Earnings Call: Q3 2020

Nov 5, 2020

Good morning, and welcome to the CEVA Inc. 3rd Quarter 2020 Earnings Conference Call. All participants After today's Please note this event is being recorded. I would now like to turn the conference over to Richard Kingston, Vice President of Market Intelligence And Investor Relations. Please go ahead. Thank you, Brandon. Good morning, everyone, and welcome to CEVA's third quarter 2020 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 on the third quarter and provide general qualitative data Geneva Bank covered the financial results for the third quarter and also provide qualitative data for the fourth quarter full year 2020. I will start with the forward looking statements. Please note that today's discussion contains forward looking statements that involve risks and uncertainties as well as assumptions that if they materialize or prove incorrect could cause the results of CEVA to differ materially from those expressed or implied by such forward looking statements and assumptions. Forward looking statements include guidance and qualitative data for the fourth quarter full year 2020, optimizing about 5G base station RAM deployments in China, relationship with VGE, and opportunities presented by our sensing and connectivity technologies. Optimizing about the continued momentum in base station and IoT royalties, market traction associated with a low end smartphone and production schedule associated with our ADAS agreement. 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, the extent and length of the restrictions associated with the pandemic and the on customers, consumer demand and the global economy generally, the ability of CEVA's IP for smarter connected devices to continue to be strong growth drivers for us. Our success in penetrating new markets on 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 non handset base and license agreements, the effect of intense industry competition and consolidation and global chip market trends. Either assumes no obligation to update any forward looking statements or information which speak as of their respective dates And with that said, I would now like to turn the call over to Gideon. Thank you, Richard. Good morning, everyone, and thank you for joining us today. CEVA delivered a very strong quarter highlighted by record royalty from our base stations and IoT product category and licensing agreements with major players in key industries. Before we expand on our 3rd quarter results, I would like to acknowledge the tireless effort of our talented employees around the world that continue to deal with the challenges COVID 19%. With the hard work, we are successfully growing our business, keeping the commitment to our customers and maintaining the fast pace of innovation and new technology development. Thank you all. Total revenue for the third quarter was $25,000,000, up 6% year over year. Our licensing business continues to be solid at $12,400,000 for the quarter, up 10% year over year. Royalty revenue was $12,500,000, up 3% on a year over year basis. We concluded 13 new agreement during the quarter of which 5 were for connectivity and 8 well for smart sensing. 6 of those agreements well with first time customers. Target applications of our new licensing agreements include strategic design wins for ADAS with 1 of the largest automotive semiconductor player, which I will expand later on the call. Other target application for our customers this quarter include digital imaging, 2 wireless stereo earbuds, smart TV, and digital conferencing systems for home use, a growing space as more people are switching to work from home permanently and upgrading their home office setups. On royalty revenue, we have We had a strong quarter, driven by record shipment for our base station IoT product category. Formally referred to non handset product. Royalty revenue from these categories grew 86% sequentially and 1.05% year over year to reach a record of $7,900,000. We have benefited from expedited 5G run deployment in China, which I will touch on later in the call. And from series of product launches and shipment enabled by our Bluetooth, Wi Fi And Senseofusion Technologies. In our handset basement category, we saw a strong recovery from our China based customers targeting real P of 4G smartphones and feature phones for India and other developing economies. Relative to premium tier smartphone declined on a year over year basis as new 5G smartphone Series launched last month uses more than from another supplier that does not incorporate our technologies. With that said, Our technology remained incorporated in the low cost smartphone of this customer, launched earlier in the year, which continues to have a strong market traction around the world. Let me take the next few minutes to elaborate on 2 key developments in the quarter. The first is monumental agreement in the automotive ADAS space and the second is the underlying drivers that deliver a step up in 5G run world. The digital transformation in automotive industry of which ADAS is a key driver has led to dramatic increase in the usage of software and AI to analyze data collected by the cameras and radar sensors surrounding the car. Furthermore, amidst the push by players such as Nvidia and Mobileye that were the on closed and vertically integrated solutions Automotive Tier 1 and OEMs are seeking for an open high performance technology where they can take advantage of their in house silence while not being locked into a certain vendor. Against this backdrop, our powerful DSPs AI Technologies and our collaborative business model set a comprehensive foundation that enable OEMs to become supplier agnostic and translate their innovation