CEVA, Inc.

Good day, and welcome to the SEVA Incorporated Third Quarter 2024 Earnings Conference 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 touchtone 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, Market Intelligence. Please go ahead.

Thank you, Jason. And good morning, everyone. Welcome to SEVA's third quarter 2024 earnings conference call. Joining me today on the call are Amir Panoush, 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 materialize 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 sales pipeline and backlog, our financial goals and guidance regarding future performance, and our expectations regarding utilization of our stock repurchase program. SEVA 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 on our investor relations website. With that said, I'd like to turn the call over to Amir, who will review our business performance for the quarter and provide some insight into our ongoing business. Amir?

Thank you, Richard, and welcome, everyone, and thank you for joining us today. Our third quarter delivered another impressive consecutive performance, executing effectively against our strategic plan and exceeding market expectations. Our results are past targets with both top-line revenue growth and non-GAAP fully diluted EPS coming in above projections. Total revenue for the quarter came in at $27.2 million, up 13 year-over-year, benefiting from our innovative product offerings to the market and positive tailwinds in both our licensing and royalty businesses. Our backlog and pipeline continue to improve, and we are in a healthy position as we head into the fourth quarter and 2025. As a result, we are raising our guidance for the full year 2024, which Yaniv will elaborate on later in the call. In licensing, the third quarter produced several important milestones for SIVA that reinforce our strategy of delivering leading edge IP that enables smart edge devices to connect, send, and infer data. Highlights include the first licensing deal for our Nupo Nano Embedded AI NPU, multiple deals for our Pentagy 5G Advanced Wide Access Network and Satellite Communications Platform, and high-profile smartphone OEM customer for our real-space spatial audio software. Overall, licensing revenue came in at $15.6 million, up 12% year-over-year, with 10 deals completed in the quarter across all geographies and with multiple OEM customers. In royalties, the momentum in the consumer and industrial end markets continues, driving 15% year-over-year royalty revenue growth to $11.6 million and year-over-year royalty revenue growth for the fourth successive quarter. Before I provide more color on our business, I want to reiterate that we are steadfast in our belief that our board IP portfolio is highly synergetic with the most pressing needs of semiconductor companies and OEMs as they develop their smart edge products and rely on our unique IP to advance and augment their internal development. The level of global customers' engagement we are experiencing today is the highest that I've seen during my time with SIVA and provide us with tremendous insights and opportunities to partner with some of the world's leading phablet companies and brands across their short and long-term roadmaps. Our technology leadership across multiple core disciplines and commitment to long-term partnership is key to winning licensing deals that garner higher licensing fees, improved royalty rates, and overall better economics. The third quarter provided multiple proof points that our Connect, Sense, and Insert strategy is operating in full flow with deals signed across our IP portfolio and continuous trends of customers licensing multiple technologies from our portfolio for their products. In Connect, we expanded our market leadership and customer base in Bluetooth, Wi-Fi, and UWB with new deals across all platforms, including our newest Bluetooth 6 IP. More significantly, we signed a strategic licensing agreement with an innovative OEM for its development of a 5G advanced modem based on our PentaG 5G advanced Wide Access Network and Satellite Communications Platform. This OEM intends to build a transformative peer-to-peer satellite network installation that will enable ubiquitous 5G communications globally and bring cost-effective cellular IoT services to the masses. As the only IP provider with a comprehensive modern platform for 5G advanced communications, We are the partner of choice for any systems company or OEM looking to develop advanced wireless communications ASICs. Our leading Agile IP and deep wireless expertise significantly reduce the entry barriers for the development of these highly complex chip designs. The economics and scale of this deal reflect the trust they've placed with Inciva for these projects. and we are incredibly proud to partner with this OEM to help make their vision a reality. In addition to this strategic deal, an illustrative of the bold market opportunities we are seeing for our 5G advanced IP, we signed two other agreements this quarter, one with a leader in 5G cellular IoT modem and another with an automotive semiconductor for their next generation V2X vehicle-to-everything communication chipsets. These deals, combined with the two large deals signed last quarter and our robust pipeline for 5G advanced IP, cement CIVA's position as the leader in this market. Our market leadership translates into higher licensing fee per deal, higher royalties per unit, and creates sticky long-term relationships that are incredibly beneficial to CIVA business. In sense, we continue to expand the market penetration for our real-space spatial audio software. We signed a new licensing deal with a high-profile smartphone OEM to include real