CEVA (NASDAQ:CEVA) Q1 2020 Earnings Call

0:00 Good day and welcome to the SEVA, Inc. first quarter 2020 earnings conference call. All participants will be in this mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, you will have an opportunity to ask questions. To ask a question, you will press star then one on a touch-tone. To withdraw your question, please press star then two. Please note, this event is being recorded. and now I'd like to turn the conference over to Richard Kingston, Vice President of Market Intelligence, Investor and Public Relations. Please go ahead, sir.

0:36 Thank you, Rocco, and good morning, everyone. Welcome to FIVA's first quarter 2020 earnings conference call. I'm joined today by Gideon Wertheiser, Chief Executive Officer, and Yaniv Arieli, Chief Financial Officer of FIVA. Gideon will cover the business aspects and highlights from the first quarter and provide general qualitative data and Yaniv will then cover the financial results for the first quarter and also provide qualitative guidance and data for the second quarter and full year 2020. I will start with the forward-looking statements. Please note 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.

1:26 Forward-looking statements include guidance for the second quarter of 2020, our anticipated pillars of growth, including 5G RAN and Wi-Fi 6, and optimism about achieving such growth objectives, optimism about certain of our customers gaining market share in 5G, our ability to manage our non-GAAP expense levels to mitigate the adverse impact of the pandemic in the coming months, and market data by Cisco and ABI Research. For information on the factors that could cause a difference in our results, please refer to our filings with the Securities and Exchange Commission. These include the duration of the COVID-19 pandemic, the extent and length of the shelter-in-place and other restrictions associated with the COVID-19 pandemic, and the impact on customers' demand and the global economy generally, the ability of SEVA's IP for smarter connected devices, to continue to be strong growth drivers for us, our success in penetrating new markets and maintaining our market position in existing markets, the ability of new products incorporating our technologies to achieve market acceptance, the speed and extent of the expansion of the 5G Wi-Fi and IoT markets, our ability to execute more non-handset baseband license agreements, the effect of intense industry competition and consolidation,

2:56 and Global Chip Market Trends. SEVA assumes no obligation to update any forward-looking statements or information which speak as of their respective date. With that said, I'll now turn the call over to Gideon.

3:12 Thank you, Richard. Good morning, everyone, and thank you for joining us today. Firstly, our heartfelt sympathies are with those around the world that have lost their loved ones or their jobs due to the COVID-19 pandemic. We are all hopeful that the measures taken by governments around the world will lead to a sustainable recovery. At CIVA, we are taking proactive steps to protect all our employees' health and adjust our operations to work from home. Our IT infrastructure is advanced and scalable, which allowed a seamless migration from office to work from home.

3:59 Our ongoing R&D development remains at a high level of productivity, and our interactions with customers for sales and support activities are smooth. We continue to monitor government instructions country by country and are taking careful steps to enable our employees to return to our offices. Against this backdrop, we have an excellent quarter with revenue of $23.6 million, up 39% year-over-year. The licensing environments continue to be robust, and we recorded $14.5 million in licensing revenue, up 32% year-over-year.

4:49 We signed 13 new agreements, of which 10 were for connectivity and three were for smart sensing. Three out of the 13 deals were with first-time customers. Clouded applications for technologies include 5G for base station run, 5G fixed wireless access, 5G backhaul, Wi-Fi 6 for IoT devices, full wireless earbuds, vision and AI for drones, and voice assistance for a range of smartphone and IoT devices. Royalty revenue came in at $9.1 million, up 53% year-over-year.

5:41 Above seasonal weakness in the Chinese handset market resulting from the COVID-19 lockdown in China was more than offset by solid IoT-based product shipments and the introduction of new low-cost models from a leading smartphone company. Let me take the next few minutes to provide you with additional perspective on two growth vectors that are central in our strategy, 5G run and Wi-Fi 6. These spaces represent secular trends and are expected to come increasingly into focus on the back of COVID-19 as they are key to enabling better work from home practices and support the proliferation of the use of robots, remote medical diagnosis and treatments in the future.

6:49 On 5G-1, Our largest 5G OEM customer extended the use of our technologies and signed new licensing agreements during the quarter for development of next-generation 5G chipsets to address the 5G Phase II network services. The services include ultra-reliable low-latency communication, UR-LLC, targeting robotics, smart manufacturing, automotive, medical, and massive machine-type communication, MMTC, that enables billions of low-powered sensors to be connected to the cloud for aggregation and AI services.