into a competitive edge. In this regard, the unique opposition of our leading edge Sense Pro DSP, along with our CDNN AI compiler technology were instrumental in obtaining a new comprehensive agreement we signed in the quarter with a major semiconductor player in the automotive space. This agreement is based on a project our customer won with a very large automotive manufacturer in Japan for an ADAS solution for new N2 plus and L3 cars, which are projected to start production by 2025. On 5G 1, the transition from non standalone to standalone more the 5G new radio is already underway, in particular in China. According to government data, Chinese operators has already deployed 480,000 5 gs base station as of the first half of the year. This represents about a third of the global run market. Fiba is a client beneficiary of this upgrade cycle in China through our strategic relationship with ZTE. China Mobile China Telecom And China Unicom has engaged ZTE in large scale for these deployments As a result, its market share climbed to 30% within those operators. Furthermore, in comparison to 4G, 5G present higher content in a larger addressable market for us, resulting from the use of active antenna units, Aau. In the base station radio unit. Deployment of active antenna settings provide operator with substantial increase in network capacity data rate, higher energy efficiency and overall lower cost of ownership. The latest advancement in active antenna technology require massive DSP computing provider items such as massive NIMO and informing, which can optimally serve by our advanced CEVA exit wells and CEVA exit 16 DSP. We are therefore presented with additional content and higher volume opportunity in addition to our proposition for baseband processing. Valtors for multiple antenna has already made noticeable contribution to our 3rd quarter royalty reports. So to summarize, our third quarter performance demonstrated the continued meaningful progress we are making across our businesses. Our technologies for sensing and connectivity are fundamental to any intelligence device and we lead the transformation in 5g Networks And Automotive Space. We are managing our business for the long haul and confidence in our growth strategy. Yet, we remain determined and focused to drive efficiency and prudency to cope with the ongoing uncertainty COVID-nineteen projects. Finally, I'd like to thank again, our customer, partner, and see the hard work in place. Your health and safety continued to be our first priority. With that said, let me hand over the call over to Yaniv for financials and guidance. Thank you, Gideon. I'll start by reviewing the results of our operations for the first quarter of 2020. Revenue for the third quarter was up 6 percent to $25,000,000 as compared to $23,500,000 for the same quarter last year. It is the highest 3rd quarter revenue we ever recorded. The revenue breakdown is as follows: nicely related revenue was approximately $12,400,000, reflecting 50% of total revenue 10% higher than $11,300,000 in the first quarter of 2019. Royalty revenue was $12,500,000, representing 50% of our total revenue, 3% higher than $12,200,000 from the same quarter last year. ROCE revenue from our base station and IoT product line in the quarter reached a new record high of $7,900,000, up 86% sequentially and 105% on a year over year basis. Corning gross margin was 90% on a GAAP basis and 91% on a non GAAP basis. Both significantly better than what we projected. Non GAAP quarterly gross margin excluded approximately 0.2000000 dollars of activity based compensation expense and $2,200,000 for the impact of amortization of acquired intangibles. Total GAAP operating expenses for the third quarter was at the upper range of our guidance at $22,500,000. OpEx also included aggregated equity based compensation expense of approximately $3,400,000 $600,000 for the amortization of the required intangibles. Our total OpEx for the quarter, excluding these two items, were $18,500,000, slightly above second quarter level and also at the upper range of our guidance. Note, The third quarter 2020 financials include a $1,000,000 tax expense due to withholding tax which cannot be utilized in future years. Our third quarter 2019 financials included a $1,000,000 ex benefit as a result of a successful conclusion for the tax hike. U. S. GAAP net loss for the quarter was 0 point $7,000,000 and diluted loss per service $0.03 for the third quarter of this year as compared to net income of $800,000 and diluted earnings per share of $0.03 for the third quarter of 2019. Non GAAP net income and diluted EPS for the third quarter was $3,600,000 $0.16 respectively. Our non GAAP net income and diluted EPS were for that 2019 were $5,100,000 $0.22, respectively. How the related data. Shipped units by SEMA's licensing during the third quarter of 2020 were 349,000,000 units, up 51% sequentially and 20% up from the third quarter of 2019. The 3 49,000,000 unit shipped, 149,000,000 or 43% for for handset based benches, reflecting a sequential increase of 50% from 99,000,000 units of handset baseband shipped during the second quarter of this year. And a 12% decrease from 169,000,000 units shipped a year ago. Our base station and IoT product shipments were a record 200,000,000 units for the quarter, up 52% sequentially and 63% up year over year. As a reminder, we have categorized all our non handset basement chips under the umbrella of base station and IoT category since the beginning of this year. As for the balance sheet items, as of the end of September, give us cash cash equivalent balances, marketable securities and bank deposits were $153,000,000. We did not repurchase any shares during the quarter, We have