Good day, and welcome to the CEVA, Inc. first quarter 2021 earnings conference call. All participants will be in listen-only mode. If you need assistance, please signal the 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 your touch-tone phone. To withdraw your question, please press star then two. Please note today's 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, sir. Thank you, Rocco. Good morning, everyone, and welcome to CEVA's first quarter 2021 earnings conference call. I'm joined today by Gideon Wertheizer, Chief Executive Officer, and Yaniv Arieli, Chief Financial Officer of CEVA. Gideon will cover the business aspects and the highlights from the first quarter and provide general qualitative data. Yaniv will then cover the financial results for the first quarter and also provide qualitative data for the second quarter and full year 2021. 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 CEVA to differ materially from those expressed or implied by such forward-looking statements and assumptions. Forward-looking statements include statements regarding demand for and benefits of our technologies, including 5G technologies and our BlueBud platform IP and related deal flow. Expectations regarding market trends, including growth in shipments of ultra-wideband devices and true wireless earbuds and secular growth in the IoT space. Beliefs regarding benefits of the Intrinsix acquisition, as well as the closing of the acquisition. Our ability to help customers mitigate risks associated with supply constraints, and guidance and qualitative data for the first quarter and full year 2021. 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 scope and duration of the pandemic, the extent and length of the restrictions associated with the pandemic, and the impact on customers, consumer demand, and the global economy generally. The ability of CEVA's IPs 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 and IoT networks. Our ability to execute more base station and IoT license agreements. The effect of intense industry competition and consolidation, and global chip market trends, including supply chain issues as a result of COVID-19 and other factors. CEVA assumes no obligation to update any forward-looking statements or information which speak as of their respective dates. With that said, I'll now hand the call over to Gideon. Thank you, Richard. Good morning, everyone, and thank you for joining us today. 2021 is off to a robust start with strong licensing execution and royalties exceeding our expectations. During the quarter, we unveiled BlueBud, a first of its kind IP platform for the booming market of the true wireless TWS earbuds, smartwatches, gaming headsets, and other wearables. Today, we are announcing the acquisition of Intrinsix, a neighboring Massachusetts-based leading chip design and secure processor IP company with an extensive experience and solid business in the aerospace and defense market. I will elaborate shortly on these strategic initiatives. Total revenue for the first quarter of 2021 was $24.4 million, up 8% year-over-year. The licensing environment continues to be healthy with $14.4 million in licensing revenue, down 1% year-over-year. We signed 11 new agreements, of which two were with first-time customers. China continues to be a very strong market for our wireless connectivity technologies, with high adoption rate both by strong incumbents and newcomers. We are experiencing increasing interest for our 5G technologies, specifically the new 5G provision known as RedCap or Reduced Capability, which is targeted for the proliferation of IoT devices such as wearable, industrial, wireless sensor, surveillance cameras, and more. Our Bluetooth and Wi-Fi technologies continue to be in high demand for a variety of IoT devices for smart home and mobile devices. We also signed up a lead customer for ultra-wideband UWB technology that we are currently developing. UWB is a short-range wireless communication that is able to precisely triangulate location of devices with high security. It is already widely used in the automotive industry, and recently Apple, Samsung, and Xiaomi have embedded UWB in their flagship models and have gradually embedded UWB in other high-volume devices, such as the recently announced Apple AirTag. According to ABI Research, 285 million UWB devices are expected to be shipped this year and forecast to reach 1,000,000,000 devices by 2025. Royalty revenue reached $11 million, up 21% year-over-year, ahead of our expectations. This was driven by a robust demand for our consumer and IoT products and above-seasonal demand in smartphone. We believe our customer is facing tight supply constraints, as is most of the industry, and are working hard to expedite shipments for high-demand products. Let me now go through the rationale for the acquisitions of Intrinsix, which we are announcing today. Intrinsix is a leading chip design and secure processor IP specialist, targeting the growing chip development program in the aerospace and defense market and a range of our other IC designs for medical and industrial products. Intrinsix has successfully executed more than 1,600 complex chip design projects in its 34-year history and been the successful business that generate more than $20 million