CEVA - NASDAQ

Good day, and welcome to the CEVA, Inc. First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Richard Kingston, Vice President, Market Intelligence, Investor and Public Relations. Please go ahead.

Thank you, Jason. Good morning, everyone, and welcome to CEVA's first quarter 2024 earnings conference call. Joining me today on the call are Amir Panush, Chief Executive Officer; and Yaniv Arieli, Chief Financial Officer of CEVA. Before handing over to Amir, I would like to remind everyone that today's discussion contains forward-looking statements that involve risks and uncertainties as well as assumptions that if they materialize or prove incorrect, could cause the results of CEVA to differ materially from those expressed or implied by such forward-looking statements and assumptions. Forward-looking statements include statements about our market positioning, strategy and growth opportunities, market trends and dynamics, CEVA's ability to execute on backlog deals in the second quarter and to reach total revenue target for the year, expectations regarding demand for and benefits of our technologies and our expectations on 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 Intrinsix's business, financial results from Intrinsix's were transitioned to a discontinued operation beginning in the third quarter of 2023 and all prior period financial results have been recast accordingly. We will also be discussing certain non-GAAP financial measures, which we believe provide a more meaningful analysis of our core operating results and comparison of quarterly results. A reconciliation of non-GAAP financial measures is included in the earnings release we issued this morning and in the SEC filings section of our Investor Relations website at investors.ceva-ip.com. With that said, I'd like to turn the call over to Amir, who will review our business performance for the quarter, review the year and provide some insights into our ongoing business. Amir?