7:42 LLC and MMTC will drive the upcoming capital investment in 5G and are the focus of our customers with their new run design. In this context, a few weeks ago, we unveiled our latest generation DSP, the SIVA XC16. This is the most advanced and powerful DSP platform available today, offering unprecedented performance and State of the Art Architecture, Innovation in Operating Speed, Parallel Processing and Multi-Threading. We are also encouraged by the recent traction our customer, VP, has had in 5G.

8:28 Today it has 45 commercial contracts and most recently won 29% share of a $5.2 billion contract to deploy 5G base station for China Mobile, a substantially bigger share than it had in prior engagement for China Mobile. On Wi-Fi 6, we are experiencing good momentum and customer interest with two new agreements signed during the quarter, targeting a variety of IoT devices, ranging from BTV, smart set of boxes, smart speaker, to smart door locks.

9:15 Wi-Fi 6 is the latest Wi-Fi standard, also referred to as A2211AX. According to Cisco forecast, nearly 60% of mobile data traffic worldwide will be offloaded to Wi-Fi network by 2022. According to recent study from ADI research, the Wi-Fi 6 market is forecasted to reach 2.2 billion units by 2024, as compared to less than 300 million in 2019. The recent FCC approval to free up additional spectrum at the 6 GHz band will enable compliant Wi-Fi 6E devices to achieve speeds comparable to 5G mobile networks, support low latencies required for applications like virtual and augmentation reality, and Mobile Gaming and is also expected to boost the industry 4.0 update for smart manufacturing.

10:29 So in summary, our thoughts are with those people suffering from the impact of COVID-19. While the situation is still dynamic, we are encouraged by the persistent design activities of our customers and interest in our products. We are laser-focused to continue to expand our business to capitalize on the momentum we gained last year. We are closely monitoring the dynamics and developments concerning our customer shipment and will take prudent steps until COVID-19 impact is contained and supply and demand resume some normalcy.

11:16 We hope you are all safe and look forward to meeting you face-to-face again in the near future at conferences and workshops. With that said, I'll hand over the call to Yaniv for financials and guidance. Yaniv Arieli Thank you, Guido, and good morning. I'll start by reviewing the results of our operations for the first quarter of 2020. Revenue for the first quarter was up 39% to $23.6 million, as compared to $17 million for the same quarter last year. The revenue breakdown is as follows. Licensing and related revenue was approximately $14.5 million, reflecting 61% of our total revenue, 32% higher than $11 million for the first quarter of 2019.

12:11 Multi-revenue was $9.1 million, reflecting 39% of public revenue, 53% higher than $6 million from the same quarter last year. Quarterly gross margin was 88% on gap basis and 90% on non-gap basis, slightly better on non-gap than we originally forecast. Non-GAAP quarterly gross margin excluded approximately $0.2 million of equity-based compensation expense and $0.2 million of the impact of amortization of required intangibles. Total GAAP operating expense for the first quarter was at the higher end of our guidance at $22.5 million. Topics also included an aggregate equity-based compensation expense of approximately $2.9 million, higher than forecasted due to the accounting associated with the February 2020 CSU grants to manage it.

13:18 OPEX also included $0.6 million for the amortization of acquired intangibles and $0.9 million Allowance for doubtful debt provision associated with liquidity difficulties for one of our customers in the U.S. Total operating expense for the first quarter, excluding equity-based compensation expenses and amortizations of intangibles, were $19 million, also at the higher end of our guidance. U.S. GAAP net loss for the quarter was $1.2 million and diluted loss per share was $0.05 for the first quarter of 2020, as compared to a net loss of $2.3 million and diluted loss per share of $0.10 for the first quarter of 2019.

14:13 Our non-GAAP income and diluted EPS for the first quarter increased by 9.5-fold and 11-fold, respectively, to $12.6 million and 11 cents. Other related data. Shipped units by SEVA's licensees during the first quarter of 2020 were 261 million units, down 27% sequentially, but up 50% from the first quarter of 2019 reported shipping. Of the 265 million units shipped, 111 million units, or 43%, were for handset baseband ships, reflecting a sequential decrease of 43% from 196 million units of handset baseband ships shipped during the fourth quarter of 2019.

15:20 but a 25% increase from 89 million units shipped a year ago. Our base station and IOT product shipments were 150 million units, down only 9% sequentially and up 76% year-over-year. We've now categorized all of our non-enhanced baseband ships under the umbrella of BaseStation and IoT products. As for the balance sheet, as of March 31, 2020, SEVA's cash, cash equivalent balances, marketable securities, and bank deposits were $151 million.

