Good day, and welcome to the CEVA, Inc. second quarter 2022 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 presentation, 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 today's event is being recorded. I would now like to turn the conference over to Richard Kingston. Please go ahead. Thank you, Rocco. Good morning, everyone, and welcome to CEVA's second quarter 2022 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 highlights from the second quarter and provide general qualitative data. Yaniv will then cover the financial results for the second quarter and also provide guidance for the third quarter and full year 2022. I'll start with the forward-looking statements. Please note that today's discussions contain 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 market trends and dynamics, including anticipated growth in the wireless component of the global semiconductor market, our and our customers' gains in market share, and the future of 5G and Wi-Fi, our market position and strategy, including the strength of our technology offerings and efforts with respect to our co-creation business proposition, impacts of global economic uncertainty and COVID on our business, including royalties, demand for and benefits of our technologies, and expectations and financial guidance regarding future performance, including for the full year and third quarter of 2022. 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 the duration of the pandemic, including continued restrictions in China, the extent and the 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 markets, our ability to execute more base station and IoT license agreements, the effect of intense industry competition and consolidation, global chip market trends, including supply chain issues as a result of COVID-19 and other factors, and our ability to successfully integrate Intrinsix into our business. 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. CEVA produced solid second quarter financial results despite the challenging macroeconomic backdrop and disruption in production schedule because of the lockdown in major cities in China. Our strength in wireless, a space that according to a recent study by McKinsey, will be responsible for 25% of the growth in the global semiconductor market over the next 5 years, continues to drive our business and enable us to expand our footprint in the growing market of 5G, wearable, hearable, automotive, aerospace and defense and more. Revenue for the second quarter came at $33.2 million, up 9% on a year-over-year basis. The licensing environment continues to be strong, delivering $22.1 million in quarterly revenue on the back of 22 licensing agreements with customers targeting a multitude of wirelessly connected devices, AI-driven sensors, satellite communication and more. We also signed a strategic agreement for Bluebud wireless audio technologies in the wearable space, which I will touch on later. Asia continues to be a major driver for our business, but our activities and scope of engagement with US-based customers is picking up. Royalty revenue came in $11.1 million, down 26% on a year-over-year basis. Second quarter 2021 royalty revenue included revenue of approximately $3.3 million following a resolution of a disagreement on royalty rate with the customer. Carving out the $3.3 million amount, royalty revenue for the second quarter of 2022 was down only 4% versus the second quarter of 2021. In handset, global economic uncertainty and the impact of COVID measures in China are causing consumers to adopt cautionary approach with their disposable income, which adversely impact handset shipment, particularly in the low and the mid-tiers. Our base station and IoT royalty category showed resilience as 5G rollout continues in China and into countries with low 5G penetration rate today. Our cellular IoT and Bluetooth customers continues to gain market share, with both categories deliver year-over-year unit growth. Let me spend the next few minutes to highlight recent dynamics in the wireless space and how we are addressing them. Unarguably, wireless continues to be a cornerstone in the proliferation of intelligent IoT products that bring together wireless connectivity, sensor and AI into highly efficient SoC. At the back of this trend, CEVA has become the wireless anchor to more than 300 semiconductor companies as they shape the intelligent IoT ecosystem. By being at the forefront of wireless standards and offering it under IP business model, CEVA lowers the entry barrier for embedding wireless connectivity in SoC and enabling many semis to come out with more cost-effective and power-efficient chips than the repurposed smartphone connectivity chips that Qualcomm, Broadcom and MediaTek are selling into these markets. In that sense, our leading wireless IP, along with the critical role wireless technology plays in IoT SoC, opens up opportunity for us to elevate our business engagement with, from a delivery of just the IP core tower, a position where we co-create with the customer its own wireless system. We are already experiencing very good interest with this business proposition and see this as a vehicle to grow our revenue base. In the quarter, we concluded a comprehensive agreement along the co-creation business model with a U.S.