approximately 500,000 shares available for research. Our DSOs for the third quarter was 57 days, higher than the second quarter level, but lower than the first quarter level. During the quarter, we used $4,300,000 of Cash from operations, our depreciation and amortization was $1,400,000 and the purchase of fixed assets was $1,200,000 higher than the norm for larger investments in hardware, computer servers, and in engineering development software. At the end of the third quarter, our headcount was 390 eight people, of which 3.31 were engineers, slightly down from a total of 401 people at the end of June. Now for the As demonstrated by our financial results for 2020 thus far, Divan's product and customer diversity, enable us to migrate the disruption that COVID-nineteen possesses. Amid continued economic uncertainty We expect our 2020 total revenue to increase over 9% year over year to a record annual high of $95,000,000. We believe the momentum we saw in the third quarter in base station and IoT royalties will extend into the fourth quarter. Licensing the demand for our connectivity and sensing technologies remained high. We are relentlessly working to translate these opportunities into licensing revenue. Specifically, for the fourth quarter, gross margin is expected to be approximately 88% on a GAAP and 89% on non GAAP basis, excluding an aggregate $200,000 for both equity based compensation expenses, and the same amount of amortization of other assets. OpEx for the 4th quarter is forecast to be slightly lower than the last two quarters. GAAP based OpEx is expected to be in the range of 21.9 to $22,900,000. Of our anticipated OpEx for the third quarter, $3,500,000 of expected to be attributed to equity based compensation expense and 0.6 for amortization. Our non GAAP OpEx is expected to be in the range of $17.8 to $18,800,000. Net interest income is expected to be approximately $700,000, taxes for the 4th quarter expected to be approximately $600,000 going to be 23,300,000 shares. And Brandon, you could now open the Q And A session. Thank you. We will now begin the question session. Our first question comes from Matt Ramsay with Cowen. Please go ahead. Thank you very much. Good morning. Good afternoon, everybody. I guess just a quick clarification patient, any use could. I think the line broke up a bit on my end when Gideon was talking about the specific revenue for the base station business in terms of royalties in the quarter, if you could re clarify what that number was and maybe what it was year over year. And then the question on that front is with Huawei being, under scrutiny and potentially impaired in terms of getting their own silicon from their own silicon division. How are you guys thinking Gideon over the next? 12 to 18 months, what that might mean for your customers in the 5G base station business about their trajectory of billing in for some of those voids that Huawei might be leaving in the industry and how that might change how you're thinking about the potential over the next 18, 24 months for your business and royalties for base stations? Sure. Good morning. I'll start with the first question. I don't think there was any line breaking we didn't mention specifically any numbers related to base station royalties in the third quarter. We did say, however, that our base station and IoT device, this is the bucket that we are now representing all the more, the newer technologies and markets that CEVA is engaged in over the years have reached an all time record high of $7,900,000. To remind you, that same category for the first half of the year was also $7,900,000. So within 1 quarter, we have seen a tremendous growth in our newer market loyalty contribution. A big portion of it was from 5G base station ramp up by VTE. We did mention that. Smart antennas and their market share growth into China. Specifically. And the rest, it came across all the industries were active and we came in at record high my Bluetooth royalties, Wi Fi royalties, sensor fusion royalties. So a lot of different similar related devices and infrastructure for 5G help us reach that record number for this quarter. And while we are on the, we're free to begin. So Huawei, it's a it's how to answer how this shape up to grow the Huawei was strong in the market First of all, because they were superior in their technology advanced than other, and specifically the active antenna that I refer. So a return in the prepared remarks. So ZP is the 2nd company today that offer an active antenna in production. So in this respect, there are gaining share in China specifically. And but how on a global basis, the share of Huawei was split between Nokia, Ericsson, ZTE Samsung, These are the names that we do. It's hard to say at this stage. Got it. Thanks guys for the detail there. As my second question, Katie and I understand that there may be some things you can disclose and some of these can't, but I wanted to follow-up further on the new automotive design win or agreements that you guys have gotten in place now with the Tier 1 chip supplier that you mentioned. If there's any additional detail that you give about number of chips per car, royalty potential per car, how broad that agreement might be in terms of auto units that it might be exposed to. Any additional details there would be helpful and congratulations on that win. Thanks. The automotive is a strategic market that do. Last quarter, we had a very large deal in the on the power of the call and now we talk about ADAS. The only thing that I can say is what we said in the prepared remarks. First of all, it's a project, meaning it it's a design win and it's a one way peak. Meaning, if you do all, we have to follow all the step and then