in annual revenue. Over the years, they have built strong relationships with leading chip semiconductor companies, OEMs, among which are Intel, IBM, Leidos, Lockheed Martin, Honeywell, and many more. Their chip design skills and expertise are scarce and include proven competencies in RF, mixed signal, digital, software, security, and RISC-V processors. With the additions of Intrinsix, CEVA stands to benefit from three growth pillars. First, extending CEVA market reach into the sustainable and sizable aerospace and defense space, a market forecasted to reach $6 billion in annual semiconductor spending. Second, increasing our content in customer design and accordingly increasing license and royalty revenue opportunity by offering turnkey IP platform that combine CEVA connectivity and smart sensing IP with Intrinsix chip design expertise in security and interface IPs. Third, extending CEVA IP portfolio with secure processor IP for IoT devices and heterogeneous SoC interface IP for the growing adoption of chiplets, which offer a faster and less expensive alternative to the high R&D cost and complexities associated with monolithic IC development. We welcome the Intrinsix team to the CEVA family and look forward to the exciting opportunities ahead. We expect the closing of the agreements to take place during this quarter. Yaniv will discuss the financial aspect of this acquisition later on. Another important product we recently introduced is the BlueBud platform IP. The proliferation of true wireless earbuds is skyrocketing as millions of workers, students, doctors, and other professions are required to spend much more time in voice or video calls and need stable and high-quality audio experience from their wireless earbuds. According to recent data from Counterpoint Research and Strategy Analytics, the TWS market is expected to reach to 600 million units by 2022 and to see 70% CAGR over the next three years. The underlying technology used for TWS has broader uses and be carried forward to smartwatches, over-the-counter hearing aids, mobile gaming, AR headsets, home entertainment speakers, and smart home appliances. With the BlueBud proposition, CEVA strives to become the de facto standard for wireless audio in the IP industry. Our unique technology competencies and holistic view allow us to address the substantial technology challenges derived from the need for extreme low power consumption and intelligible audio quality. BlueBud is a self-contained platform enabled by our high runner CEVA-BX1 DSP and incorporates all the software framework and hardware peripherals required for a wireless audio system. We also offer optional value add SDK, including our WhisPro AI-based voice recognition software, ClearVox, our echo cancellation and noise suppression software, and MotionEngine for IMU-based user control. I am pleased to share that we have already signed up a high volume lead customer for BlueBud at the beginning of the second quarter, and are expecting more deals to follow as the product is released to the wider market. In summary, we are very pleased with our solid performance in the first quarter. Our business fundamentals are strong. With the acquisition of Intrinsix, we are expanding into the aerospace and defense market and enriching our value proposition and content by offering patent IP platform and new IP for security and HSoC interface. With our technology-based core competencies and customer relationship, we are well positioned to capitalize on secular growth in the IoT space. Lastly, we are monitoring closely the impact on the industry-wide supply constraint, and will help our customers to mitigate their risk and challenges where we can as they become empowered. With that said, let me hand over the call to Yaniv for the financials. Thank you, Gideon. I'll start by reviewing the results of our operations for the first quarter of 2021. Revenue for the first quarter was up 8% to $25.4 million as compared to $23.6 million for the same quarter last year. Revenue breakdown is as follows: licensing and related revenue is approximately $14.4 million, reflecting 57% of our total revenue, just slightly lower than $14.5 million for the first quarter of 2020. Royalty revenue was up 21% to $11 million, reflecting 43% of our total revenue, compared to $9.1 million for the same quarter last year. Royalty gross margin was 91% on a GAAP basis and 92% on non-GAAP basis, both better than what we projected. Non-GAAP royalty gross margin excluded approximately $0.1 million for equity-based compensation and $0.2 million for the impact of the amortization of acquired intangibles. GAAP operating expenses for the first quarter were just over the high end of our guidance, at $24.4 million. Our total operating expenses for the first quarter, excluding equity-based compensation expenses and amortization of intangibles, were $20.7 million, also just over the high end of our guidance. Tax expense for the first quarter came higher than expected due to an uncommon revenue mix in which the majority of our revenue recognized are associated with our connectivity products, Bluetooth and Wi-Fi, originating in France, which is a higher corporate tax rate of 26.5%. In ongoing basis, our corporate tax rate should be lower and in line with our original expectations, but