-based customer. This agreement was driven by top-tier OEM who will deploy our Bluebud integrated wireless and audio IP platform across multiple SKUs for smartwatches, hearables and other wearable devices. The wearables market is the second largest market after mobiles in terms of volume. Recent devices offer high quality 3D audio, AI-based noise cancellation, voice recognition and IMU-based contextual awareness. These are technologies that CEVA offers to customers in addition to our processors and audio IP technologies. Another discussion that we are having with wireless customers today is about the co-existence of 5G and Wi-Fi, and whether one will eclipse the other. Our view is that they will continue to coexist, and in many use cases, they are in fact complementary to each other. 5G offers robustness in the form of security and low latency with its ultra-reliable low-latency URLLC standard. Deploying Wi-Fi networks, on the other hand, is simpler as the IT department is more familiar with it than with 5G. At the Mobile World Congress, MWC event earlier this year, an event that historically dedicated to cellular, there were a number of major Wi-Fi 7 announcements indicating that the cellular industry understands that 5G and Wi-Fi coexistence will continue to play an important role. Cisco, a long-term and dominant Wi-Fi player, commented at MWC that 5G and Wi-Fi must coexist in private networks. These market dynamics and our strengths both in 5G and Wi-Fi IP provide us with significant potential to expand our relationship with new customers by offering them a one-stop shop for both technologies. Excuse me. In summary, we are satisfied with our financial performance in the second quarter against the backdrop of a challenging and uncertain macro environment. Our IP portfolio is trying to address the most exciting and crucial technology trend. Our ability to step up and partner with customers for their wirelessly connected SoC design through our co-creation business model is compelling. We will continue to focus on driving our strategic vision of enabling semis to make their products smart and wirelessly connected. With that said, let me hand over the call to Yaniv for the financials. Thank you, Gideon. I'll start by further reviewing the results of our operations for the second quarter of 2022. Revenue for the second quarter was $33.2 million, up 9% compared to $30.5 million for the same quarter last year. The revenue breakdown is as follows. Licensing and NRE related revenue was $22.1 million, reflecting 67% of our total revenue, up 42% as compared to $15.5 million in the second quarter of 2021. Royalty revenue was $11.1 million, reflecting 33% of our total revenues, down 26% from $14.9 million in the second quarter of 2021. Second quarter 2021 royalties included revenue of approximately $3.3 million following a resolution of a disagreement on royalty rates with a customer. After carving out the $3.3 million, royalty revenue for the second quarter of 2022 was down only 4% versus the second quarter of 2021. Base station and IoT royalty revenue contributed $7 million in the quarter, flattish from the first quarter and up 6% year-over-year, despite the impact of the lockdown in major cities in China on some of our Chinese customers and the overall challenging macroeconomic environment. Gross margin was 79% on GAAP basis and 82% on non-GAAP basis, slightly better on GAAP and in line with our non-GAAP expectations. Non-GAAP quarterly gross margin excluded approximately $0.3 million of equity-based compensation expenses and half a million dollars of amortizations of assets associated with Intrinsix acquisition and innovation investment. Our total operating expenses for the second quarter were $26.6 million, below the low end of our guidance of $27.1 million and the first quarter expenses of $27.5 million, mainly due to improved FX environment and the timing of the Israel Innovation Authority grants received in the second quarter. OpEx also included aggregated equity-based compensation expenses of approximately $3 million, amortizations of acquired intangibles of $0.3 million associated with the cost of the Intrinsix acquisition. Our total operating expenses for the second quarter, excluding equity-based compensation, amortizations of intangibles, were $22.6 million, also below the low end of our guidance of $23 million and the first quarter expenses of $23.4 million, due to the same reason I just stated. On the tax front, we continue to implement the tax regulations in France, named the IP Box tax regime, enabling our corporate tax rate to be lower than the statutory 25% on specific types of revenue. We also recorded a benefit related to a true-up of the French 2021 tax return, which was partially offset by higher withholding tax expenses associated with future utilization in our Israeli subsidiary. GAAP other income included half a million dollars net loss from the remeasurement of a marketable security associated with Cipia, formerly Eyesight Technologies, a leading