proposition. All of these in turn will unlock and create more shareholder value. Now, I will turn the call over to Yanier for the financials.