Good morning, and welcome to the CEVA Inc. second quarter 2017 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. 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, Andrew. Good morning, everyone, and welcome to CEVA's second quarter 2017 earnings conference call. I'm joined today by Gideon Wertheizer, Chief Executive Officer of CEVA, and Yaniv Arieli, Chief Financial Officer of CEVA. Gideon will cover the business aspects and the highlights from the quarter and provide general qualitative data. Yaniv will cover the financial results for the second quarter and provide guidance for the third quarter of 2017. I will start with the forward-looking statements. Today's conference call 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 our financial guidance for the third quarter and full year 2017, including the degree of confidence in the guidance, general market outlook, and revenue drivers for 2017, optimism about the licensing pipeline and our product portfolio, anticipated benefits of the newly executed portfolio agreement, adoption of new CEVA technologies in the Chinese smartphones, and market opportunities and ability to leverage market trends for vision and imaging, 5G, base station, and other strategic opportunities, and projected customer ramp-up schedules, market trends, and resultant royalty revenues.
The risks, uncertainties, and assumptions include the ability of the CEVA signal processing IPs for smarter connected devices to continue to be strong growth drivers for us, our success in penetrating new markets, specifically non-baseband markets, and maintaining our market position in existing markets, the ability of new products incorporating our technologies to achieve market acceptance, the speed and extent of the expansion of the 3G, LTE, and 5G networks, Bluetooth 5, and the IoT space, our ability to execute more broad portfolio license agreements, customers' ramp-up schedules, and the impact on royalty revenues, the effect of intense industry competition and consolidation, global chip market trends, and general market conditions and other risks relating to our business, including but not limited to those that are described from time to time in our SEC filings.
CEVA assumes no obligation to update any forward-looking statements or information which speak as of their respective dates. With that said, I would now like to turn the call over to Gideon.
Thank you, Richard, and welcome, everyone. The momentum in our business continued to build through the second quarter as we delivered strong financial results that exceeded the high end of our guidance. Our licensing business continued to accelerate, and in addition to 12 licensing agreements completed, we signed a second portfolio agreement with a major customer. The visibility in our licensing business continued to strengthen with record-high backlog and solid pipeline. Therefore, we are setting another record high licensing guidance for the third quarter and will revise upward our annual licensing guidance as well. With licensing performance re-occurring revenue, our product portfolio presents a broad customer base and the potential for CEVA to address the smart and connected world. Revenue for the second quarter came in $20.6 million, up 20% year-over-year. Licensing and related revenue was record high at $10.4 million, up 38% year-over-year.
During the second quarter, we concluded 13 deals, of which seven were for our DSP cores and platform, five were for connectivity licenses, and one was the portfolio agreement that I just mentioned. Eleven of the deals were for non-handset-based applications, and four were with first-time customers. Customers' target markets for licenses include smartphone, automotive ADAS, drones, surveillance cameras, wearable, industrial IoT, and variety of Bluetooth and Wi-Fi connected consumer and medical products. On royalty, revenue came as expected at $10.2 million, up 6% year-over-year, primarily driven by new non-handset products, including initial shipments of vision processor in smartphones and base station chips. Let me take the next few minutes to highlight a few of the agreements signed in the quarter. As I remarked earlier, we signed a portfolio agreement with a major customer during the quarter. Our second portfolio deals in the last 12 months.
These portfolio agreements grant broad access to our cellular connectivity, vision, and sound technology, as well as early adoption of our future roadmap products. These types of portfolio agreements are strategic and serve to solidify and extend our collaboration for future generations of products. It also paves way for CEVA lead position as a one-stop IP shop for sensing and connectivity solutions. We are delighted to have two of our major customers now signed up under these comprehensive agreements. Due to the nature of these agreements, revenue will be recognized in equal installments over the next few years. Two other agreements that I would like to highlight from the quarter are for our vision platforms. One is a large handset OEM and the other is a top-rated drone maker. Both are aiming to internalize the development of vision chips as a means to differentiate their camera experience.
For this purpose, these customers will capitalize on our vision platform along with the CNN, our deep neural network software and hardware solution. Smartphone OEMs are consistently enhancing their camera with advancements in low light performance, image stabilization, zoom, and neural net-enabled applications like scene detection, facial recognition, and more. In the drone space, our deep learning platform enables the most sophisticated drone workload called sense and avoid, which allows the drones to fly autonomously, detecting static and moving obstacles. Overall, we had another excellent quarter for our vision platform with four deals signed. We now have more than 30 customers actively designing products for a range of end markets, including automotive ADAS, AR/VR headsets, smartphones, drones, surveillance cameras, mirrorless cameras, and more.