provider of in-cabin sensing solution in the automotive industry that went public on the Tel Aviv Stock Exchange in the fourth quarter of 2021. As we explained in the past, we continue to adjust our investment quarterly up or down based on the market valuation of those shares. GAAP net loss for the quarter was $1.1 million and diluted loss per share was $0.05 compared to a net income of $0.3 million and $0.01 for the second quarter of 2021. Our non-GAAP operating income was $4.6 million, down from $6.3 million for the second quarter of 2021, and our non-GAAP net income and diluted EPS for the second quarter of 2022 was $4.3 million and $0.18, respectively. Other related data. Shipped units by CEVA's licensees during the second quarter of 2022 were 433 million units, down 18% sequentially and down 4% for the second quarter of 2021 reported shipments. Of the 433 million units shipped, 83 million units or 19% were for handset baseband shipments, reflecting a sequential decrease of 17% from 100 million units of handset baseband shipments shipped during the first quarter of 2022, and a 40% decrease from 138 million units shipped year-over-year. Our base station and IoT product shipments were 349 million in the quarter, down 19% sequentially and up 11% year-over-year. Of note, Bluetooth shipments were up 35% year-over-year to 255 million units, and cellular IoT shipments were up 12% year-over-year to 20 million units. As for the balance sheet, as of the end of June 2022, our short-term and long-term cash and marketable securities balances were approximately $146 million. With last quarter's share price levels, we activated our buyback program and repurchased approximately 136,000 shares during the quarter for approximately $4 and a half million. As of today, 362,000 shares are available for repurchase. Our DSO for the second quarter was slightly higher than the last two quarters due to the lockdown in China that caused slower collections and came in at 42 days for the quarter compared to 32 days in the prior one. During the second quarter, we used $8.1 million of cash from operations. Depreciation and amortizations were $2 million, and the purchase of fixed assets were $1.2 million. At the end of the second quarter, our headcount was 492 employees, of which 411 are engineers. Slightly higher than the total of 487 employees at the end of March. As for the guidance. As evidenced for the first half of the year, our licensing, NRE, and related revenues were strong. Also, as Gideon explained, our technology offering and co-creation business proposition resonate well with our customers and present new opportunities to grow our revenues. In royalties, despite the challenges in the macro environment, we continue to expand in the base station and IoT segment through the gradual rollout of 5G base stations enabled by our technology and see continued share gains in wearable, hearable, and IoT products at large. With that said, we are monitoring the implications of the economic uncertainty, and that we experienced in the second quarter associated with the handset royalties as we get closer to the holiday season and as the COVID restrictions in China are being lifted. Specifically for the third quarter, gross margin is expected to be slightly better than the second quarter, at approximately 81% on GAAP basis and 83%-84% on non-GAAP basis, excluding an aggregated $0.3 million of equity-based compensation expenses and $0.5 million of amortization of other assets associated with the Intrinsix acquisition, NB-IoT and Immervision business and assets. OpEx for the third quarter of 2022 is forecasted to be slightly higher than the first quarter of this year. GAAP-based OpEx is expected to be in the range of $27.6 million-$28.6 million. Of the anticipated OpEx for the third quarter, $3.4 million is expected to be attributed to equity-based compensation expenses, $0.1 million to the amortizations of acquired intangible assets, and $0.3 million associated with the Intrinsix acquisition. Our non-GAAP OpEx is expected to be in the range of $23.1-$24.1 million. Net interest income is expected to be approximately $0.4 million, and the taxes for the third quarter are expected to be similar to the first quarter, approximately 25%-27% non-GAAP tax rate or about $1.7 million. Taxes generated from the new 10% lower tax rate on specific revenues from our French activities would be offset by tax expenses associated with withholding and the future utilizations in our Israeli subsidiary. Share count for the third quarter is expected to be approximately 24.2 million shares for non-GAAP EPS calculations. Rocco, you can now open the Q&A session. Thank you. Thank you. We'll now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Today's first question comes from Matt Ramsay at Cowen. Please go ahead. Good morning. Good afternoon, everybody. Thanks very much. Yaniv, I couldn't help but notice there in your guidance commentary for t he third quarter and the back half of the year that you guys didn't really talk about revenue. I'd be remiss if I didn't ask the question. If you could give us a little bit of help there on just the trends you're seeing