CEVA, Inc. Price & Performance (CEVA)

Expectations regarding demand for and benefits of our technologies and revenues from long term strategic engagements with industry leaders, Our sales pipeline and backlog and our financial goals and guidance regarding future performance. CEVA assumes no obligation to update any forward looking statements or information, which speak as of their respective dates. In addition, following the divestment of the Intrinsics business, financial results from Intrinsics were transitioned to a discontinued operation beginning in the third quarter of twenty twenty three, All prior period financial results have been recast accordingly. We We will also be discussing certain non GAAP financial measures, which we believe provide a more meaningful analysis of our core operating results and comparison of quarterly results. A reconciliation of non GAAP financial measures is included in the earnings release we issued this morning and in the SEC filings section of our Investors Relations website at investors.cevaip.com CEVA. [indiscernible] who will review our business and performance for the quarter and the year and provide some insights into our ongoing business and for 2025. [indiscernible] Thank you, Richard. Welcome, everyone, and thank you for joining us today. 2024 was a transformative year for CINA. Marking a year of exceptional execution with double digit revenue growth increased profitability and expanded market leadership for the Smart Edge.

Our growth strategy, which we shared during our Investor Day at the end of 2023, position us to exceed our expectation for 2024 while keeping us strategically focused on our long term goals to maximize shareholder value. Our core strategy of partnering closely with our customers to solve their most critical technology challenges through a comprehensive best in class portfolio of IP platforms continues to drive our growth. By enabling smart edge devices connect sense and infer data at the edge. [indiscernible] are delivering impactful solutions that drive success for both our partners and our business. 2024, we have strengthened our leadership and influence around our key technology pillars reinforcing our dominant position in wireless connectivity while expanding our sense and inference product offerings and global customer base. Our large highly diversified customer base spans across multiple industries and end markets creating multiple licensing wealth engines and strong royalty tailwinds that will further enhance by the expansions of AI across industries and everyday life. Before reviewing the year and our key achievements, I will first provide an overview of our fourth quarter performance. [indiscernible] For the fourth quarter, I'm pleased to report another stronger quarter with both licensing and royalties combining to deliver 21% year over year revenue growth exceeding market expectations.

As we highlighted in recent earnings calls, our business momentum is fueled by the AI super cycle with significant investment shifting towards enabling AI inference and the edge. This trend perfectly intersects with our industry leading portfolio of IPs which enables any edge device to connect wirelessly, sense its environment [indiscernible] and perform real time on device insurance enabling faster and more efficient decision making at the edge. We believe that recent advancements related to large language model see. With significantly lower training and inference costs and reduced memory requirements, will make AI more accessible efficient and affordable particularly at the edge. As NNNs become smaller and less resource intensive, the shift from centralized cloud processing to on device AI will accelerate. Unlocking new opportunities for real time edge based intelligence. In the quarter, we signed several key [indiscernible] The first deal to note is with a top tier global MCU company which has signed a long term architecture licensing agreement for our Wi Fi platform. This partnership will enable our customer to offer end to end connectivity solutions across a wide range of IoT and industrial IoT applications. As the market for WiFi continued connectivity continues to grow, so does the complexity of the standards and the large number of products with different connectivity flavors [indiscernible] need to integrate Wi Fi into.

By standardizing on CEVA Wave WiFi platform architecture, This customer will streamline their Wi Fi efforts and focus on their core key differentiators while benefiting from our IP to deliver best in class connectivity solutions across their NFE portfolio. Targeting multiple end markets. The second major strategic deal relates to the mobile market where we're concluding a long term licensing agreement with a leading UX OEM to use our technology in their in house five gs model. We anticipate that this agreement will lead to significant market share expansion of our wireless communication IP. We expect this agreement to drive a meaningful long term royalty stream in the years to come. These types of long term strategic engagements with industry leaders serve as a cornerstone of our future growth. By aligning our IP portfolio and the product roadmap we unlock more opportunities with our partners create lasting relationships and improve our long term profitability. In addition to these two strategic connectivity deals, our AI products achieved key milestones this quarter. Including signing important licensing agreements for our AI DSPs and Newport nano NPUs with a first time customer [indiscernible] and add new Sensing related features and capabilities. Market interest and demand for our both from existing and new customers looking to solve the challenge of adding AI to their Smart Edge product.