16:06 We continued our buyback plan this quarter, repurchasing approximately 202,000 shares for approximately $4.8 million. In February, our board of directors approved the new expansion of the buyback plan by a total of 700,000 shares available for repurchase. As of today, 498,000 shares are available for repurchase. Our adjusted AST 606 DSOs for the first quarter of 2020 were 63 days. During the first quarter, we generated $6.4 million in net cash from operations.

16:54 Our depreciation and amortizations were $1.5 million, and the purchase of fixed assets were $0.8 million. At the end of the first quarter, our headcount was 391 people, of which 324 were engineers. up from a total of 382 people at the end of 2019. Now for the guidance. As mentioned by Gideon, we continue to execute well in our business strategy during the first quarter and have had an excellent first quarter in licensing and royalty revenue despite the disruption caused by COVID-19.

17:43 Although we continue to work diligently towards our goals of meeting annual revenue guidance given on the last earnings call, the spread of COVID-19 around the world and the extent of this disruption it exposes on the supply chain and on consumer demand cannot be fully assessed at this point. Given this uncertainty, As a matter of prudency, we have decided to withdraw our annual royalty revenue guidance at this stage. On the other hand, our licensing and related revenue business remains robust, and we're maintaining our annual forecast of growth of $2 million to $4 million over 2019 record annual results.

18:35 We will also continue to monitor closely our non-GAAP expense levels to mitigate any adverse impact of the pandemic in the coming months. This will not affect our research and development plans, technology roadmap, or customer support, as we are firmly committed to those areas and believe those technology investments will pay dividends in the future. As we have seen from prior cycles, IP companies play a crucial role in expediting the semiconductor market recovery and with closing technology gaps that such slowdowns can create.

19:24 Specifically, for the second quarter of 2021, gross margin is expected to be approximately 86% on gap and 88% on non-GAAP basis, including aggregates of $0.2 million of equity-based compensation expenses and $0.2 million of amortization of other assets associated with the EmerVision investment. OPEX for the next three quarters of 2020 should be lower than the first quarter. For the second quarter, GAAP-based OPEX is expected to be in the range of $21.2 to $22.2 million.

20:09 Over anticipated total operating expenses for the second quarter, $3.7 million is expected to be attributed to its equity-based compensation expense. Such expenses are higher than originally forecasted due to the accounting treatment of our February 2020 PSU grants to management. And $0.6 million will be attributed to amortization of acquired intangibles. Therefore, our non-GAAP office is expected to be in the range of $17 to $18 million. An interest income is expected to be approximately $0.75 million.

20:54 Taxes for the second quarter are expected to be approximately $0.3 million on both GAAP and non-GAAP basis. Share count for the second quarter is expected to be at 23.2 million shares. And, Rocco, you can now open the Q&A session for us. Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, we ask you to please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. Today's first question comes from Matt Ramsey with Callen. Please go ahead.

21:39 Thank you very much. Good afternoon and good morning. Gideon, it's really nice to see the momentum in the licensing business continue. And I noticed over the last couple of earnings calls, you've talked more and more about Wi-Fi 6 and also expanding your 5G portfolio beyond just the baseband, but to some additional areas as well. Maybe you could I think you're highlighting two major growth engines for us. It's a

22:34 It's the result of two things. One is the market. I'll get into this in a minute. And the second one is the landscape of suppliers. So these are two significant technologies that there are not that many companies that have the competency to do it. But they do need to get into this one if they want to benefit of what these technologies are offering. So if you take the 5G specifically, and I touched on the one which is the base station, radio access network, and the related thing. There are very few companies that can build a base station today. And those companies, a key element in their capability or ability to build this one is to use ESP that is not around anymore. We are the only company that can offer ESP like XE16 that takes you not just to what people are thinking today about 5G, which is the mobile broadband, the smartphone, but also the next generation or the phase two where people start putting into place autonomous driving, smart manufacturing,

24:07 remote medical things that we start seeing today at the back of the coronavirus. So we are here in a position as the only viable proven supplier that can take advantage of the 5G. And an aspect of this one is what is called now 5G all-run, open-run. One of the things in the States are important in order to build Independency of, let's say, Chinese OEMs or dependencies to go to what is called open run, which is more disaggregation or disconsolidation of supply or dependency on one OEM.