in the different end markets and how you guys think about revenue trending. Obviously, there's caveats around the macro, but I think that's gonna be the question that most folks wanna ask here. Let's just see what we have to say on revenue. Thank you. Sure. Good morning. I'll start, and Gideon will jump in as well. We are not giving guidance on a quarterly basis. True to the fact for many years now that our customers under 606 revenue recognition rules, we report what our customers report in the same quarter itself. You know, we don't really get, and you guys also don't get visibility from the cell phone manufacturers and the OEMs and the Bluetooth-enabled devices and a lot of the other OEMs, how much they actually plan to sell, and therefore, giving guidance on a big portion of our royalties, of our revenues, which are the royalties, under 606 has been very difficult. We have stopped doing that because the data does not exist. With that said, there are some very positive trends in our royalty business, and that's around the base station IoT. We managed with all the uncertainty that you asked and mentioned to grow that portion of the business 6% with the lockdowns and the rest of the macro concern. A lot of it this time around, every quarter it comes from a different market that's stronger than others. This time around, we saw growth in very strong growth compared to Q1, for example, in the 5G base station RAN. We saw continued growth in Bluetooth devices on a year-over-year basis and cellular IoT devices on a year-over-year basis. That trend continues. I think it should be there for a long period of time. Every quarter, a different market, a different segment could pull in or be the driver for those royalties. I think because we are powered in so many devices, 1.6 billion last year, and the numbers are looking quite solid for this year as well, the weakest link in the other category of royalties is not coming from base station IoT, but from the handset side. In handsets, there are many companies that came out and explained the industry. We saw a weakness in China and China-related countries, low-end to mid-tier type of phones, smartphones. This is where the uncertainty relies. It could move in different directions, partially because of the lockdown, partially because of concerns. Eventually, there are needs for those low-end phones. We saw more resilience on the high end, Apple and Samsung's results. We saw, at least in the second quarter, less in the low end, which could fix itself in the later part of the year. Those are the two moving pieces in the royalties. Gideon, happy for you to comment in a minute as well. That's more of the uncertainty that we are seeing around us. We have experienced this second quarter specifically in handsets. When you look at the licensing environment, it's still robust. We came out with a strong second half last year with $21.5 million. This year for the first quarter of the year, for the first time ever, two quarters in a row, we're above $22 million. The shutdown in China, if they did affect consumer demand, as we said, it did not affect technology companies to continue to do design wins. You know, after two and a half years of COVID, companies know how to run their R&D sites offline and from work, from home. We have continued to see very strong demand in licensing, and we don't see that, at least in the near future, for the upcoming quarter slowing down with new offerings. I think that's the commentary we made. We haven't changed the annual guidance. We don't know exactly where we'll find ourselves with that. But on the other hand, you saw the numbers for this quarter as well. The expenses are slightly better. FX environment is helping us, and that could offset some of the risk to the bottom line. Sorry for the long answer, but I tried to cover all the basis. Yeah. Matt, let me just highlight two things regarding the royalties. Obviously, COVID was a tailwind or headwind, I would say, on handset revenue, handset royalties at the low end, I would say low end, concentrating on the low end a bit in the mid. The way we see it is, OEMs are a bit prudent in piling up the inventory. Prefer to clean up inventory in preparation. You know, we are getting to the second half of the year, and we see more prudence there at the OEM level. When it comes to the low-end market, we were in this position several times. When there is some kind of a macro event that affect the economy, the low end, the handset is the first thing that impacted, but it's the first thing to recover, and it could be a fast swing, when this uncertainty goes. That's where we see it now. We have the product. 5G is where the opportunity is enhanced. 