Our unified NPU portfolio scales from the smallest most power sensitive embedded use cases required in MCUs and production after the multi engine NPUs for cobiron, ADAS and other high performance use cases. Providing customers with a solution that addresses their specific needs. Feedback from our customers has been overwhelming quantities and we are very encouraged by the progress we are making on the HAI front. Other engagements in the quarter include a multiyear Bluetooth extension with an existing mobile customer, and multiple deals for our WiFi and Bluetooth six and seven platforms with customers in consumer and industrial end markets We also signed a software licensing deal with an OEM for our motion engine sensor fusion software targeting mobile products and a wireless communication platform deal with a customer designing a cellular IoT chip. Overall, completed 12 deals in the quarter '3 of which were with first time customers and two of which were with OEMs. Now turning to warranties for the quarter. We continued our excellent momentum delivering our strongest warranty quarter of the year and our fifth consecutive quarter of year over year royalty revenue growth. We also achieved an on time high in royalty shipments powering six twenty three million units in the quarter.

The first time ever we have surpassed 600,000,000 units in a single quarter. This milestone's achievements were driven by record high shipments of both our WiFi and Bluetooth IPs, with WiFi shipments growing 110% year over year and Bluetooth shipments up 41% year over year. Smartphone shipments were up heavily 27% year over year on the back of strong end market demand for low end four gs and five gs smartphone. And we saw another good sequential and year over year increase in five gs RAN shipments from our grain customers. Our audio and AI related shipments grew 94% year over year as smartwatches, wearables, sun bulbs and speakers are adopting our AI DSPs for more powerful chips to deliver immersive experiences for consuming music, gaming, movies, and other multimedia. Likewise, in Dividend DCs, our Sensor Fusion customers shipments grew sequentially Overall, this was our second highest quarter ever for royalty [indiscernible] reflecting the new royalty growth cycle. That we have been highlighting in recent earning calls. We are particular particularly pleased to have achieved this through strength across multiple end markets with multiple technologies and from a diverse array of customers. For the full year of 2024, we finished the year strong.

Delivering 10% top line growth exceeding our expectations, reaching $106,900,000 Licensing and related revenue was $60,000,000 up 4% over 2023. We signed 43 licensing agreements in 2024, across our extensive IP portfolio. 11 of those deals were with OEMs who are integrating our IPs into their end products. In terms of end markets, [indiscernible] and 19 for the industrial IoT with the remainder targeting mobile. Including two of our Encore mobile customers that signed long term agreements in the fourth quarter. 12 of the customers license multiple technology from our portfolio. A clear indication that our strategy to offer a broad portfolio of IPs [indiscernible] dis synergistic with addressing multiple needs of our customers. In terms of full year royalties, we delivered strong year over year 18% revenue growth and shipped a record 2,000,000,000 Siva powered units, marking the first time in our history to reach this milestone number. Shipments trend was across the globe. With numerous records achieved. Highlight a few of these, we powered a record 1,100,000,000 Bluetooth devices a record 179,000,000 CEVA Fi devices, a record 170,000,000 cellular IoT devices [indiscernible] and 170,000,000 other smart edge devices followed by our DSPs air accelerators and sensor fusion software.

In terms of end markets, consumer IoT was 53% of annual royalties, followed by mobile at 32%, and industrial IoT at 16%. [indiscernible] Looking ahead into 2025, we anticipate [indiscernible] will continue to grow. With a number of five volume WiFi six customers getting into production and ramping up. Similarly, we expect continued growth for our Bluetooth and cellular IoT shipments with additional customers coming to market and strengthening our dominant position in these markets. Also, on the back of signing new long term licensing deals with our two main mobile customers, expect the royalty contribution from mobile to grow year over year. Now taking a step back and looking at CEVA in terms of business achievements and milestones, there are many these years. But I would like to highlight the film. In connectivity, we solidified our position as the outstanding leader in this domain in multiple areas. In five gs cellular, we completed cellular with did long term deals with our anchor customers in mobile and wireless infrastructure securing our IP and solidifying our position in the road map for next generations of products. We broaden our five gs customer base in the satellites and terminal markets while adding multiple new customers for five gs V2X cellular IoT and mobile broadband use cases.