mainly prudent on the outcome of the revenue allocation mix. U.S. GAAP net loss for the quarter was $3.6 million, and diluted loss per share was $0.16 for the first quarter, as compared to a net loss of $1.2 million and $0.05 loss for the first quarter of 2020. Our non-GAAP net income and diluted EPS for the first quarter were $0.3 million and $0.01 respectively. This is compared to the first quarter of 2020 with $3.2 million of net income and zero or $0.11. With respect to other related data, shipped units by CEVA's licensees during the first quarter of 2021 were 341 million units, down 30% sequentially and up 31% from the first quarter of 2020 reported shipments. Of the 341 million units shipped, 129 million or 38% were for handset baseband chips, reflecting a sequential decrease of 41% from 217 million units of handset baseband chips shipped during the fourth quarter of 2020, and a 16% increase from 111 million units shipped a year ago. Our base station and IoT product shipments were 212 million units, down 21% sequentially and up 41% year-over-year. As for the balance sheet item, as of the end of March 31st, CEVA's cash equivalent balances, marketable securities, and bank deposits were $174 million. We did not exercise our buyback program this quarter as we focused on the Intrinsix acquisition and the expansion in the business. Upon closing the deal, our cash balances will be reduced by approximately $33 million in acquisition consideration as well as deal cost. Our DSO for the first quarter was 49 days, similar to the prior quarter. During the quarter, we generated $15.2 million of net cash flow operation, depreciation expenses and amortizations of $1.5 million, and the purchase of fixed assets was $1.1 million. At the end of the first quarter, our headcount was 412 people, of which 346 were engineers, up from a total of 404 people at the end of 2020. Now for the guidance. We continue to experience a healthy licensing environment and pipeline is solid. Royalty, we believe our customers are still dealing with industry-wide supply constraints, which may prolong for the remaining of the year. With that said, the demand for products based on our technology is strong, and our customers, with our support, are working fearlessly to fulfill their purchase orders. We announced earlier today, we agreed to acquire Intrinsix and expect to close the deal later in the quarter. From a financial point of view, we expect Intrinsix to contribute between $10 million-$11 million to CEVA's top line in the second half of the year, and that this deal will be accretive as early as 2021 on a non-GAAP basis. We'll provide more information on the next earnings call. On the back of this, we forecast our new total revenues for 2021 to be between $116 million-$117 million, compared to about $100 million in 2020. This is subject to the Intrinsix acquisition closing on the anticipated timeline. Specifically for the second quarter of 2021, gross margin is expected to be approximately 89% on GAAP basis and 91% on non-GAAP basis, excluding an aggregated $0.1 million of equity-based compensation and $0.2 million of amortization of other assets. OpEx for the second quarter should be lower than the first quarter. For the second quarter, GAAP-based OpEx is expected to be in the range of $22.9 million-$23.9 million. Of our anticipated total operating expenses for the second quarter, $2.9 million is expected to be attributed to equity-based compensation and $0.6 million to amortization of intangibles. Our non-GAAP OpEx is expected to be in the range of $19.5 million-$20.5 million. Net interest income is expected to be approximately $0.45 million, and taxes for the second quarter are expected to be around $0.7 million on both GAAP and non-GAAP bases, in line with our prior expectations and models. Share count for the second quarter is expected to be approximately 23.5 million shares. Rocco, you could now open the Q&A session. Thank you Thank you. We will now begin the question -and -answer session. To ask a question you may press star then one on your touch-tone phone. [audio distortion] To withdraw your question, please press star then two. Today's first question comes from Matt Ramsay with Cowen. Please go ahead. Thank you very much. Good afternoon, good morning, everybody. Congratulations on the acquisition, Gideon. Maybe you could give us a little bit more background on Intrinsix, your relationship with them. Have you guys collaborated with them on other projects in the past? If you could walk us through what are the particular pulls from the aerospace and defense and government sectors for technologies that are appropriate for CEVA's portfolio, which pieces you might have had in-house, which pieces you're acquiring. Looks like a good deal. Anyway, we externally weren't familiar with the company. I imagine a lot of your investors weren't. If you could give us a little background, that would be great. Thank you. Good morning, Matt. Let me start by explaining about Intrinsix and the rationale for us to do. It's very hard to find such a skill set under one roof, that they can do complex design, involve different disciplines like RF, mixed signal security, which everybody has to do it in the IoT, and do it all the way from specification to a design. We