25:01 So we are the only company that can enable those companies to get into the market and take advantage or run and provide portion, either in the antenna side or in the base station. So that's about the 5G run in general, which is we build throughout the year a big entry barrier for any company, including those that want to build it in-house. And then comes the Wi-Fi, which becomes now a competitor to 5G, especially when it comes to the residents and the enterprise of the fixed.

25:46 and the fact that you have today Wi-Fi 6E, which basically doubled of the Wi-Fi. and provide area that is clean of congestion. Let's take the Wi-Fi succeed beyond what we know, all of us know, it's PC and the handset into the access point in the enterprise or at home. People will stay more at home. They need faster networks. and going into industry 4.0, which require robotics, require this kind of fast and reliable access to the web. So these are two anchors of technology that we are the only viable supplier of the technology for those companies that wants to be in this market either through the consumer part of it or through the industrial part.

26:58 Got it. Thank you for the cover there, and it sounds like some really good progress. I wanted to, obviously, Yaniv, I didn't understand the lack of visibility with the guidance, particularly on smartphone units, but I think it struck me that So I'm not mistaken, this is the first quarter where more than half of the royalty units were non-handset. So we've seen a shift there. And I know a number of years ago, you guys talked about some targets, about some big numbers of non-smartphone baseband units. And it seems like the IoT franchise is really starting to come together as we all kind of wait for the bigger 5G units to come in base station. But any color you could give on the breakdown of some of the Thank you.

28:08 Yeah, sure. It was an interesting quarter, unlike prior years. We did see more than seasonal decline in the Chinese, specifically in the Chinese markets and manufacturing markets. of Chinese phones going to different areas of the globe, offset by a newer, low-cost, well-known OEM that came out with a lower series in a different interesting timing, which usually is not in the beginning of the year, but usually in the September timeframe in prior years. That was on the handset side. You are right that this is probably the first time that our non-handset units for the quarter, which is $150 million, were stronger than the handset business of $111 million.

29:04 Thank you very much. The industry has, in Q1, in normal years, has changed a bit. In some segments of the market, of course, sensor fusion is new for us. We had it this quarter. We didn't have it a year ago, so that was helpful. But even among the other traditional markets for us, like Bluetooth, for example, it was a very strong quarter, although it was the seasonal weakest quarter of the year for consumer devices. So maybe some people at home still needed different devices.

29:53 Maybe there was specific needs for different markets that still played nicely. And we saw that the sequential decrease in the new category that we called our base station in IoT was only 9%. This is overall very low compared to any first quarter we ever had before. But this is the combination of the reasons. and no doubt that this new segment, at least new name of Base Station and IoT should continue to help us grow the business and grow the loyalty forecast that we have. With this strange limitation this year that it's not traditional seasonality anymore, It's not traditional second half, which in the last two years were stronger than our first half. It may be the case, but we just need to wait and see due to the coronavirus effect.

30:50 Got it. And just one last quick one. You mentioned down to $17 to $18 million for OPEC. Thank you, too. Is that just organic sort of belt tightening, any kind of? I know there's been R&D grants in the past and there's been specific government funding things that have moved around since we've had the coronavirus situation. So anything unusual in the OpEx or is that just the run rate we should expect going forward? Thanks.

31:19 Sure, so we set up in the prepared remarks. We are sort of monitoring this and trying to tighten whatever we can from the expense side without hurting the R&D. You're right that in Q1, the grants were much smaller. Some of the government agencies were closed and we didn't get as much payment. Q4 to Q1, there was a decrease of a million dollars in grants, for example, so it's a big number. will play around the year, and that's why the next couple of quarters are lower than the first quarter. We also had an unusual effect for us of some doubtful debt and some U.S. company that got into financial difficulties and liquidity with corona and related, so we had a bigger provision of $0.9 million in the first quarter.

32:10 All that with less travel, less trade shows, more virtual events than what you could see in other companies. We are also taking measures here and trying to come up with ways to offset any risk in the royalty revenues in the next couple of years, if they will be so. and our next question today comes from Mike Walkley with Canaccord Genuity. Please go ahead.

32:45 Thank you and congratulations on the strong results in the tough environment. Just a question for me on the A-station or wireless infrastructure market. You know, with Nokia starting to highlight the progress of reef shark shipment, you know, picking up quarter over quarter and expected to do so through year-end and and VTE doing quite well on 5G contracts. Can you just talk about maybe, I know you're pulling growth guidance just because there's so much uncertainty in the world, but can you talk maybe what you're seeing on the infrastructure side is it certainly seems like the need for broadband that bothers puts and takes overall infrastructure spending looks to be one of the areas more on track than maybe the consumer-driven handset markets.