This enables us to service a diverse customer base across multiple five gs related end markets with our unified platform. In the short run connectivity, we signed Bluetooth six and seven and Wi Fi seven platforms and establish long term strategic relationships with multiple global MCU leaders while standardizing our connectivity platforms, for key areas of the product market. We also launched CEVA Weight Links a new family of multiportical wireless solutions we look to deliver more value to our customers, we increasingly need combo solutions for their designs. This combo solution allows us to secure better yield economics and important royalties. [indiscernible] [indiscernible] we made significant progress with our special audio embedded application software reaching production in headsets and earbuds with both winning new business with the global smartphone OEM for multiple headsets and earbuds SKUs to be launched in 2025. Our Semic DSP also entered production in the automotive markets with one of the world's leading automotive semiconductors companies towards the end of the year our audio sound DSPs experienced strong year over year growth in wearables, home audio, driven by increased demand for advanced audio pre and post processing. As special audio and other complex audio and voice cases continue to evolve, our solutions are playing a critical role enabling these next generation user experiences.

In inference, we introduced Nipponado our new embedded AI NPU, targeted at power constrained devices and already signed multiple deals with lead customers looking to integrate it into their next generation SOC Overall, 2024 was a pivotal year for JI. With strong end market demand pushing companies to rapidly adopt AI capabilities in their end products. Accelerating the reefer cycle AGI is highly synergistic with our connectivity and sensing offering. Which we believe will lead to significant increased interest and demand for our HAI portfolio from new and existing customers. These synergies are another strategy to drive larger deals with better economics for both licensing and royalties paving the way for revenue growth per deal in the years ahead. 2024 was a landmark year for CETA, Our commitment to operational excellence and disciplined execution deliver exceptional results across many fronts. We hit major R and D milestones launched multiple innovative products like the Nippon Nano AGI NPUs all while doubling our non GAAP EPS compared to twenty twenty two and creating shareholder value. Progress we have made sets a strong foundation for an exciting 2025 and beyond. Our success is a testament to the dedication passion and incredible efforts of our employees worldwide.

And I'm deeply grateful to each and every one of them for their contributions. For 2025, the shift from AI inference processing in the cloud to the edge continues to generate Unprecedented demand for smart edge devices driven by the need for lower power consumption reduced latency and cost savings required to make AI to be used, in everyday life. This shift is a pivotal growth driver for us. We are committed to maintaining our leadership in connectivity, ensuring that all devices are seamlessly connected and capable of handling multiple protocols. Connectivity is complemented by our Samsung DSP and software [indiscernible] all of which enabled the Smart Edge Not only are we leading the way with IT IPs aimed at democrat design, AI at the Edge, [indiscernible] Based on our strong heritage of processors and connectivity technologies designed for battery powered devices. We have almost 20,000,000,000 Siwa power devices shipped to date, the majority of which are battery powered. Low power is in our DNA. We continue our focus on improving data economics by delivering greater product our customers. Through multiconnect protocols, AI accelerators and software enhancements. Our apologies to offer complete IP solutions rather than just individual components. Ensuring that our customers receive integrated high value offerings the driver's success and ours.

By enabling the Smart Edge ecosystem, we are positioned positioning ourselves as the fourth one of this technology cloud revolution. In multiple domains. I personally am incredibly excited for what's ahead for Sila. Now, I will turn the call over to Yaniv for the financial Thank you, Amir. I'll now start by reviewing the results of our operations for the fourth quarter of twenty twenty four. Revenue from the fourth quarter increased 29% to $29,720,000 as compared to $24,200,000 for the same quarter last The revenue breakdown is false. Licensing and embedded revenue increased 33% to $15,700,000 and reflecting 54% of our total revenues. As compared to $11,800,000 for the fourth quarter of twenty twenty three. Royalty revenue increased 9% to $13,500,000 reflecting 36% of recurring revenues up from $12,300,000 for the same quarter last year. This is the fifth sequential year over year growth in loans. Property gross margin came in at forecasted and guided 88% on GAAP basis with 89% on non GAAP basis. Our total GAAP operating expenses for the fourth quarter was at the mid range of our guidance range of $25,800,000 Total non GAAP operating expenses for the fourth quarter excluding equity based compensation expenses and ordinations of intangibles and deal costs from $21,600,000 also at the mid range of our guidance.