found this company, and they have a 35 or 36-year track record of doing such projects. Now, with that in mind, we plan to take advantage of it in two gross pillars. One is security and aerospace and defense. This is a market that we were looking to expand into in conjunction with what you do in the consumer and the telecom market. It's a big market. It's DSP-intensive because you do a lot on radar GPS, you do a lot of DSP processing, and they have designs. They have a very solid business. In general, aerospace and defense, you have big spendal system companies. It's a high entry barrier to penetrate, but once you are there, it's for the long haul. What we plan to do there is basically increase the content, because we can bring in our DSP in conjunction of the design that they do and the customer that they have, and with that in place, get exposure to a market that anyway we plan to do, and a much faster exposure and higher content with our IPs on the portfolio that we're going to do. That's one pillar. The second pillar is what we call internally a turnkey IP or what we define a turnkey IP. There are many system companies today that want to build a chip to create a competitive edge. Those guys, not all of them can build a design team because this is, again, a scarce resource, very hard to find, take a long time to build a cohesive design team. Those guys go either to ASIC company or other way, or ASSP company and want them to change. What we plan to do is take our IP, and if you take TWS is one example like BlueBud, and basically come to the customer with a proposition that not just will surround IP with other hardware and basically provide to the customer the design of the chip, but then they can go directly to the foundry and manufacture the chip. This is something that we see lot of interest from customers coming and requiring such capabilities to do it. You can think it's a very equivalent to what AMD is doing in semi-custom. When AMD design chip for PlayStation or Xbox, they bring in their IP and provide the design for Sony or Microsoft. Same thing, a different example, close to what the market that we are in is what led Marvell to acquire Avera, because Marvell had the IP and Avera can do the tailor-made design for the customer. We are not going to do chip manufacturing. We'll be IP company, but we allow our customers to go directly to the foundry and not take any intermediary in between. That's the second pillar. The third pillar is IP that we didn't have. This is the secure processor IP. This is something that you have to have in any IoT device. IoT is our main market. If you don't do it, you'll be hacked. They have the technology. They deal with it for many, starting from back DARPA projects. The other IP that they bring in is what is called SoC, which is hybrid SoC, and this is basically chiplets. Going back to those system companies, very difficult, very complicated to do a monolithic SoC, like what Apple is doing in their chips or semi companies is doing. Chiplet is basically, you take different die and connect it under what is called interposer. You combine them into one chip. In trinsix, strategic relationship with Intel, that is the leader in this area and one of the anchor of their foundry strategy, the new foundry strategy. We will be looking to capitalize on this. That's all the consideration that led us for this transaction. Intrinsix is very familiar with DSP, is very familiar with our technology. We didn't have projects in the past, but we already communicate and shared with key customer this capability and got good feedbacks. Great. Thanks, Gideon, for all the details there. Good luck with the deal. Thank you. Yaniv, a couple of financial questions. One set is on the acquisition. I think you said on your script, $10 million - $11 million for the back half of the year. If you could give us any sense of the rest of the P&L of the acquisition around margins, OpEx taxes, things like that. I guess the second part of the question is on the core business, the tax rate in the March quarter, very different than any of us had modeled. I get the mix of revenue between Europe and the U.S., et cetera, and Asia. It sounds like something must have went differently in the quarter than you guys had forecast initially in terms of revenue mix. If you could enlighten us on that would be great. Thanks, guys. Let me answer Matt's second question about to give you a background for the revenue mix that we do. This revenue mix came with, I would say, unexpected surge in revenue. We start seeing things in the second half of last year where the demand of our connectivity product, we saw much stronger demand that we do. What happened late in the year and in this quarter is that it comes with a more comprehensive agreements with customers. They are looking for the portfolio for technology. They are looking for architecture, a license. These are much more expensive product line. In the Q1, we had the kind of a concentration of at least two or three large agreements, in the connectivity space that basically, we didn't anticipate this demand, but on the other hand, it's good news because you talk about large customers that are willing to pay, and appreciate our technologies. Take that very strange mix that even for us was a surprise. Gideon