33:31 You're right. It looks to us that the 5G infrastructure is somehow resilient to the impact of the coronavirus. This is an infrastructure investment. Contracts are being out. The China Mobile had about $10 billion. It's sizable, and they will continue. And we see our customers are benefiting. You know, it's a process from the point you win a deal until you see it on the financials about six months.

34:18 So we are encouraged and we'll see how it evolves in the coming months.

34:25 Great, thanks. And just my follow-up question on the licensing side, it's great to see you still expect to increase $2 million to $4 million this year. Can you just talk about, you know, with so much travel restriction and work from home, you know, how your team is able to virtually work with your clients to ensure that you can execute on this project? Thank you.

34:46 I have to admit that for us it came as a surprise the effectiveness or the productivity that people get when it comes to interaction with customers. If I take an example of China, They start working and they are logging immediately after the Chinese New Year where the coronavirus just was on the peak. And the way licensing works, there are Different things that you can show to the customer about a demonstration, and that's something that you can do from a remote, late access, but most of the work is evaluation, Q&A, presentations, and this was smooth and ongoing, like people are doing face-to-face. This was not the personal relationship that people are going out together, but all Other than this, the practice of licensing was as usual. And the fact that at least what we saw so far, people didn't slow down development and planning and wanted even to expedite it.

36:17 That's the reason that we see what we saw in Q1 and the pipeline that we have ahead.

36:22 Great. Thank you. And I, too, look forward to the day we can all get together again in person. Good luck this year. Thank you. And our next question today comes from Suzy De Silva with Roth Capital. Let's go ahead.

36:41 Hi, Gideon. Hi, Yaniv. Congratulations on the execution in a tough environment, certainly. Can you talk about the activity you've seen in licensing and royalty quarter to date, the linearity in the activity, whether it stayed relatively linear in licensing and any signs of recovery in royalty or whether it's just too hard to say at this point?

36:59 Suji, so let's go with the licensing. I think other than the fact that I mentioned the hotspots about 5G and Wi-Fi 6, Wi-Fi 6, you see many companies going into and building products, and these are consumer products and access points. It's just a new cycle of the Wi-Fi, and we see more people because we have more smart devices today, DTVs, smart door locks, and so that's why. I would say that in licensing it's all across the board. We have AI portfolio, we have computer vision, we have sound, we have, of course, Bluetooth. People want to build a lot of earbuds, hearing aids. So I cannot say that there is a star there.

37:49 It's all over the place. And the uniqueness of SIVA is our... The synergistic portfolio, the people that are building any connected device, they need connectivity, they need some form of sensing, whether it's a camera sensor, a microphone sensor, or IMU sensor, they need something, and they find it in one spot when it comes to us. Now, when it comes to the linearity of the world, it's hard for us because we don't get orders from customers. We just get reports of what was most often done. But what we see around us, speaking with customers, is that what we call now IoT and base station, this is something that more or less goes according that we expect it to be more or less as we anticipated in this year.

38:47 There are less people buying, on the other they need more stuff while they stay at home and of course the 5G is ongoing. The question mark is about smartphones. People are saying the Q2 will be weaker than Q1 and then There will be some gradual recovery, maybe L-shaped, maybe V-shaped, nobody really knows how to go there. But I think generally Q2 will be weaker than Q1, primarily at the break of smartphones, and then depending on the release and how countries will go out of this virus, of this lockdown, Thank you, Gideon.

39:48 It's a very helpful call. I appreciate that. And then on 5G wireless infrastructure, you have a series of licensing wins here and seems to be more activity there. Should we expect that your royalties in the next one or two years will still come from the two large customers, or are there additional or smaller customers that are coming into the 5G industry? Royalty Mix in the next year or two, that would be helpful to know.

40:08 Thank you. That's an important question, Suji. We have other customers as well. The 5G run market is what is called heterogeneous. We have not that many, but few other customers that want to go into the 5G run market and play there in different form factors there.

40:52 Okay, and then just a quick follow-up there. Will the ASPs be similar to the base station ASPs you've quoted, which are significantly higher than the existing ASPs?

41:00 Thanks. They are going to be higher. In the base station chips, they're much more expensive and bigger physically, bigger chips with many more ESP implementations inside. So part of the The royalty that we get is based on the chip size, and here it's a question if it's a smaller hotspot for home or a bigger base station, or what type of base station it could have multiple disciplines from a light bulb all the way to mega-sized base stations with dozens of chips inside and dozens of implementations inside. So I think we'll have lots of different flavors.