GAAP operating income for the fourth quarter was $100,000 the first GAAP positive quarter in 2024 up from a GAAP operating loss of $2,800,000 in the same quarter a year ago.

Net and non GAAP operating margins and net income were percent of revenues and $4,500,000 88130% higher than operating margin at 8% and operating income of $1,900,000 recorded in the fourth quarter of twenty twenty three, respectively. Strong business execution contributed to increased growth and profitability.

Financial income net was negative $100,000 compared to $1,800,000 of income for the fourth quarter of twenty twenty significantly lower than our estimate of $1,200,000,000 This will due to a significant fall in value of the euro versus the U. S. Dollar in the fourth quarter of over 7% impacting the value of our euro dominated assets, especially French related tax receivables.

GAAP and non GAAP taxes were approximately $1,700,000 slightly higher than our guidance and affected by geographic of revenue recognized from deal and royalty revenues. Debt debt loss for the fourth quarter was $1,700,000 and diluted loss per share was $0.07 as compared to a net loss of $8,100,000 and a net loss per share of of $0.34 for the fourth quarter of twenty twenty three. Non GAAP net income and diluted earnings per share for the fourth quarter of twenty twenty four increased by 1210% to $2,700,000 and $0.11 respectively as compared to net income of $2,400,000 dollars and diluted income per share of $0.1 reported for the same period last year. With respect to other related data, ship units by civil licensees during the fourth quarter of twenty twenty four or six twenty three million units up 38% from the fourth quarter twenty twenty three reported shipments. Of the six twenty three million units reported, 129,000,000 units or 21% were for mobile handset modems. Four fifty nine million units were for concealed IoT products up from three twenty five million units in Q4 of last year. 35,000,000 units were for industrial IoT products, up from 27,000,000 units at last year.

Video shipments were a record high of three forty three million units in the quarter, up 41% year over year.

Cellular IoT shipments were 46,000,000 units up 37% year over year. And our WiFi shipments were a record 66,000,000 units up 110% year over year. WiFi royalties were up 175% year over year driven by the higher royalty for Wi Fi six products the shipment volumes continue to ramp up. As for the year, our total unit shipments were $2,000,000,000 in 2024, up 22% year over year which equivalent to more than 60 Sienna power devices sold every second 2024, Annual mobile modem shipments were up 19% year over year to three forty million units, reflecting robust demand for mobile and smartphones which offer similar feature sets to more expensive mid range [indiscernible] Annual consumer IoT related shipments were 1,500,000,000 units, up 21% year over year.

Annual industrial IoT related shipments were 126,000,000 units up 50% year over year.

WiFi, cellular IoT and audio AI shipments all sold strong year over year growth of 71%, 3136% respectively from 2023.

In terms of the royalty contribution, highlights, Bluetooth royalties were up 54% year over year, reflecting ASP uplift for newer generations of Bluetooth shipping with better royalty economics. On the annual financial metrics, revenue increased 10% above our 4% to 8% initial guidance for the year. Our non GAAP gross profit remained strong at 89% Non GAAP operating margins and operating income more than doubled to 9 percent and $10,000,000 and net income and diluted earnings per share also doubled to $9.36 for last year, all demonstrating and contributing increase shareholders' value. As for the balance sheet, as of 12/31/2024, CECL CEVA, equipment and balances [indiscernible] and bank deposit were approximately $164,000,000 the fourth quarter, we purchased approximately 32,000 shares for approximately $1,000,000,000 and for the year, we repurchased approximately 375,000 shares for approximately $8,500,000 And with today, around 1,000,000 shares are available for repurchase under the repurchase program has expanded in November of last year.

Our GSO for the fourth quarter of twenty twenty four was around fifty days similar to the prior quarters During the quarter, we generated $8,000,000 of cash from operating activities, unload depreciation and amortization was $1,100,000 and purchase of fixed assets was $1,000,000 At the end of the fourth quarter, our headcount was four twenty eight people with full three forty nine were engineers.

Now for the guidance.

Amir highlighted our 2024 achievements and our strong building blocks for longer term growth and profitability as we continue to execute on our strategy that we first presented in our December 23 Analyst Day Investor Day. In 2024, we managed to execute better than our plan and achieved important milestone.