explained, part of the surprise, one of the deals are many million-dollar deals with a leading handset OEM. It all happened in France. Tax rate is much higher, so the concentration was almost everything in France in the first quarter. On an annual basis, that will level out. We see it as just something very awkward, but had a large payment to that top line. When we add the next couple of quarters at the same run rate that we talked about last quarter, on the annual guidance, we did give 22% and said that France has more business these days, not in the level of Q1 across the year. If you go back to the normal mix of revenues between Israel, U.S., Ireland, not just France, we should be back in more normal territory in this. We have never seen that type of concentration in France yet, and I don't see that repeating itself in the near future. It could happen, but it's very rare. I think from a tax perspective, we will have a higher tax dollar for overall the year. The percentage in the next couple of quarters will not change. We kept the model the same, the 22% with a higher Q1. With that said, we see the stand-alone before Intrinsix, we already added or adding about $1 million to our prior guidance. Instead of the $106 million, we're looking more like a $107 million for this year. This is CEVA stand-alone, higher taxes, and a very solid entry into the second quarter. Gideon talked about the pipeline. I mentioned what we see both in royalties and in licensing. We don't give quarterly revenue guidance, but we are looking and feeling very comfortable with at least the licensing environment that we have control over. Over the year, that itself could close the gap or start closing the gap versus the higher Q1 taxes. If you add to that Intrinsix, which you had a good question, top line, we're adding maybe $10 million of revenues in the second half. I would look at operating margins of about 10% for this type of business. On that front, we should have a tax benefit in the U.S. when we combine that business with CEVA. All in all, that is going to be accretive based on the current model that we have today with actual Q1 and its higher taxes. That should be able to also offset the Q1 expenses. All in all, better revenues for the year, specifically with the Intrinsix acquisition, if all closes on time. Some recovery, maybe even all of it, we just don't know, and we don't guide for EPS, we just give the trends in the business. We could see some corrections on those few cents that were lost in Q1, making it either from higher revenues or just more expense monitoring and things like that. Better normal tax rates for the rest of the year. No, thanks, guys, for all the details there. Really appreciate it. Thank you. Sure. Thank you, Matt. Our next question today comes from Suji Desilva with ROTH Capital. Please go ahead. Hi, Gideon. Hi, Yaniv. Congratulations on the Intrinsix acquisition. Based on your last few acquisitions, I'd be expecting good things from this one as well. Can you talk about the competition for Intrinsix and also the secure IP, the RISC-V IP, what opportunities there are to take that outside the air defense market? Hi, Suji. Good morning. You were broken. The only thing that I managed to capture is the question about secure IP. Anything in the other question? Oh, the competition, Gideon. Yeah, Gideon, the competition. The competition. Okay. Security is basically a complete solution based on RISC-V. It's a hardware-based platform that was developed on a few projects for the DARPA, and the security or secure IP is a very dynamic market because threats are being developed or innovated every day, and you need to find a way to somehow detect and deal with it. Intrinsix has this platform available. As a company, they didn't do IP business thus far because that's not where the focus here, they couldn't afford doing both things. We have the platform, we have the sales channels to do it. In terms of competition, Rambus is a competitor. I think these are the main competitor. As time goes by, we look more closely on the competitive landscape and add our own flavor to make it IP business. For us, it's an easy licensing add-on because we come to the customer with a basket. We have the connectivity, we have the sensors, and now we are adding security into the mix. Okay. Very helpful. Thanks. Perhaps on the current royalty run rates, the wireless infrastructure market, 5G infrastructure, can you talk about how that's been trending this quarter, last quarter, this quarter, and then what the outlook for the rest of the year is, including perhaps new customers coming online as well? Yeah. The trend is positive. We see the growth moving both on a year-over-year and also on a quarter-over-quarter. I would say that it's a bit slower than we thought about it, and we see it across the board because it's a matter of the operator or capital spending on the next wave or the next services in 5G, which are small cells in the private network. It's moving, and no question about that it will come. In terms of customer, we have one customer. Another customer publicly said that it goes into production in this quarter, so we are positive. Maybe I'll add some color, Suji. Sure. Some other factors of the base station IoT, Bluetooth was up 84% year-over-year