Thank you, Richard. Good morning, everyone, and thank you for joining us today. CEVA delivered first quarter results that reflected solid royalty trends with good year-over-year growth, while licensing was lower than we anticipated, but some deals we expected to close in the first quarter were delayed. I continue to be very encouraged by our diversified licensing pipeline and stronger backlog. We closed a significant multimillion-dollar deal with a strategic customer in the beginning of the second quarter, and there is strong demand for our next-generation IPs that are currently in development and are being licensed by early adopters, who are looking to gain an advantage in the market. I will elaborate more on our expectations for our licensing business for the rest of the year shortly. First, looking at the licensing business we concluded in the quarter in more detail. We continue to expand our leadership in Smart Edge IP, completing 11 licensing deals across all of our key target markets, namely consumer, automotive, industrial and infrastructure. These deals range from Bluetooth connectivity for wearables and IoT, 5G for RedCap and cellular V2X, Wi-Fi for access points, UWB for consumer devices and audio for smartphone. More significantly in the quarter, I'm very pleased to report that we signed deals for our next-generation Bluetooth 6 and Wi-Fi 7 IP. Design activity around our Wi-Fi 7 IP is experiencing strong traction with both new and established wireless players, and we present a positive catalyst of our licensing activities in 2024 and beyond. In the quarter, we're concluding a Wi-Fi deal with a strategic customer, who is already in mass production with a combo chip based on our Wi-Fi 6 and Bluetooth 5 IP. These customers has managed to successfully compete with the largest incumbent in the wireless combo chip space for consumer, enterprise and automotive and is now beginning to design their next-generation Wi-Fi 7 chips to gain further market traction for the board consumer devices that will require Wi-Fi 7 connectivity, including smartphone, tablets, laptops, wearables and smart home devices. In terms of market size, ABI Research forecast that Wi-Fi 7 shipments will exceed 1.7 billion units annually by 2028. As we have stated previously, due to its technical complexity, our Wi-Fi 7 IP commands a higher license fee and royalty rate than previous generations of Wi-Fi, which in turn drives ASP growth and enable us to drive more value per customer. Moreover, the large market size entices new entrants to the Wi-Fi market, while the complexity of the technology possesses challenges to many of the existing wireless players to develop this technology internally. As the only IP company in the market today, offering licensable Wi-Fi 7 technology and the ability to license it together with our Bluetooth and UWB technologies, we are in an excellent position to repeat our success in the Wi-Fi 6 market or Wi-Fi 7. In Bluetooth, we have added a new Bluetooth 6 customers in the quarter, who is the first-time customer for CEVA and a world leader in wireless audio. This customer decided to take advantage of our IP to accelerate their product development for the next generation of Bluetooth audio. Although the Bluetooth 6.0 standard is not yet ratified, we are among a small number of leaders and the sole IP licensing company that has the expertise and skills to develop next-generation wireless technologies ahead of the market and ahead of the standard itself. We have successfully achieved this for a number of generations of both Bluetooth and Wi-Fi standards and have built an unrivaled position, as the industry leader and trusted partner for wireless IP over many years. We have more than 100 customers and billions of devices shipped. Finally, on licensing, in relationship to the licensing pipeline for the remainder of the year, and our ability to extract more revenue per deal, I would like to share a few thoughts and data points. CEVA is one of the few select companies that have the technical capabilities, talent and unique know-how to develop wireless, sensing and edge AI IP to the level required by most demanding customers. I firmly believe that we can command higher licensing fee and royalties for our leading-edge products, and many of our ongoing customer discussions reinforce this belief. While a few deals that we had anticipated closing in the first quarter were delayed to later quarters, those deals remain in our sales pipeline, and some have already been signed since the first quarter [indiscernible]. Our value proposition around the 3 major Smart Edge use cases, connect, sense, and infer is clear and well understood by our customers and partners. In addition, we have already closed a meaningful multimillion-dollar deal in the second quarter with a strategic customer for a next-generation IP that we are currently developing. I will update you more on this deal in the next earnings call, but I wanted to share that this deal reinforces our strategy to extract higher value for our technology due to our unrivaled technical leadership and the ROI gains that can be achieved when partnering with us. We believe this, in turn, will serve to increase shareholder value through higher revenues, margins and profits over time. We are laser-focused on this value-add strategy, leveraging our strong broad portfolio of Smart Edge IP offering. Turning now to royalties, we are pleased with our start to the year with a robust quarter, showing an impressive 33% revenue growth year-over-year and just a 14% seasonal sequential decline compared to a 28% sequential decline a year ago. We saw shipments volume up 25% year-over-year, an increase in every end markets we serve, as restocking continue across the broad IoT markets. Smartphone