This process and this progress has enabled us to project 2025 as another year of growth for multiple financial and business aspects. We have a healthy backlog and promising pipeline of prospects as well as several positive trends and tailwinds, with regards to continued market penetration for Bluetooth, WiFi, cellular IoT, and smartphone technologies. On an annual basis, our total revenue is expected to grow 7% to 11% over 2024 CEVA.

With model growth in the first half of the year and higher in the second half. CEVA to prior years, and seasonal trends. On the expense side, we plan to increase our 2025 overall expense levels including both cost of revenue and OpEx, at a significantly lower growth rate than our top line growth. And at the range of 2% to 6%, or $99,000,000 to $103,000,000 for next year. Overall, non GAAP cost expense is expected to increase by approximately $2,000,000 and our non GAAP OpEx is expected to increase by approximately $2,000,000 From the guidance and activities we've just discussed, we anticipate non GAAP operating income and operating margins as well as non GAAP net income and fully diluted EPS to grow significantly year over year by approximately 48% to 52%. Specifically for the first quarter of twenty twenty five, With typical seasonality, shipments of consumer IoT and mobile products post the holiday season, we expect overall revenues to be sequentially lower and in line with street estimates. Still significantly higher than the first quarter of twenty twenty four. Revenue is forecasted to be 25.5 to $27,500,000 Gross margin is expected to be slightly lower than what we just reported for the fourth quarter.

Due to lower seasonal royalty revenue and allocation of design activities for strategic [indiscernible] We forecast 87% on GAAP basis and 88% on non GAAP basis. Excluding an aggregate of $100,000 of equity based compensation, expenses and $100,000 for amortizations of acquired intangible loans. GAAP OpEx for the first quarter of $25,100,000 to $26,100,000 a bit lower than the level we just reported for the fourth quarter.

Of our anticipated total operating expenses for the first quarter 4,000,000 expected to be attributed to equity based compensation expense $200,000 for amortization of acquired intangible and $100,000 of costs associated with business acquisition.

Our non GAAP OpEx is expected to be in the range of $21,000,000 to million dollars to $22,000,000 also just below the fourth quarter twenty twenty four levels. When the interest income is extended to be approximately $1,300,000 taxes for the first quarter are expected to be approximately $1,200,000 and share count for the first quarter is expected to be 25,400,000.0 shares. Rafael, you can open the Q and A sessions, please.

Now begin the question and answer session. Today's first question comes from Kevin Cassidy of Rosenblox Securities.

Please go ahead.

Thanks for taking my question. Congratulations on the great year, good quarter and ending the year. Just my question on the MCUs, as we're talking about AI moving to the edge, more and more of the processors need to have integrated MCUs. So with your license agreement with the MCU player or maybe just in general the MCU players in the market, Is there an opportunity not only for your wireless, but for the NPU to get integrated into these OEM MCs? Yes, Kevin, thanks for the question. This is Amir. Yes, definitely. In this case, we highlighted basically our wireless technology as a license across the board to the MCU, a top tier customer. In addition to that, definitely, as we mentioned, we licensed in other tier [indiscernible] that goes very nicely alongside our wireless connectivity and sensing compared but what we definitely see is that the trend With all the MCU players now adding more and more AI capabilities, with that and that level of investment, there is a different level of CEPs in technology needs that we need from us to come and help them to deliver in the market. And overall, what we see on the set as the player that can enable the MCU marketplace integrated some type of technologies from connectivity to AI as well.

Okay, great. And I wonder if you could provide any detail on your U. S. Mobile OEM with their in house five gs modem of when the royalty revenues start, maybe kind of what the run rate looks like and how increases over time? [indiscernible] expand beyond what we said in the prepared remarks.

Other than the fact that we're trying to volume. And then when we get the royalty report, we'll have a better idea from other customers, including this one. And and that's true by others as well. So it's an exciting opportunity. And we're looking forward to it for the next couple of years. Okay, great. Thanks and congratulations again.

Thank you. And our next question comes from Suji Desilva with Roth Capital. Please go ahead. Hi, Amir, Yaniv. Congratulations on the strong calendar '24 for me as well.