in royalties, and our sensor fusion was up 51% year-over-year. These are pieces of IP that, like now with Intrinsix, we bought over the years, we invested there, and we see the fruits in recent years. Hopefully, that's what we'll see in a few years from Intrinsix as well. But the overall growth in the first quarter also positively surprised us. And for now, our customers, especially in the IoT space, the consumer devices, TVs, robot cleaners, were super strong in the first quarter, which is obviously an anomaly because they're usually the post-Christmas quarter, and that was not the case this year with COVID around. Okay. Appreciate the color. Thanks, guys. Thank you. Our next question today comes from Tavy Rosner with Barclays. Please go ahead. Hi, this is Peter Zdebski on for Tavy. Thanks for taking my question. I wondered if you could comment on the type of growth that Intrinsix has had historically, and maybe your going forward expectations, say, one or two years out, given some of these synergies and customer overlap that you discussed earlier. Okay. Hi, Peter. The Intrinsix as a standalone business is a growing business. We saw from their financial, it's a consistent growth starting from 2007, where they really turned the corner in the aerospace and defense. The aerospace and defense space is a growing space, more spending by the DoD in semiconductor. It has highest priority than 5G from DoD standpoint, and also highest priority than AI. Intrinsix is basically growing by taking more projects, more lucrative projects. That they bring in as an inertia. Now, what we are adding to this one is what we think is the IP. When we go to the defense, we're going to present to the prospect, the customers, the IP that we have, and most of them, they need the DSP there or connectivity things that we have. The other thing that we're going to go is to go to our end customers. A lot of them are now coming to us to purchase IP, and we come to them, why don't you take, we do for you the whole design, including IP, because we are the expert in IP, and we have the most experience in internal understanding on combined IP with the design around the IP. That's initiative that we're going to take is, and as I mentioned, they also bring in IP that we're going to add it to our IP. Let me try to summarize. If we are looking on a half year for this year, we are looking at $10 million. Obviously, with simple math, you could double that for next year. On top of that is the pillars that Gideon talked about growth will give more color after we close the deal and when we get closer to 2022. There's no doubt that with CEVA on board and bringing these together, that $20 million we see it as a growth driver in the next couple of years, both organic and the non-organic is the combination of services and IP. Okay, great. That's helpful color. Thank you. Just wanted to ask about the licensing results, given that revenues were pretty strong sequentially, but the deal count was a bit lighter. Was that simply related to some of those deals last quarter that were signed but not yet recognized in revenues? Yeah. This is a question we are always asked. We said it's not that important to divide the thousand dollars by the deal count. Some we are not able to recognize. Some, specific in this quarter, is a very large deal that we talked about earlier with a handset OEM, which was a multimillion-dollar deal. At the end of the day, if you look at $14 and something million, this is the fourth time ever that CEVA was recording a $14 million and higher in its history. It was all in the last year, in five quarters that it happened. Started Q4 2019 for the very first time, then again in Q1, again now. This is just to show that this combination of new markets and new technologies have worked out well, and the pipeline for us and the backlog for us for the second quarter is as strong. Great. Thanks again, and congrats on the quarter. Thank you. Our next question today comes from Martin Yang at Oppenheimer. Please go ahead. Hi again, Yaniv. Thanks for taking my question. First, I want to ask about the turnkey IP business model, and can you comment on how long are the design cycles, and does that usually involve just one-time fees from customers or maybe higher royalties as they choose to go with turnkey IP? The timeline or the design cycle depends on the complexity of the project, and it could range between six months to one year. This is the magnitude of the project. In terms of payment, it will be the extra component that we are familiar, a license fee for the IP, NRE for the development, and royalties. It will be higher because we combine both for the combination of the design and the IP. Great, thanks. Can you also comment on the development of Bluetooth new LE Audio? It's been announced for over a year now. How are the adoption rate in the market, and do you see that as a meaningful driver for your Bluetooth products? Yes. Indeed, it does carries a big potential. The platform that we announced, the BlueBuds, support both the BLE audio and the classical Bluetooth. The BLE audio is not yet deployed in mass market because we have lot of legacy to support. The BlueBuds support the dual mode, which is a combination of the BLE and the classical Bluetooth. The benefit of BLE audio