start the production will be 20 25. And before there is a sizable large OEM in Japan that deployed this project. And the third one, it's mid range, Carl, that means volume and versus the premium. So these are the 3 components that for now we can share. Got it. Thanks very much guys. I'll come back in the queue. Sure. Thank you. Our next question comes from Tavy Rosner with Barclays. Please go ahead. Hi, this is Peter Debski on for Tommy. Congratulations on the great quarter. Maybe first ask one of the previous questions in a little different way since we really love some more detail on the base station traction. Could you maybe give us an idea of how many base station units were represented in that $7,900,000 of royalties or even some sense of the ASCs there? And then as a follow-up, how do you see the to the runway in China in terms of the pace of the 5G rollouts and where they are in that deployment cycle? Yes. Sure. So we don't break out the numbers of specific customer of how many ships. But unfortunately, but we do bundle it with the 200,000,000 units that reached record high. So, of course, base station is on lower, smaller quantities of those $200,000,000, but it's a significant contributor and a step up from what we had before due to, as they didn't explain, both supplying the modem as well as the smart antennas, which their volume could be much, much higher than our traditional modem only type of socket. This could be a few tens of antennas per base station And that's the opportunity we have in the future, but we don't we can't. Unfortunately, they open up specific volumes for a specific customer. I hope that helps a bit. That helps, but thank you. And then as far as do you see this the pace of of ZTEs rollout accelerating from here? And then how many quarters do you think that could be sustained? Yes, I mean, the prospect for 5G is bigger than basis because we spoke, we speak about base station and we refer to the big one, the macro base station. But as time goes by and 5G the technology itself becomes more mature and that's something that in a year 2 years, no more than this, you're going to see smaller scale base station private base stations. So you think about manufacturing line or Toyota or whatever, and they will, can install their own 5G network private network where they can used for the robotics and with fast connection to the cloud where they do AI. So we use the term transformation because the way to look on 5G is not just how many big base station you have and how many antenna hoops to it, which is also a new one. So, and that's something that feeds out a lot of estimation, a part to each other in a big way. So we don't know exactly, but we talk about here in millions of a smaller size base station with antennas and all of them. We have the opportunity to have the content forced for the baseband and for the active antenna. That's helpful color. Thank you. To add one more thing, when we talked about the opportunity with ZTE, And it's an operator driven business, perm implementation of the city over place of a network we don't have ahead of time that visibility. That was in the arrears when we get the royalty report for a specific quarter, we know better that was installed in that specific day quarter. Bear in mind that the next year, we're also looking to have another OEM start to deploy our solutions which is Nokia. So as soon as they get into production, it's not going to be only DTE, but another base station and as we didn't say on top of that, we have other aspects of 5G and customers in that space that hopefully should be ramping up as well as we have licensed our technology to them away. All this is in the pipeline in the coming years. Great. Thank you for that. Sure. Thank you. Our next question comes from Suji Desilva with Roth Capital. Please go ahead. Hi, Gideon. How are you and Eva? Congratulations on the progress here. Looking ahead to calendar year 'twenty one, across the non baseband, the 5G base station, the IoT connectivity, the sensors. Can you talk can you talk about the strongest growth opportunities in the calendar 2021? Because it seems like all three of those are doing well. Just want to know maybe rank order, which ones would have the best option for growth contribution looking out to calendar 2021? Till early in the morning, so I didn't bring my glasses. So I don't see as far, but if I look at only 2020, just because of the site vision here, And remember 2020 when we started the year and this was pre corona, our target for base station IoT was reach a like a $20,000,000 target, which was huge for us. As you recall a few years ago, we were at $4,000,000 a year ago last year, we were $13,000,000. And we talked about 20. 20 is a 50% growth that you don't see in the semi space, in the consumer space, This is something that we believe that we could reach. With COVID and all the things that are around us these days, we are today much more confident of surpassing that quite nicely and even reaching those 60% to 70% growth this year in 2020 because of the momentum on all these different markets and the Finally, we're seeing these nice tractions, even better than what we started the year with. Hard to say we didn't do our is for 2021 yet. It's still early. We'll do it as we always do in the first call of the year and try to give them more data and insights around that. But for sure, if you look back 3 or 4 years where we were with them and where we are today with north of 20,000,000 in all these new markets, it is working out extremely well for us in all the different fronts. And this is part of the growth that we are looking into the future. Thanks, Anita. That's helpful. And then perhaps second question for