Maybe you could talk a little bit about the AI news recently about the deep seek model in China and the lower potential footprint for LLMs. Expanding the edge opportunity. Maybe you could talk about if you see DeepSeq is helping accelerate your opportunity and if you've seen China kind of infra activity picking up [indiscernible] Yes. Definitely, Luigi. This is Amir. Two comments here. One, first from so called the different regional innovation, we see both The U. S. Market and the Western world as well as China really innovating a lot in the AI domain. And these are it's really great opportunity for us across the globe. In terms of the new models that are coming out, this is exactly what we were looking for and anticipating that will come. Which basically means a much more optimized model that can run with a smaller footprint and can drive lower power type of devices enabling the LLMs to run locally. What we have talked about for a while, the Smart Edge So we definitely see that as an accelerator to enable the different devices around us to be able to run different type of LLMs and provide great type of accessibility and lower cost structure to drive higher volume and adoption across the edge devices.

So for us, this is we were very happy to see the innovation and the progress globally as well as with this specific case. Okay. And with that, I would say that if we look at our activity today overall, what we are seeing is even more velocity and furthering of demand and interest of our portfolio fund NPUs and overall on the ability to run AI models on edge Okay. Thanks, Amir. And then on WiFi, it seems like that's going to be a strong growth driver for '25 I'm wondering if we should expect the penetration to kind of hit an S curve that where your penetration is today and if it hits an S curve? Similar to Bluetooth or whether it would be a steady kind of penetration increase And if you could just touch on which end markets Wi Fi will drive the Wi Fi growth in 2025, that'd be helpful.

Thanks. Yes. So we are right now really in the midst of the transition from the WiFi 4.5 to WiFi six. We licensed to more than 40 different customers in the last few years. So this is really where we're starting the acceleration. Already 2024 was a very strong year for us in terms of price per shipment volume as well as higher ASP per unit as the transition to Wi Fi six. As we alluded already in Danaavista on Danaavista at the end of twenty twenty three, And with that 2025, we definitely expect to see even further acceleration of that growth.

And as well as you asked about the use cases and the proliferation, the Wi Fi six is the strongest technology in terms of penetration across all the different IoT markets and submarkets. This standard that really helped to not only increase the throughput in terms of data, data throughput, but also increase capacity and better utilization of the spectrum on the edge, so called IoT devices. So this is really we are the mid and really in the acceleration of the transition of our customer base moving to IPv6. [indiscernible] I will let you know a little bit more about the history Remember, when we started 2020 to license duties, it took few years of licensing activities and it took three years to ramp up and this year we've reached 1,100,000,000 devices. In 2023, two years ago, about 50% of the Bluetooth deals are already in [indiscernible] and Bluetooth as a combo chip. And this year, we reached the one almost the 180,000,000,000 units for Wi Fi. So the opportunity the next couple of years for Wi Fi and Bluetooth type combo chips with higher ASPs as we saw just starting to pick up in 2024 is really some of the very, very exciting growth opportunities in the next couple of years.

Anywhere between that €180,000,000 for Lifesize to the 1,100,000,000 Bluetooth devices is where we want to see our sales in few years. And just to clarify, if you sell a combo, you counted as one Bluetooth and one WiFi? That's correct. Thank you.

And our next question today comes from Gus Richard with Northland. Please go ahead.

Yes. Thanks for taking my questions and congratulations on great results. Just in terms of modeling that you've done for the year and sort of your expectations, do you expect your cell phone modem revenue to grow faster than your WiFi or will WiFi outstrip that? Just relative growth rates would be helpful. [indiscernible] I wish we all would have known what to answer here, but half of our business in royalties is royalties and those royalties were each of the industry's we play in. We have very good relationship with many of them. But what we don't have the crystal ball is really to the ramp up timing and to the volume of any player could be a handset player, it could be a WiFi or an AI or an automotive player, which we have added late last year for the first time after many, many years. And that piece is missing from our model. The longer term basis, and as soon as we think some of our new customers starting to shake, that gives us new information that we could build on and build our models from.

But sometimes until the first damage starts, it doesn't have exactly that crystal ball. So a lot of good moving pieces looking into 2025. Hard to say exactly if it's a Q1 or Q2 or Q4. Usually, with the seasonality of selling to consumer IoT, less in the industrial IoT.