41:45 Right now we have one customer in production. We're waiting for the other one to kick in later this year, the beginning of next year, and then the newer ones that joined in the last probably 12 to less than 24 months. And these were the ones that Gideon mentioned just a minute ago.

42:05 Okay. Thank you, guys. Thank you. And our next question today comes from Tabi Rosner with Barclays. Please go ahead.

42:21 Hi, congrats on the strong results. Most of my questions have been asked, I guess. Hi, sorry, can you hear me?

42:32 Yes, go ahead.

42:37 Hi, can you guys hear me? Just a follow-up. Last quarter, you mentioned the traction you were seeing for the automotive. And I'm wondering if that's still the case. And then as a follow-up, just looking at the cost flexibility you have, if I'm just looking at the worst-case scenario where we would see a second wave of COVID and some pressure on your revenues, Do you have any flexibility to kind of decrease cost temporality on some of your non-R&D spend?

43:22 Sure, I'll start today with a second question because I think we answered that and talked about this. We are looking and monitoring closely the cost basis. Some are helpful just because of the COVID, less travel, less events, which we're doing indifferently virtually like the rest of the world. These are obvious cost savings, less office time to some extent in some offices and related costs. We are looking at other ways to be more creative and cost efficient. and this is, you could see that as early as the guidance we gave for Q2 in the non-gap of 17 to 18 million dollars for the quarter, so this already makes some of that into account.

44:14 I'll tell you, in regard to the automotive market, we are, when we do the license with automotive and we speak about traction, about Thank you very much. So, you know, one quote here and there is not that substantial, but so far, in terms of this design, the discussion that we have with customers about new design is ongoing.

45:02 Great. Thank you. And our next question today comes from David O'Connor with AXA and BNP Paribas. Please go ahead.

45:14 Great. Good morning, and thanks for taking my question. Maybe one or two kind of follow-ups on my side. Maybe firstly on the Yaniv, on the base station royalty in Q1, any color there in how much that was or the change relative to Q4, quarter over quarter? Then maybe one follow-up from the last question on automotive. In terms of engagement there due to the COVID-19, any change in kind of the interaction on the licensing side? And then maybe a third one on the sensor fusion. Can you remind us on sensor fusion what type of seasonality you've seen there in the past so we can try and do some kind of modeling around that going forward? Thank you.

45:54 Okay, David, I got the first question and the third question. The second question maybe Yaniv heard because I didn't. We may ask you to repeat it. But the first question was about the 5G royalties. You know, we don't break down specifically on those segments. We have 5G and IoT in general. But... There was a disruption in the 5G because people couldn't go and work and install those base stations, but that's temporary. They will get back to work and then we'll see. So far we maintain what we thought, that when it comes to 5G base station, it's the same. We don't see any change from what we thought at the beginning, that this would be a gross year in this respect.

46:42 Now, in terms of sensor fusion, sensor fusion is something that IMU, which is the Inertia Measurement Unit, It's a very broad market. So there are consumers, we have customers in the PC, we have customers on the TV. So you don't really can talk about seasonality. It's a highly fragmented market and what we are looking here is just the trend. We are expanding our customer base in the addressable market. Overall, it's one segment out of our IoT segment, and so far, when it comes to what we see so far in terms of interest, it's very well.

47:39 Thanks for that. My question was on automotive. Automotive.

47:46 And what was the question? Because I couldn't hear. You were broken.

47:50 Yeah, sorry about that. Just to repeat on the automotive side, any change on the licensing of automotive in terms of engagement you're seeing in Q1? Thank you.

48:04 I don't think we have a change in the automotive engagement. I think there was a question before. When we license something, it's for programs that go until 2024, the earliest. So a quarter here and there is not something that changes people, especially when it comes to design. And that's what we see in terms of design activity, prospective customers, there is no change. And since we don't have royalty there, so we cannot, in a way, we are not impacted from obvious slowdown that we have in the automotive market.

48:51 Got it. That's helpful. Thanks, guys. And, ladies and gentlemen, this concludes the question and answer session. I'd like to turn the conference back over to Mr. Kingston for any final remarks.

49:03 Thank you everybody 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 at investors.seva-dsp.com. With regards to upcoming events, we will be participating in the following event shortly. Thank you, sir. This concludes today's conference call. You may now disconnect your lines and have a wonderful day.