Gideon. Automotive, congratulations on the win there for me as well. Can you talk about the key factors that are driving CEVA adoption versus competitive solutions? Are there any shifts in automotive architecture or trends going into the L2 plus L3 that make the CEVA solution more favorable versus competitors? Thanks. Very high entry barrier to get into the automotive market in general. Need to have a pedigree, and we are in this market developing relationship with OEM, not the semiconductor for almost 4 years now. Now it's typically for L2 plus and L3 just for people that don't really knows what is L2 plus or L3. L2 plus is basically similar to autopilot that Tesla has today. So it's a, it's cautiously, on autonomous driving. And you have to have a substantial performance, capabilities because you have to fuse many sense. So many cameras could be 12 cameras and radars could be up to 16. So you need to fuels then to get an holistic view of 360 degree. Now, our endgame is in 2 forms. 1 is our BSP processing and this specific customer will take the bleeding edge BSP. We came out recently with the new DSP category. It's not just next generation. It's called, we call it SensPro, and the theme of Sensors is through Sensors Fusion, meaning combining the inputs from different sensors. And that's one element. And the other element is the AI portion. And the AI portion, the key entry, the key point there is the software. And we came out early on, almost 4 years ago, with our compiler technology, which we call it CBN and see that deep neural network. And that was, in my opinion, in fundamental to get the deal because the customer would see how he developed an inference in software using our processors and other hardware that they have in the cheaper in the system. Okay. Thank you, Kenny. Thanks guys. Thank you, Susan. Our next question comes from David O'Connor with Exane BNP Paribas. Please go ahead. Great. Good morning and thanks for taking my questions. Just a couple of kind of follow ons on my side. Maybe firstly, getting on the ADAS win. Can you tell us which geography this customer was in? And then the Japanese win at OEM site. Is that a platform win or is it just one car? That's my first question. And I have one or 2 follow ups. Thanks. Oh, it's a platform. It's a it's a Japanese OEM. That's That's the only thing that we can share at this point. Okay. Got it. Understood. Maybe turning to the base station slides, on the active antenna unit, how should we model that long term can that grow to as big as the base station baseband? So any baseband, let's say cheaper baseband that is base station, you're going to have between 3 to 20 or even more antennas hooked together. Okay. So, the way to model it is at the minimum 3 times, it can go up to 10 times. Their base station. Of course, it's different shifts. So the price is also an ASP is different between them. And for now, not all of our customers or our players in the industry have that capability. We talked earlier about Vawi and DTE having that Others will follow and we have good chances of licensing these technologies to others, but it's yet, it's not yet across all the industries. So this is something that we have been among the first to have and look at it as a nice interesting growth opportunity in the near term also in the licensing front. That's helpful. Thank you. And then maybe as a final one, can you talk a small bit on the licensing pipeline as we approach the end of the year and you start to look into next year, what is the kind of status of that right now? Thanks. So, licensing is looking very solid. We, the, let's say, the hotspot there our 5G, all the different aspects of the base station, and he said about newcomers into this market because the antenna portion is because of the volume attract many, many companies from by the way, from different angle, it could be optical transceiver company that IDSP for this one. It could be a networking company. It could be and antenna company. So all of them, we try to get the share in this very lucrative space. So then one hotspot, the other hotspot is Wi Fi, all the different aspects due to the access point that people wants to move to work for home and IoT, different kinds of IoT. Then going forward, we have all the computer vision and AI We have strong interest from all different people, I'll start talking about AR, now implementation reality, mix reality, to wireless, that's going to use the market with by seeing all over the place starting from $20 to $200. So the good thing about CEVA is that have those common denominators that allow us to, cover all those aspects. And then, whether it's a high volume or whether it's a high value market. And that's drive the licensing. It's spread all over the place. You cannot really see with any consolidation. It everything that relates to IoT, which is sensors or connectivity. That's what we offer. And one more thing I would add that if you look at an annual basis, we're saying that this year, we will pass $51,000,000 in licensing for the very first 9 after being at $48,000,000 last year. And before the $48,000,000 were at $30,000,000 levels for a few years. So within a very short period of time, we jumped from 20 to 30 to 40 now to 50 for the very first time or more than 50 and licensing. So those markets and those technologies that we went into really paid off and these R and D investments that we have put over the years have really paid off to increase the licensing activity. Very helpful. Thank you. Thank you. Our next question comes from Gus Richard with Northland. Please go ahead. Yes, thanks for taking my question. Just on the ADAS win, is this just cameras and radar that you're doing centrifugeing for or does it