Is the second half loaded. That's historical been the case. But that could change if any big enough customer or customers or markets pick up for whatever reason earlier in the year. So lot of good new pieces and that looks quite positive, but can't tell you what market today in February will end up the strongest for 2025. I would add to that, in addition to what you Okay. Thanks. I would add that in addition to what Yaniv said, overall, we are extremely encouraged with royalty growth and the volume shipment that we have seen in 2024 literally across all our product lines and markets, With that, we expect significant growth also continue in 2025 across our WiFi, Bluetooth, [indiscernible] and even potentially in five gs WAN. So overall, we see that it's really positive for us moving forward. With that in mind, generally speaking, we see the first half so called slower than the second half and really strong acceleration in the second half.

Got it. And then just a quick question on AI. The models seem to be bifurcating between large language models and And it sounds like and the recent models need more compute, more memory. Is the edge going to be dominated by LLMs?

Or is there an opportunity for the reasoning model sort of how do you think about the market as it evolves? And are you positioned to capture both or does one just not matter?

Yes. So first from a market, our expectation is we'll see the the multiple tiers of technologies, capabilities and with that demand of the the very more the low tier simple, simple models all the way to somewhat more sophisticated LN that still can be efficient and cost power and size wise to be able to be run on the edge. From our perspective, of course, our strategy is to be able to deliver the complete portfolio of AI accelerators or AI NPUs can support on the way from the hundreds of so called GEOPS operation that typically goes with the long term MCUs all the way to the high end hundreds of top track requirements of the edge from more sophisticated SoC that you can see in the mobile PC or automotive data systems and so on. So we definitely see that fabrication happening on the edge and with that our technology and portfolio will support it. And I guess we're very excited about this announcement.

Thank you. Our next question comes from Chris Van Meter with Barclays.

Hi. Thanks for taking my questions and congrats I wanted to ask about any of the new licensing deals and whether they might also include some of the customization that you spoke about last quarter and this quarter that was kind of just a pressuring the gross margin a little bit. I'm just wondering going forward, I know you mentioned that due to seasonality, the gross margin in the next quarter would be a little lower. But are we going to see any more of that customization come in with the new licensing deals or do you have any visibility on that? [indiscernible] Customization leaves around off the shelf. Technologies that we already have and are happy to offer and deliver to our customers immediately. Those leftovers from last year's deal very large mobile space modem type is going to continue a few quarters into 2025.

So it's not a new deal from Q4, but it's the deal from Q3 that we signed starting to pick up a little bit now in Q4.

But most of the work will happen now in 2025. And [indiscernible] while just a notch to below in the gross margin.

Also for Q1, the volume usually the most core of royalties just because of the seasonality. That will change over the year.

Got it. Thanks. And just regarding the New Pro solution, did you say earlier that there were two deals on the quarter?

In the quarter, we had one deal of the new Panano and one deal of our DSP for AI application.

Okay. Thank you. That's clear.

Thank you. Thank you. And our next question is a follow-up from Kevin Cassidy of Rosenblatt Securities.

I'm sorry, I didn't mean to ask for a follow-up, sorry.

No problem at all. And ladies and gentlemen, this concludes the question and answer session. I'd like to turn the conference back over to Amir Panish for closing remarks.

Thank you. On behalf of SivaTIM, thank you for joining us today. We are proud to have delivered strong year over year growth in our licensing and warranty businesses. With a compelling roadmap of innovative ITs that enable edge devices to connect, sense and infer data, We are confident in our ability to drive long term shareholder value in the Smart Edge era. As we continue into 2025, wish you and your families a happy and prosperous year. I look forward to connecting with many of you at upcoming industry events and conferences throughout the rest of the year. Richard, I will hand over to you to wrap it up. Thank you, Amir. Thank you, everybody. As a reminder, the prepared remarks for this conference call are filed as an exhibit to the current report on Form eight ks and accessible through the Investors section of our website With regards to upcoming events, we will be participating in the following conferences. Mobile World Congress twenty twenty five from March '6 in Barcelona, Spain, Loop Capital's sixth Annual Investor Conference, March 11 in New York and the thirty seventh Annual ROTH Conference, March 1718 in Dana Point, California.

Further information on these events and all events we will be participating in can be found on the Investors section of our website. Thank you and goodbye.

Thank you. This is Lucero's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.