5G mid-low end is where our customers are focusing and they have the product in place. We're discussing price, of course, design wins with Xiaomi and OPPO and of course there is the India side of things. As soon as this cloud of uncertainty will somehow clear up, we're going to see this coming back strong. When it comes to the base station, I think Yaniv covers properly. We talk about a diverse product and the diverse market. I would say we see the CEVA goes all over the place because our customers are coming every quarter with new product. It's shared gain. It's growing. It's not just, you know, growing with the market, but above the market because there are new products coming from our customers. The handset is something that impacted us, but the rest is well. Great. Thank you both guys. I really appreciate all the commentary there, and we certainly do appreciate the uncertainties that are out there. Just as my follow-up question, I'll keep it quick and I'll get back in the queue. Yaniv, I think you guys gave some commentary in the script about the amount of smartphone units that were in your royalties. Could you also sort of quantify how much of the royalty revenue in the second quarter was in the handset market, just so we can calibrate risks there? Thank you very much. Yeah, sure. We continue to give this, these numbers quarter after quarter. Out of the $11.1 million, $7 million were base station IoT, and the $4.1 million were handset related. Thanks, guys. Appreciate it. Sure. Thank you. Our next question today comes from Kevin Cassidy with Rosenblatt Securities. Please go ahead. Yes, thanks for taking my question, and congratulations in this tough market of having good numbers. But you showed 22 new IP deals, and you're very impressive with that. You know, last quarter was only 14 new deals, but the revenue is about the same. Can you say, is there a trend there for smaller deals? Or, you know, maybe just give us a feel for what happened in that mix. Good morning. We answer that from time to time. I don't think that taking the revenue and divide it by the number of deals gets you anywhere. Some deals that were signed are not delivered, because if we don't know the customer and we don't know its financial background, we don't recognize and don't deliver the technology before we actually get paid. There is a little bit more complexity around the number of deals they get signed versus the average amount. I would say that in every given quarter, we have one or two bigger deals for millions of dollars, and we could have smaller deals for a single use or for some software elements or work in the hundreds of thousands of dollars, and we could have deals, and usually do have deals in the $2-$3 million-dollar type range. I wouldn't take one. You cannot, from those numbers, get to one answer or the other. It's a combination of large deals, small deals, recurring customers, 5 new customers that we have never had any business with. Some we deliver immediately and recognize. Some we don't deliver because we don't know the customer, its financial background yet, and we only wait for the payment, so it's a. Some work that we do, whether it's NRE or some special customizations, and that gets recognized over a few quarters without counting that as a new deal every quarter, obviously. It's a combination of all these three or four elements. Okay. Understand. Just make sure it's not a trend. The Intrinsix. You didn't say much about, you know, some of the pipeline that you're working on there. Can you give us some feel for the Intrinsix's opportunities? Yeah. Intrinsix has a strength in the defense market. The defense market has its own dynamics, and usually it's a large project. What we are adding now under the umbrella is CEVA is our new customer base. We already signed few designs in respect to CEVA customer base that come to us and after understanding what Intrinsix can contribute, asking for such designs. What we're discussing in the call about the co-creation business, where we come to the customer and take the lead on the wireless system, Intrinsix has a significant role because those guys are the integrator of IPs. Okay. Thank you. Thank you. Our next question today comes from Suji DeSilva at ROTH Capital. Please go ahead. Hi, Gideon. Hi, Yaniv. Gideon, you talked in the prepared remarks about having cellular and Wi-Fi and the coexistence. Can you talk about the advantages of CEVA of being in both markets, along with, you know, just having strong opportunity in each one, maybe the synergy between them? The synergy between Wi-Fi and 5G. Well, there's a lot of technology synergy between Wi-Fi and 5G. They use the same, especially Wi-Fi 7 and 5G, they use the same modulation mechanisms to go. With that said, the way we deal with customer is that we see the Wi-Fi as the local area network, and 5G is the WAN, the broad network. When we go to customer proposition, we basically, it's two technologies that we put together. It's two components of our offering, and we deal all the integration between the two. Customer, we see more and more customers asking for both technologies, either in order to address larger markets, or go to what is called access point or fixed wireless access, where on one hand the internet is coming into their home through 5G and spread over the LAN through Wi-Fi. Okay. That's helpful, Gideon. Thanks. On the 5G infrastructure base station side, can you talk about how many customers you're ramping today basically versus 12 months ago? Is there any inflection in the upcoming quarters or maybe the macro would impact that? Any thoughts there on how 5G is gonna