units, while up year-over-year, were down quite sharply from the fourth quarter, a similar trend to what we saw last year. Also, the infrastructure markets remain soft, reflecting low CapEx for 5G networks globally. From conversations with our customers, we expect smartphones to improve in the second quarter and throughout the year. Overall, the first quarter shipments increase our confidence that we are well positioned to grow our royalty business in 2024 augmented during the year by new customer ramps, deploying our portfolio of wireless IP for consumer and industrial devices, and our embedded application software for spatial audio in the headphones and sensor fusion software for [ intelligence ] robots. Now some commentary regarding development in the quarter. In the first quarter, we also invested further in cementing our market leadership, expanding our product offerings and strengthening our ecosystem. We announced a new UWB wireless IP for consumer devices, one that builds on our success in UWB solution for automotive and which we already licensed successfully to a customer this quarter. UWB is [ poised ] for takeoff in the consumer market, as the majority of smartphone OEM are now integrating this technology into their latest devices, which is a precursor to mass market deployment in endpoint devices. ABI Research forecasts that the global market of UWB enabled device shipments will grow at a compound annual growth rate of 14% over the next 5 years from 435 million units in 2023 to nearly 1.3 billion units by 2028. We are ideally positioned to leverage this market opportunity, as it develops, already having a mature IP available for licensing and the ability to license it, integrate with our Bluetooth low energy IP. In terms of our ecosystem, we announced a new partnership with ARM targeting 5G advanced infrastructure and non-terrestrial networks, NTN, aimed at lowering the barriers to entry for developing products targeting these 2 large markets. NTN or satellite communication is a hot bed of innovation these days. And together with ARM, we can deliver the processing power required by satellite companies and new entrants to bring 5G advanced networks to orbit, enabling the [ problemist ] of global broadband connectivity and a host of new use cases on earth that can leverage truly ubiquitous connectivity. We continue to gain market share in wireless connectivity with an unrivaled portfolio of wireless IP, spanning the most common [ standards ] like Bluetooth, Wi-Fi and 5G through to emerging standards like UWB and [ meter ]. Connectivity is no longer considered a feature for electronic -- for electronic devices. Moreover, it's a very foundation of innovation that allows AI to be deployed and accessed by edge devices. Without connectivity, there is no AI. We're incredibly proud of our central role in the industry, enabling the connectivity in more than 1 billion devices annually that allows them to interact with AI and improve our daily lives. On sensing and inference, we continue to experience strong demand for our software and hardware products targeting these use cases. Our generative AI NPU scalable IP portfolio with market-leading performance is undergoing intense evaluation with a number of customers that we have identified as strategic design partners for this technology, and we will update you, as this deal comes to fruition. Our embedded application software, particularly around spatial audio is also experiencing significant traction, and we reached an important milestone in this quarter. With the first headset integrating our real space spatial audio and head tracking software going on sale to the public, the Nirvana Eutopia headphones from India's #1 wearables and hearable OEM boAt, also features our Bluetooth and Audio AI DSP, making this product a perfect illustration of our connect, sense and infer strategy, where we can provide multiple IPs to a single product and work directly with the OEMs to bring the product to market. Overall, we are very excited about our product lineup targeting Smart Edge devices. Our dialogue with customers is very open, and we understand the recurring pain points that our customers share with us when discussing their Smart Edge road maps. With AI set to transform every industry and technology, semiconductors and OEMs needs to define their strategies, not just to deal with the inference workloads, but also how to connect their devices and enable them with the ability to use sensors for voice, sounds, vision and motion. Without these 3 use cases being addressed in every smart edge device from smart MCUs all the way to autonomous vehicle and 6G virtual RAN equipment, companies will not be able to compete in the Smart Edge era. We are ideally positioned to fill the knowledge and the R&D gaps at companies that like the ability to excel in all of these areas. Our portfolio of IP for connect, sense and infer use cases is highly synergetic with a broad range of semi and OEM customers across multiple industries, including the high-volume MCU players, where we already have significant traction for our connectivity IPs and the TWS and wireless headphone market, where we estimate our Bluetooth customers to have between 45% and 50% market share today, excluding Apple products. We intend to fully exploit our leadership in wireless connectivity to offer additional IP for sense and infer, as the use cases for Smart Edge devices growth, driving larger licensing deals and higher royalty fees per unit. In summary, we have begun 2024 with royalty-bearing shipments up across all the end markets we serve, and we have a solid pipeline of new customer set to reach production, as the year progresses. In licensing, the first quarter was challenged with a few license [Technical Difficulty].