space in multiple skews of headphones and TWS earbuds, with the first products expected to launch in the first half of 2025. This OEM specializes in developing smartphone and accessories with incredible details for aesthetic design while delivering a unique user experience. Overall, we are experiencing increasing interest in our real space software in multiple categories of products due to the excellent user experience based on our superior spatial audio and head tracking technology. Our ability to deliver this software on embedded platforms across multiple architectures and on higher-end smartphone and PC platforms is a key driver for this demand. In the case of this OEM, our superior solution quality reflected in the tight integration of our special audio rendering and head tracking technologies and coupled with our capabilities to efficiently support the full product integration and tuning helped us to secure this deal. As I've mentioned previously, The royalties for software license directly to OEMs are at the higher end of our overall range, and the customers get to market faster than typical semiconductor customers involved in a lengthy chip design course. In inference, while training neural networks in the cloud is the most practical way of developing new AI models, inferencing is the path to monetizing these investments. The preferred way to inference is to process it honest on the smart edge device itself due to the near zero marginal cost of performing each query in addition to other benefits such as the lower latency and privacy. From laptops, smartphone, and self-driving cars, scaling all the way down to tiny neural networks on power-constrained IoT devices, the industry is experiencing unprecedented demand for power and cost-efficient solution to run AI on device. In line with this trend, we secured our first licensing deal this quarter for our Neupor Nano NPU, which was only introduced in June of this year, a significant milestone for our embedded AI product line. Embedded AI is highly synergetic with our connectivity and sensing offerings, from the high volume end markets we serve to the customers we work with and to the growing need for connectivity, sensing, and AI to be increasingly integrated into every smart edge device. This specific customer is an existing licensee of our Bluetooth dual-mode IP, which it ships in high volume today in their wireless audio chips. These customers require a highly efficient NPU to add to their products for audio and other embedded AI processing in order to increase performance and add new AI-based features. Newport Nano was the outstanding choice for them due to its single core, highly efficient architecture that can execute CPU, ESP, and neural networks workloads with high performance and low energy utilization, all in a small area. This deal is indicative of our belief that many of our existing connectivity customers will require an NPU for their product roadmaps and is reflected in multiple opportunities in our pipeline. Through our proven relationships based on market success together, we are very well positioned to capitalize on this and license our NIPO Nano IP, which leads to higher royalties on each device. In addition to signing the first licensee in the third quarter, we also achieved other important milestones for embedded AI. We delivered a second, higher-performance implementation of Nucleon Nano, which is available for customers now, giving them another option for their NPU requirements. And we also expanded access for AI developers to rapidly develop, train, and deploy advanced embedded machines learning applications for the Nupo NPUs via a partnership with Edge Impulse, whose platform is widely used in the AI developer community for IoT devices. These developments are part of our strategy to leverage our significant investment in AI to create a strong growth engine for SIVA. Overall, I'm incredibly pleased with licensing performance in the quarter and through the key build signs in each domain we specialize in. There is a clear indication that our strategy is working and resonating with our customers worldwide. Turning now to royalties, continuous trends in consumer and industrial IoT and markets help us to achieve 15% year-over-year royalty revenue growth and deliver the second highest quarterly unit shipment in SIVA history of 522 million units. Federal IoT units were at an all-time record high, while Bluetooth and Wi-Fi continue to be very robust. Overall, combined shipments of Bluetooth, Wi-Fi, and federal IoT surpassed 400 million units in a quarter for the first time, an impressive milestone for our IoT connectivity product line. Also, we dropped sequential and year-over-year growth of TVs and PC-powered devices by our sensor fusion software. Smartphone shipments volume were down moderately on a sequential and year-over-year basis, and muted 5G RAN shipments reflected the software environment for 5G operator CAPEX this year. Of note, we saw several of our customers ship record volume of their SIVA-powered products, reflecting a combination of improved demand and continued market share gains. particularly in the wireless connectivity space. Overall, I remain very confident in the resilience of our royalty business with many different customers and end markets contributing to the fourth consequential quarter of year-over-year royalty growth. Our royalty pipeline continues to show strong momentum with a growing number of customers preparing to launch SIVA power products, spanning wireless combo chips new 5G, and several IoT use cases, vision and sensor fusion for other systems, and special audio software, to name just a few. Now, I will turn the call over to Yanir for the financials.