In connectivity, we signed an important agreement for our Bluetooth and Wi-Fi products with a China-based SoC company that will soon emerge as a contender to the incumbents in the smartphone SoC space. This company is targeting the China domestic market, in particular the low and the mid-tier smartphone segments. It already licensed our vision and audio platforms and is now extending its use of our IP to include Bluetooth and Wi-Fi for connectivity portion of its chipset. In addition to our incumbency in baseband processing, this agreement provides us with additional royalty opportunity from the mass market of China-made smartphones, where 84% of the world manufacturing takes place. Turning to royalty. The second quarter royalty revenue reflects a seasonal weakness of post-Christmas and the inventory adjustment. Smartphone OEMs are making to set the stage for new SKU shipments in the second half of the year.
Non-baseband shipments were particularly notable, with units up 39% year-over-year, including first-time volume shipment of vision and base stations products. On a year-over-year basis, royalty revenue was up 6%, with units up 19%. In baseband, despite the muted growth in the overall handset market, the unit potential for mobile Internet-enabled smartphone continued to be sizable. According to recent Ericsson report, in the first quarter of the year, user of mobile Internet reached a new record high of 4.6 billion out of the total 7.6 billion subscribers, of which only 2.1 billion are using LTE. Beyond the growth opportunity we have in LTE baseband processing, we actively address two other substantial growth vectors in smartphone space. The first growth vector is increased content via our vision, voice, and connectivity technologies.
On vision, advancement in photography such as low light, zoom, and the expected proliferation of augmented reality application as seen by Google Tango and Apple's ARKit are already driving customers to incorporate our vision platforms along with our deep network framework. In this context, Vivo, one of the fastest growing companies in the smartphone space, announced last month the adoption of our Vision DSP platform in its latest X9s Plus flagship smartphone. On voice Use of multiple microphones for noise suppression to enable the growing use of voice assistant services such as Apple Siri or Google Assistant, as well as voice over IP, require the use of high performance and low power DSPs, along with advanced algorithms that we are set to offer.
In connectivity, new classes of wireless earbuds like the Apple AirPods, that could potentially displace the current wired earbuds, as well as the upgrade to 802.11ac MIMO in mid-range phones offer us additional opportunities to our connectivity portfolio with the major incumbents and newcomers. The second growth vector is 5G. Our strategy here is to address both ends of the network, the base stations and the edge devices, which include handsets and the anticipated billions of IoT nodes. Our platform solution complies with the performance and the power requirements of all 5G verticals, namely gigabit per second for smartphone, mission critical for automotive, and the massive IoT. Our base station products are applicable to all different form factors of base stations, among which are macrocell, small cell, millimeter waves, and others.
To summarize, I am happy with the strength of our licensing business and the substantial opportunity it possess in developing long-lasting customer relationships and royalty revenue streams. I am also encouraged by the recent royalty traction in the lucrative vision and base station spaces. Both are expected to be a strong contributor to our royalty revenue mix next year and beyond. With that said, let me turn the call to Yoni for the financials and the guidance.
Thank you, Gidi. I will start by reviewing the results of our operations for the second quarter of 2017. Revenue for the second quarter was $20.6 million, up 20% on a year-on-year basis. The revenue breakdown is as follows: Licensing and related revenue was approximately $10.4 million, reflecting just over half on total revenues, 38% higher as compared to the second quarter of 2016, a new record high. Royalty revenue was $10.2 million, reflecting just about half of total revenue and 6% higher on a year-over-year basis. Quarterly gross margin was 92% on U.S. GAAP basis, and rose to 93% on non-GAAP basis. Our non-GAAP quarterly gross margin exclude approximately $1.4 million of equity-based compensation expenses. Total operating expenses for the second quarter were above the guidance range at $16.8 million. This was primarily due to almost no R&D grant payments in the quarter and high employee-related costs.
OpEx also included an aggregated equity-based compensation expenses of approximately $2.1 million and $0.3 million for the amortization of acquired intangibles of Evelio. Total operating expenses for the second quarter excluded equity-based compensation expenses and amortization of intangibles were $14.4 million. Again, over the high end of our guidance due to the same reasons I just mentioned. Taxes. As we guided on our last earnings call, the second quarter included a tax benefit, resulted from the conclusion of a tax audit, following which we recorded an additional one-time tax benefit of approximately $1.8 million on both U.S. GAAP and non-GAAP basis. Our U.S. GAAP base net income and diluted EPS for the quarter increased 44% and 30% to $3.9 million and $0.17 respectively over the second quarter of 2016. Our non-GAAP net income and diluted EPS for the second quarter increased 38% and 33% year-over-year to $6.3 million and $0.28 respectively.