Pardon me, ladies and gentlemen, it appears we have lost the connection to our speaker. And by while we reconnect, we thank you for your patience. [Technical Difficulty] Pardon me, ladies and gentlemen, we have reconnected with the speakers. You may proceed.

Sure. Did Amir finished his prepared remarks before we got disconnected?

No, I think the best thing to do, just to repeat the summary paragraph.

That's okay.

Perfect. Thanks, Richard.

Thanks.

In summary, we have begun 2024 with royalty-bearing shipments up across all the end markets we serve, and we have a solid pipeline of new customer set to reach production, as the year progresses. In licensing, the first quarter was challenged with a few licensing agreements delayed until later in the year. But overall, the quality of licensing deals signed and the overall demand for our next-generation IPs is very encouraging. We have the portfolio of technologies that meet some of the critical pain points of semiconductors and OEMs for their Smart Edge road maps, and I'm confident that we can meet our total revenue targets for the year, and we have built a healthy backlog, which reinforces my belief on this. Overall, I remain very positive that 2024 will be a growth year for CEVA and will set up us to reach our longer-term revenue, margin and profitability targets. I look forward to meeting with many of you at conferences and roadshows during the quarter. Now I will turn the call over to Yaniv for the financials.

Thank you, Amir, and sorry about this. There is a blip. I will now start with a review of the results of our operations for the first quarter of 2024. Revenue for the first quarter was $22.1 million, as compared to $26.3 million for the same quarter last year. The revenue breakdown is as follows: licensing and related revenue was $11.4 million, reflecting 52% of our total revenue as compared to $18.2 million for the same quarter last year. Royalty revenue was $10.7 million, reflecting 48% of our total revenue, as compared to $8 million for the same quarter last year. This represents an impressive 33% revenue growth year-over-year and just a 14% seasonal decline compared to a 28% seasonal decline a year ago. Gross margin was 89% on GAAP and 90% on non-GAAP basis compared to 87% and 88% on GAAP and non-GAAP basis, respectively, a year ago. Total GAAP operating expenses for the first quarter were $24.5 million at the lower end of our range. Total non-GAAP operating expenses for the first quarter, excluding equity-based compensation expenses, amortization of intangibles and deal costs were $20.7 million below the midrange of our guidance due to specific cost monitoring and cost and controls, as we talked about in prior earnings call. GAAP operating loss for the first quarter of 2024 was $5 million compared to GAAP operating loss of $2.6 million for the same period in 2023. GAAP and non-GAAP taxes were $1.7 million, above our estimates due to the geographies of deals signed. GAAP net loss for the first quarter of 2024 was $5.4 million and diluted loss per share was $0.23, as compared to net loss of $2.7 million and diluted loss per share of $0.12 for the same quarter last year. Non-GAAP net loss and diluted loss per share for the first quarter of '24 were $1.3 million and $0.05, respectively, as compared to net income of $1.2 million and diluted income per share, $0.05 reported for the same quarter last year. With respect to other related data. Shipped units by CEVA's licensees during the first quarter of '24 were 371 million units, up 25% from the first quarter '23 reported shipments. The 371 million units shipped, 61 million units or 16% were from mobile handset modems, 283 million units were for consumer IoT products, up from 250 million units for the first quarter of last year, 27 million units were for IIoT products, up from [ 18 million ] for the first year of '23. Bluetooth shipments were [ $202 million ] for the quarter, up 6% year-over-year. Cellular IoT shipments were 36 million units, up 24% year-over-year. Wi-Fi shipments were 31 million units, up 50% year-over-year. As Amir mentioned earlier, shipments were up year-over-year across all our end markets. In total, royalty revenues, excluding mobile handset modems was the highest quarter since third quarter of 2022, [ suppressing ] $8 million. As for the balance sheet items. As of March 31st, 2024, CEVA's cash, cash equivalent balances, marketable securities and bank deposits were approximately $159 million. In the first quarter of '24, we purchased approximately 57,000 shares for approximately $1.3 million. As of today, around 643,000 shares are available for repurchase under the repurchase program has expanded back in November of last year. Our DSOs for the first quarter -- for the 58 days back to its normal levels and higher than the prior quarter's 32 days. During the quarter, we used $7.3 million cash from operation activities, ongoing depreciation and amortization was $1 million and the purchase of fixed assets was $0.9 million. At the end of the first quarter, our headcount was 433 people, of whom 356 are engineers. Now for the guidance of the second quarter of 2024, As Amir stated earlier, we've signed a number of deals at the start of the second quarter and also have good visibility into the second quarter potential deal flow for a wide range of technologies and markets. On royalties, we expect year-over-year growth in the second quarter and are monitoring the timing of new product introduction from our customers. All in all, we forecast sequential growth in overall revenues for the second quarter of 6% to 16%, primarily from licensing. Gross margin is expected to be similar to the first quarter, approximately 88% on GAAP basis and 90% on non-GAAP basis, excluding an aggregate of $0.2 million of equity-based compensation expenses and $0.1 million of amortization of acquired intangibles. GAAP OpEx for the second quarter is expected to be in the range of $24.5 million to $25.5 million slightly higher than the first quarter and in line with our annual plans. Of our anticipated total operating expense for the second quarter, $3.8 million is expected to be attributed to equity-based compensation expenses and $0.5 million for the amortization of the acquired intangibles. Our non-GAAP OpEx is expected to be at the same level as the first quarter in the range of $20.2 million to $21.2 million. We'll continue to monitor our expenses closely and look for ways to further improve our operating efficiency. Net interest income is expected to be approximately $1.3 million Taxes for the quarter are expected to be approximately $1.7 million, and the share count for the second quarter is expected to be around 25 million shares. Jason, you could open the Q&A session, please.

[Operator Instructions] And our first question comes from Matt Ramsey from TD Cowen.

Thank you very much, everybody. I have a few questions. I guess, as the first one on licensing guys, it's totally normal for deals to sort of flip around across quarterly boundaries and -- but I know you've mentioned in the script, there were some deals that might have -- you might have expected to sign, they got pushed a little bit, but it didn't sound super clear to me whether all of those things that slipped out of Q1 were just kind of across the quarterly boundary and going to get done in Q2 or if they might have been slipped a little bit longer than that. And if it's the latter, maybe you could just kind of talk about what's going on in the environment that might be delaying a few of the deals longer than would be typical?