ramp up from here? First of all, in terms of customer, we have two big customers that take us to the macro base station, the largest base station. We have several other customers that you know expose us to different other markets like small cells and other. Now, 5G, and that's what we like and believe in 5G is extremely ubiquitous so on one hand and also come with new form factor of 5G. We have things like private networks. We have MIMO antennas. Only the strong survive. We have O-RAN, Open RAN. These are all vectors that extend the TAM, the total available market of 5G. We approach all of them. I think I heard Nokia saying that outside of China, 5G network is only in 15% of the available market, 15%. Think about the opportunity ahead of us in terms of geographies, in terms of India, it's a big market. And another thing, it's a high entry barrier because if you have the relationship with experience, it's very difficult to create an alternative. That's helpful, Gideon. Thanks. Thanks, everybody. Thanks to you. Our next question today comes from Chris Reimer with Barclays. Please go ahead. Oh, hi. Thank you for taking my question. I wanted to ask about operating margin. You mentioned in your comments that you might be seeing some benefit or de-risking. I was just wondering if you could give a little color around what's going on there and what the moving parts are. Yeah, sure. Great question. When we added Intrinsix and added both NRE services and the co-creation of licensing both, and offering both IPs and services and designs of chips or blocks, it obviously took our margins down from the 90s that we were for many years to the low 80s, anywhere between 80 to 84-ish type, 85%. That's where we sort of are in the sweet spot in our understanding of the existing market until new royalty payers will come in from that new business model. With that said, the simple combination of the same level of licensing of 22+ and higher royalties than where we are now with the $11 million for Q2 gets you to slightly better margins. It's just technicalities here. Nothing has changed in the business. It's just the mix of licensing versus royalties. The higher the royalties, obviously, in the future as well, the higher the margins will be, but we don't see it going anywhere higher than that 83%-84% for the time being, until the new royalties from this business kick in as well. That's what the margin and the understanding for the guidance for Q3. Got it. Just touching on M&A, are you seeing any changes perhaps or any thoughts on pipeline now that we've seen some valuations come down recently? Seriously, you know, our barrier of not doing M&A too frequent is not necessarily only from valuation or valuation at all, but it's more of what's the right next step for us. What is the new technology, the new market, the new add-on that we could grow the business quicker and faster and add more offerings to the semiconductor industry, whether it's in hardware or software or IP. That's really where the merit is. There's no doubt that it's a little bit of an easier environment to look for ideas and better pricing. But our dilemma of what is the next step for CEVA to continue its growth and expedite it, really comes from what is right, not how much it will cost. It's a factor, but let's find the right technology. We have multiple ideas, by the way. We have multiple different projects that we're looking into with different collaborations and different ideas that we wanna target, and we're actively looking. Nothing right now on the agenda, but that's something that we continuously want to add on to our offerings. Great. Thanks. Thanks for the color. That's it for me. Okay. Thank you. Our next question today comes from David O'Connor with Exane BNP Paribas. Please go ahead. Great. Good morning. Thanks for letting me ask a question. Gideon, maybe going back to the strategic agreement of co-creation with the customer, can you just talk around the catalyst that drove that decision? You know, why now? Also maybe, Yaniv, related to that, can you talk around the impact on the model from the kind of co-creation relationship? I have a follow-up. Thanks. Let me, you know, explain the rationale from customer standpoint to go to this proposition, and maybe Yaniv can add implication on the model. The rationale from the customer is, if you want, as a company, to get into the wireless space, and you are not MediaTek, Broadcom, and Qualcomm to some extent, it's a huge entry barrier 'cause it's the. You need to deal with things that are not just complicated in terms of technologies and integration with RF, it's also a skills that is scarce. Now, what we figure out the fact that we have all these technologies and abilities to do, and we bring in our other competencies, whether it's in Intrinsix, in design or whether it's software, and we come to the customer and say, "We can create for you." For you, that's the co-create. We can create for you, your own wireless system. The result of this one is it's a larger deal, larger amount of royalties. In terms of the business model, it does not disrupt the business model because it's still IP. What we deliver is