include, you know, lidar, VIDAR or Sonar, or is that yet to be determined? It's all of the above, meaning it's all of those sensors that you mentioned. And yet to be at least from our standpoint, yet to be determined, what sensor that ended up. For sure, it will be radar and radar and camera. These are the master, whether they hook lighter there on top of it, it's to be determined. And just a further clarification, there's a lot of vagary around L2 plus and L3, is this, targeted towards hands free highway or, is it is it some other incremental improvement over L2? I hope it will not use it in cities, but the idea is that you, you put it in autopilot mode. It's by myself, you still have to hold your hands on the wheel, and let it drive. So it's I think it's a good solid, gap filler between here and when you go to 114 wise when people, I should say sleep in the car. Got it. I understand. Thank you for that. And then on the base station, it is, your second base station customer, contributing to royalty in the third quarter? And if not, when do you expect that to really start to kick in? No, we haven't seen yet, but in production, that's our second customer. I believe he always referenced to their earnings call and to their, to their deployment of re chart, which is underway and the modem piece from an RF perspective. And the modem piece is these days, done by Marvell and they're talking about the end of the year being ready for production. So It should be early next year in production. And as soon as we get more information, from them, we will be happy to share. But for now, in this year, it's not yet in the numbers. Got it. Okay. Thank you so much. Our next question is a follow-up from Matt Ramsay with Cowen. Please go ahead. Thank you guys for letting me jump back in. I think the conversation here has been really helpful on the longer term drivers of business. Yaniv, I wanted to ask a little bit about the fourth quarter guidance, if you could maybe walk us through the puts and takes a bit on revenue, it looks like, going to be down a couple of $1,000,000 sequentially Maybe if there's any help you can give on which piece of that decline might be licensing versus royalty that would would be helpful. And then on the royalty side, is the primary driver of it being down sequentially just the shift in modem procurement for Apple or are there other things that are that we should consider? Sure. So on the licensing front, as Gideon said, and we mentioned earlier, we're looking at a solid quarter overall, in order to reach that north of $50,000,000, we always said that anywhere between $11 ish to $12,000,000 something that we are comfortable with. When we were at the $40,000,000 level, it was around the 10 ish. Now we, that's the next pet function was a notch higher than that. I think the beginning of the year was stronger in that. We cannot really time the licensing activity and we when we look at an annual basis, we're very, very happy with the results of this year. And this is where the licensing should fall in. Somewhere in order to reach that north of $51,000,000 for the year, which was our initial plan. And we have hit the nail on that. Or planning at least. That's the plan. On what is, as we also realized over the years, especially this year. There are a lot of moving pieces. There are pieces of the timing of introduction of lower cost phone including by lead U. S. Handset that came out earlier this year unexpectedly and that helped us in the beginning of the year. There was this Q3 ramp up and it was the base station side. It was because of COVID, there was a lot of consumer devices that, for home office, Gideon also talked about earlier that surprise the magnitude of us, or TVs, not necessarily a strong quarter in the second or third quarter of the year to be more of a Christmas type of quarter. I didn't feel it was completely different. So, overall, we look at royalty after a very strong Q3 and with many good surprises and shifts there while looking at something similar for the next quarter. And that's pretty much all we could stare right down because it's hard to guess. We need to look at the hindsight and get the royalty report and then calculate the numbers. But we're looking at something quite similar to where we are today. So it may not help. Again, if you compare it to last year, we had a very strong Q4, it's sporadic after being in 2019, Q1, Q2 could see, wasn't the $10,000,000 $11,000,000 range and then Q4 suddenly jumped. This year, we started with a great momentum in beginning of the year, that 11:12 ish level is also something that we're very happy and feel comfortable. And that's pretty much how we see next quarter looking like. No, thank you. You need for all the additional detail. I really appreciate it. All the best guys. Cheers. Sure. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Richard Kingston for any closing remarks. Thanks, Brandon. Thank you all for joining us today and for your continued interest in CEVA. As a reminder, the prepared remarks for this conference call are filed as an exhibit to the current report on Form 8 K, unacceptable through the Investors section of our website. With regards to upcoming events, we will be participating in the following virtual conferences in Q4. A rough technology virtual event on November 11th, Wells Fargo PMT Summit 2020 on December 1st 2nd, Barclays Global Technology, Media And Telecommunications Conference on December 9th 10th on the Oppenheimer 5g Summit on December 5th team. For further information on these events and all events we would be participating in can be found on the Investors section of our website. Thank you and goodbye. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.