Yes. Thank you, Matt. I would say first, some of the deals, as we also mentioned in the previous remarks is that we already signed in Q2. And then we expect also some of that is to still sign in Q2, which is -- but also there are some deals that get delayed more towards the next quarter after that. As part of the overall evaluation that takes longer in some cases, especially for the more complicated system that our customers need to evaluate sometimes all the way into the hardware capabilities of their own system.

So it sounds like nothing atypical or different in the environment, just kind of normal course of business type stuff. Is that fair?

That's fair. I would say that the one thing that we highlight more specifically for this quarter of the strategic deal with the customers that we already have a multimillion-dollar deal that we expected to close in this quarter in Q1. And the evaluation of the technology, the agreements on both the technology and the commercial agreements was offset within the quarter, but the process signature of the customer took longer than anticipated, and this deal was already closed because the timing and the magnitude of the deal, we mentioned that specifically.

I guess, for me on to some maybe more important technology questions. I wanted to ask about sort of 2 emerging technologies that you guys seem to be investing in a lot and are well positioned for, I guess, the first one is Wi-Fi 7 and the second one is UWB. So on Wi-Fi 7, maybe you could give us a little bit more on expected pace of adoption of the technology and what the -- both the licensing and royalty economics look like for your company relative to Wi-Fi 6. And UWB, I'd be sort of interested in hearing about what the breadth of different relationships, and, I guess, what the pipeline looks like for UWB deals, both breadth and timing because these are both sort of exciting new technologies. I'm kind of interested to hear, where you guys are in the progression on each one?

Yes, definitely. Actually, I'll start with the Wi-Fi and take even a step back before Wi-Fi 7, even with Wi-Fi 6 in terms of royalty overall, we are still early so called in the cycle of our customers transitioning from Wi-Fi 4 to Wi-Fi 6 in the high volume. And so, we expect it to be a very good tailwind, as we go through the rest of the year on the royalty side. In terms of licensing, definitely, we are extremely encouraged to see some of our existing customers, as well as new customers start licensing Wi-Fi 7. This is specifically as you mentioned that we signed this quarter was about a customer that already licensed in the past Wi-Fi 6 and Bluetooth from us, extremely encouraging to see that the trough that we have in the marketplace and the [ performance that we achieved ] our customer that they repeat and come back to us. And the question of Wi-Fi 7 in terms of licensing and development of those technology is really right now ramping up quite nicely through 2024. It has started as an access point. Now we see more also on the client side. It is high performance, high throughput type of technology. So the propagation starts more from the high end and then over time will propagate lower in terms of the different tiers of the market. But also, for us, the transition from Wi-Fi 4 to Wi-Fi 6 and Wi-Fi 7, it's a great tailwind in terms of the average deal size, as well as the average royalty that we get per device because we really provide more value, more sophistication and time-to-market advantage to our customers. So all in all, this is a very strong trend, and we are encouraged to see also the Wi-Fi volume increased very nicely year-over-year this quarter. Going to the UWB questions, definitely, Qualcomm announcements and coming to market with a UWB combo with the other technology for their mobile devices, this is a very important precursor for them -- for the UWB to penetrate beyond automotive into the consumer. And most of the previous deals that we talked about were in the automotive. Now this quarter, we have a very nice deal in the consumer space. And we definitely see the Qualcomm announcement, the penetration into mobile phones and overall, the understanding of more of the use cases of UWB [indiscernible] [ certification body ] also really ratifying their solutions, putting a very good tailwind for the demand in the marketplace. Having said that, overall, I would say UWB technology penetration rate is going to be, on average, smaller or lower than what you typically see with the more incumbent [ Bluetooth or ] Wi-Fi technologies out there. The other piece, of course, for UWB, a lot of demand for UWB with Bluetooth technology and in the more high-end devices, even with Wi-Fi as combo. So again, we are well positioned to take advantage of that trend.

The next question comes from Kevin Cassidy from Rosenblatt Securities.