IP. We don't deliver chips or semiconductors to them. It's just the IP. But from the customer's standpoint, this block has a huge value. I'll add one more thing to it that, you know, in a classical IP model, you license your IP, and you wait until the customer finishes its design. It could take one or two years, qualify the chip, test it, and then that goes to the OEM into the final product. Here, when we do a block or a whole chip from an IP and service, so that sort of moves a bit of the responsibility for the success of that block or chip to us, so we have more visibility into that. As Gideon mentioned, the key critical change in the business model is that as soon as that chip goes to production, hopefully or maybe could be a little bit shorter than two years in this type of consumer-based solution, we'll get royalties. On a typical old school NRE service-based, there's no royalties. It's a one-time deal, maybe recurring engineering efforts, but you don't get the royalty component. Here, as soon as that chip is ready out the door in production, that's the real add on to the volume and to the royalties from our perspective. It's a win-win, both from a little bit more involvement in R&D of our customers and the roadmap to come after that chip into production. On On the other hand is the royalties. That's quite helpful. Thanks. Maybe Gideon, going back to your prepared remarks. You talked about engagements with U.S. companies picking up, I think. Which technologies are these engagements picking up? What are you doing a bit differently maybe to capture some of these U.S.-based opportunities? Thanks. You mean technology in terms of the mode? Well, just is it hearables, wearables? Which kind of areas are these engagements picking up the U.S.-based opportunities? Yeah. On the specific engagement that we talked about in the prepared remarks, it's wireless audio, meaning Bluetooth and audio. This combination also possesses complexities, and the target market is wearables and hearables and watches, smartwatch. Understood. Thank you. If we could just squeeze one last one in. Just on the handset baseband royalties, how would you split that out low-end, kind of mid-range versus high-end in the royalties? Thank you. Most of our business is in the mid-range these days. Our customers' business today, UNISOC is the biggest customer of ours. They are a strong presence worldwide, India, China, Latin America, in mid-range phones. You know, the low-end phones are almost disappearing. The 2G and 3G both don't really exist that much anymore. It's mainly the 4G is bringing the volume, and 5G, they have a good offering with some design wins. That's the potential over the next couple of years. Thanks so much. Thank you. Our next question today comes from Martin Yang at Oppenheimer. Please go ahead. Hi. Thank you for taking my question. I have a question regarding your Bluetooth and Wi-Fi portfolio. How much do you estimate that you have the exposure to consumer end markets, through your direct customers, and do you foresee any upcoming weakness into the second half for Bluetooth and Wi-Fi shipments? Well, you know, when it comes to Bluetooth and Wi-Fi, it's. I cannot pinpoint and say exposure to consumer market. It's all over the place. We have people that use our technology for automotive. We have people that use our technology in industrial. Recently, we see people are using it in XR headset audio. There is no any concentration on specific market, and that's the reason that it's resilient because, you know, every quarter, somebody else flourish and could be another company that face difficulties. We saw it clearly in the reports that we got in the quarter. Got it. Thank you. I don't have no more questions. Ladies and gentlemen. I think that the royalties for Bluetooth were up year over year with all these market uncertainties. This is part of the answer that we have seen in the second quarter as well. Thank you, sir. Ladies and gentlemen. No, no problem at all. This concludes our question and answer session. I'd like to turn it back to Richard Kingston for closing remarks. Richard, you may be on mute. Apologies. Sorry. Thanks, Yaniv. Thank you all for joining us today and for your continued interest in CEVA. As a reminder, the prepared remarks from the conference call today 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 events, we will be participating in the following conferences. The Oppenheimer 25th Annual Technology, Internet, and Communications Conference being held virtually tomorrow, August 10th. We'll participate at the Rosenblatt Securities The Age of AI Scaling Technology Summit August 23rd and 24th. We'll be in attendance at the Jefferies 2022 Semiconductor, IT Hardware, and Communications Infrastructure Summit August 30th and 31st in Chicago, and the Jefferies Israel Tech Trek, which will take place September 21st and 22nd in Tel Aviv. Further information on these events and all events we will be participating in can be found on the investor section of our website. Thank you and goodbye. Ladies and gentlemen, this concludes today's conference call. You may now disconnect your lines and have a wonderful day.