is substantially higher than the classical Bluetooth, is more modern one. We expect this to be mainstream, but it's going to take a few years. Thanks. I have no more questions. Thank you. Our next question today comes from David O'Connor at Exane BNP Paribas. Please go ahead. Great. Good morning. Thanks for taking my question. Maybe, Gideon, just going back to the Intrinsix deal. Just to clarify, was the business entirely design services as it exists today? I imagine they get paid per NRE, per design. Is the plan to transform that existing business of theirs into more classic CEVA licensing and royalties and where you get paid per shipment versus just NRE on a design? On that NRE side of things, how scalable is that? Because it's all relative to the number of engineers that you have and the ability to kind of rapidly grow that part of the business. That's my first question. A follow-up on the ultra-wideband. Can you just give us a quick overview of the ultra-wideband, how many customers you have today? Is this your first customer in ultra-wideband? What the pipeline looks like, and what is the end application for this customer, in terms of end market? Thank you. Hi, David. Let me start with Intrinsix. Indeed, the Intrinsix model is an NRE basis, they get paid through the resources that we put in this project. The model under CEVA will be a hybrid of both, too, because they will continue in the primary market into this model and add licensing or IP, which is just a license fee and royalties. When it comes to what we call the turn-key IP, here it's more of a back containment, meaning higher royalties, that it's more close, as you pointed out, to what we do in the IP model. We'll get NRE for the project. Think about the same thing that what people in the semiconductor are doing. They take some burden of the cost, so the payment will be higher than the cost, but on the back end, you get higher royalties. That's in terms of Intrinsix. Ultra-wideband, it's a very promising space that we decided to do. We have a lead customer. We didn't finish the design. It will take us few more months to finish the design. In terms of go-to-the-market strategy, that's another entry point to the mobile. What we have in the handset space in terms of baseband, and last quarter, we signed another big deal of connectivity, meaning people are using our technology, not for the baseband, but also for the connectivity side, Wi-Fi and Bluetooth, and that was an agreement that some of it came into revenue this quarter. This was a very big agreement. That's a way to get into the mobile ecosystem or mobile customer base through the connectivity. Ultra-wideband will be a third entry point into the market. I believe that most of the flagship model will include ultra-wideband because people would like to see the benefit of precise location, and the AirTag of Apple is just one example to do it. I believe that going forward, they'll put it in TWS and watches because you tend to forget those all over the place. It's a technology that we decided to develop. We have the resources working. We have a lead customer that assume the direction that we do, and it's a big market. I put the numbers in the $1 billion, as far as I recall, by 2025. Very helpful. Thanks, Gideon. If I could just squeeze one in for Yaniv. Yaniv, maybe I missed it, but the gross margin for Q1 that you mentioned, I think it was better than expected. What was it within the mix there that drove that better than expected gross margin? Thanks, guys. Sure. Two things. One, sometimes we do some type of customization or changes to our customers when we license in some products. In Q1, because most of the deals were Bluetooth and Wi-Fi, and that's a standard, almost off-the-shelf, we had less of a mix of R&D cost that we needed to bring up to the cost of goods. That was one reason, and that's why we had more mature deals coming out of France, because that's usually 100% recognizable with no additional work. The second, because the DSP also was lower than the normal mix, we had less payments to the Israel Innovation Authority in a normal course. These are the two elements that brought up slightly, but nicely, the margins. Understood. Thanks, guys. Thank you. Ladies and gentlemen, this concludes the question- and- answer session. I'd like to turn the call back over to the management team for any final remarks. Thank you, Rocco. Thank you all for joining us today and for your continued interest in CEVA. As a reminder, the prepared remarks for this conference call are filed as an exhibit to the current report on Form 8-K and accessible through the investor section of our website. With regards to upcoming conferences and events we will be attending, we will be attending the Needham Virtual Technology and Media Conference, May 17th, Oppenheimer's 22nd Annual Israeli Conference on May 23rd, the Cowen 49th Annual Technology, Media and Telecom Conference on June 1st, and the Baird 2021 Global Consumer Technology and Services Conference, June 8th through Jun 10th. All of these conferences we will be attending virtually. For further information on all these events we will be participating in, can be found on the investor section of our website. Thank you and goodbye. Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.