Just as you're writing more licenses coming up with agreements with licenses that include more technology, as you mentioned, the strategies to sell sensing, connectivity and the processing. Is that considered one license now? Or just is there going to be a change of the value of the license goes up and there will be fewer numbers when you report each quarter? Or are they still going to be considered separate licenses, but just in one design?

Good question, Kevin. We call them separately if they use different technologies in order to keep pace of Wi-Fi, Bluetooth, sockets and UWB, we will call them multiple deals if the R&D plan to be combining a single product. On the product itself, that the agreement is one agreement that includes all whatever type of technologies the customer would like to license and partner with us for. Of course, it's integrated in a single chip. The royalty will be applied on the entire chip price, either as a percentage of the chip or cents per chip and we'll take into account that usually those chips are higher priced, ASPs would be higher. Our take of that, whether it's sales or percentage would be higher because of the knowledge and the expertise and the advantage we're bringing to the table by combining multiple technologies.

Yes. To add on [ Yaniv ] [indiscernible] is basically, Kevin, what we announced is the Ceva-Waves Links, where we provide added value of those combined technologies if our customers need that support, and we would like to license that. And overall, I would say, as we look historically into our deals and connectivities, as we propagate into the more advanced releases of the technology from Bluetooth 4.0 to all the way now in the future 6.0 adding Wi-Fi and going for Wi-Fi 6 and 7, then the combination, we really see on average that the deal size is growing, as well as the potential warranty that comes with that.

Thanks for those details. And just in general, China has been a big market for you, and have the U.S. sanctions, is there -- is it getting worse for you? Or are there fewer new designs starting in China? Maybe just give us the landscape of what's happening in China?

First from regulation, actually, we haven't seen any material change or any meaningful change this quarter or broadly quite recently. So no, no impact at all in terms of any change. I would say still China is an important market for us in terms of lots of innovation in the semiconductor industry and overall for all the different type of technologies. We're actually encouraged to see that this quarter, I would say, overall, the market condition in China, I think, has stabilized, and there is a very good innovation and demand for technology. I think from the royalty report that we provided on average, our customer base are doing quite well in the market. So this is also a very positive indication for us, as we will continue through the year.

Kevin, I'll add to that. This is the first time in many years that we have seen sequential flattish revenue for many of our Chinese customers in the IoT space reported from Q4 to Q1, not a down quarter like it usually was, but really a flat or even a stronger quarter in some cases. So it was very encouraging.

[Operator Instructions] Our next question comes from Chris Reimer from Barclays.

Can you talk just a little bit about the path to achieving the year-end guide? I believe you were projecting [ 4% to 8% ] top line growth back in 4Q. If you could just kind of remind us how sequentially that should take place? And then on the partnership side, if you could talk about the kind of exposure you have with your partnerships, especially with the boAt and what kind of products are working with you there?

Hi, Chris. I'll start with the first part, and Amir will take over for the second. So we did guide in the beginning of the year, 4% to 8% top line growth. We did talk about flattish non-GAAP OpEx and gave a range of $93 million to $96 million for the year. We're not changing that -- those 2 numbers today. We also said at the beginning of the year that the second half will be stronger than the first year. So with all that said, nothing has really changed our plans. Yes, we talked about the deal being delayed -- a few deals being delayed. We also mentioned that some of those deals were signed in Q2, so maybe it's just some shift between those 2 quarters. But the way we're seeing it with a pretty strong Q1, much stronger than historical seasonality trends and growth in all the different product volumes on a year-over-year basis, which is also something quite remarkable. We haven't seen that for a long time. We're feeling well with the rest of the year in licensing royalties each one of them have different trends and deals can from time to time get delayed. But our plans are not changing from -- not from the expense point of view of trying to manage this carefully. The guidance for second quarter is exactly the same, 90% gross margins and non-GAAP and the same range of expenses on OpEx. And with more revenue flowing in, we should have the leverage to reach the -- our targets. That's the way we see it today. Obviously, things could change, but this is what we are focused on achieving for 2024.

As for the partnership -- as for the partnership with boAt, so boAt is the #1 Indian hearable and wearable OEM in the marketplace, and we believe, they are #2 to Apple worldwide. We have a very, very good partnership with them, working with them directly as an OEM. We offer them basically a combination of the silicon that they're using that within there, there is the IP, our connectivity IP, as well as the DSP/AI IP. And on top of that, we provide them a software IP to run 3D spatial audio for hearable and wearable devices. They've just launched the first product using this type -- all these 3 technologies combined in their device that I shared in the -- in my remarks, and we will see that keep penetrating across the product line.

There are no more questions in the queue. This concludes our question-and-answer session.

No, Jason, I think, [ Kevin -- David is there. Oh, sorry about that. Yes. Next question comes from David O'Connor from BNP Paribas.

Awesome. Thanks for squeezing me in, guys. Maybe just 1 or 2 follow-ups on my side. So firstly, just the flattish revenues in China, customers Q4 to Q1. Can you give us a bit more color, was that due to [ kindly ] units? Or was it just more content is your sense and that was inventory replenishment in those end markets or just new products coming to the market at those higher ASPs that you talked about? And I have a follow-up.

Yes. Usually, the seasonality in IoT devices, mobile has been the case for many, many years. The Q1 is lower in volume and new phone introductions than the fourth quarter and the Christmas holiday season. What we saw this quarter with 25% unit growth year-over-year and sequentially, some of our customers, which maybe is Chinese customers, but they are shipping on a worldwide basis. And Amir mentioned earlier on headsets, earbuds, we are probably 45% to 50% worldwide market share our technology is embedded in excluding Apple. So in some of these devices and the overall IoT devices that we [ shared ], we saw flattish units, we didn't see a decline, and that's probably from inventory the build-out and filling the channels with a pretty strong start for the year. Does that answer your question?

Yes. That's very helpful. And then maybe just one on the kind of higher value deals that you're signing and licensing [ on the ] higher royalty rate. Can you give us any kind of framework how to think about those kind of higher royalty rates versus your kind of classic rates? And also, the licensing deal, can you help us, well kind of give us just a sense of kind of what -- how big they are versus your classic kind of licensing deals. I know every deal is different, but just kind of how to think about that from a kind of numbers perspective. That would be helpful.

Yes, not sure we could help that much. I mean, when we talk about multimillion dollar deals, these are bigger deals and larger deals in volume than we had in the past. So it could be a few million dollars for a specific deal depends on the technology and the market segment. Maybe historically in the past, those were a few hundred thousand for single use up to 1 million. And today, it depends on that technology and how many technologies we integrate into an agreement, it could be much higher numbers than that. Maybe that's a little bit of the flavor. And the same goes with ASP. The percentages, if it's multiple technologies are higher than just a standalone Bluetooth deal that we licensed 5 years ago [ like ], I think that's what we're referring to. The more content we add to these agreements, multiple technologies, newer technologies that come into play, and that's true across the newer Wi-Fi, Bluetooth, UWB, as well as the AI, and then the software packages that we have to -- an offering that we have today, we are able to charge higher percentages of the chip price at the end of the day or higher chips -- higher cents per chip.

Maybe David just to -- just to complement on -- on Yaniv comments regarding the royalty and China. Generally speaking, for this quarter, we are really encouraged actually with our customers worldwide and as well as in China in terms of their volume shipments. And part of that is the tailwinds that we discussed last year, where we see basically Wi-Fi penetrating more and more, we see the combination of the different technologies, the higher ASP [ with a ] different product mix that goes to market, as well as more and more new customers that are ramping either Bluetooth or Wi-Fi and in the future our UWB technologies, as well as the [ narrow band ] IoT or 5G for RedCap. So all in all, for this quarter, which typically is in consumer market seasonally lower than Q4, we have seen really great year-over-year growth, as well as on a quarter-over-quarter basis, a very strong demand for our customer base.

This concludes our question-and-answer session. I would like to turn the conference back over to Richard Kingston for any closing remarks.

Great. 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 Form 8-K and accessible through the Investors section of our website. With regards to upcoming events, we will be participating in the following conferences: Oppenheimer's 25th Annual Israeli Conference May 26th in Tel Aviv, Cowen 52nd Annual TMT Conference, May 29th in New York, the Mizuho Technology Conference, June 12th in New York; and Rosenblatt's 4th Annual Virtual Tech Summit 2024 June 13th, that will be held virtually. 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.