Those figures exclude equity-based compensation expenses, net of taxes of $2.1 million and the impact of amortization of acquired intangibles of $0.3 million. Other related data. Chips units by CEVA licensees during the second quarter of 2017 were 268 million. Down 24% sequentially, up 19% from the second quarter shipments of 2016. Of the 268 million units shipped, 222 million or 83% were for handset baseband ships, reflecting a sequential decrease of 20% from 276 million units of handset baseband shipped during the first quarter of 2017, a 16% increase from 192 million units shipped year to year ago. In non-baseband, volume shipments decreased 39% sequentially due to the post-Christmas seasonality, continued to increase on a year-over-year basis, this time by 39%. The year-over-year increase is also due to higher quarterly Bluetooth, vision, and first-time base station shipments in 2017 compared to 2016.
From a revenue perspective, second quarter non-baseband royalty revenue increased by strong double digits sequentially, although volume decreased, on a year-over-year basis, more than doubled. As for the balance sheet items. As of June 30, 2017, CEVA's cash equivalent balances, marketable securities, and bank deposits grew to approximately $170 million. Our DSOs for the second quarter of 2017 was down to 46 days, third sequential time down from the prior quarters of 58 days. During the second quarter, we generated $4.3 million of net cash from operations. Our depreciation was $0.5 million, the purchase of fixed assets was $0.8 million. At the end of June, our headcount was 301 people, of which 241 were engineers. Now for the guidance. On licensing, as previously described, we continue to experience robust demand across the entire range of products we offer.
Therefore, we anticipate another strong licensing performance for the third quarter, in line or better than the second quarter's all-time record high achievement. Moreover, we're also raising our annual licensing target from the old $34 million-$36 million range to over $40 million for the first time ever. On royalty, we expect a slight sequential increase in the third quarter, led by strength in our non-handset baseband product line offset by softness in the baseband business attributable to excess inventory in the Chinese low-tier smartphone market scene. For the remainder of the year on royalty revenue, we still lack the visibility of the timing and magnitude of recovery of the Chinese market and the timing of introduction of new CEVA-powered flagship SKUs.
Our guidance for the third quarter of 2017 is as follows: Revenue for the third quarter of 2017 is expected to be in the range of $21 million-$22 million. Gross margin expected to be approximately 92% on GAAP, 93% on non-GAAP basis, excluding an aggregate $0.1 million for equity-based compensation expense. Overall OpEx should be lower for the third and fourth quarter compared to the second quarter. Q3 OpEx is expected to be in the range of $16.4 million-$60.4 million. Of the anticipated total operating expenses for the third quarter, $2.1 million is expected to be attributable to equity-based compensation expenses, $0.3 million for the amortization of acquired intangibles. Our non-GAAP OpEx is expected to be in the range of $13 million-$14 million. Net interest income is expected to be approximately $0.6 million.
Tax rate in the third quarter on GAAP base, 16%, and on non-GAAP basis, 11%. Share count for the third quarter is expected to be approximately 23 million shares. U.S. GAAP fully diluted earnings per share is expected to be in the range of $0.16 to $0.18. Non-GAAP EPS forecast, excluding the aggregate $2.1 million for equity-based compensation expenses, net of taxes, and the amortization expenses of $0.3 million
Is expected to be in the range of $0.27 to $0.29 per share on non-GAAP basis. Andrew, you can now open the Q&A session.
We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Matthew Ramsay of Canaccord Genuity. Please go ahead.
Thank you very much. Good afternoon, guys, and good morning, everyone. I guess I wanted to start with, first of all, obviously big congratulations on the licensing momentum in the business and the diversification of it. I don't know, for Gideon or Yoni, either one of you guys, how do we think about the licensing potential long-term being sustainable at these levels versus the amount that you might need to invest in the business and grow operating expenses over that period of time? I'm just trying to look at the relative growth rates of that licensing business and the cost that you're pouring into R&D to develop these new technologies, and how we should think about the two growth rates of those going forward. Thank you.
Thanks, Matt. It's a good question. No doubt that we have extremely interest in our product. Across all the 4 business lines that we have, and it's a market leader. If you take, for example, the vision, 6 months ago, we barely saw interest of use of embedding vision processor in smartphone. I think last quarter, we had 2 deals in this respect, and we have few in our pipeline. 5G is an area that people were slow. Now we are hearing Nokia speaking about acceleration, and they are speaking about 2019 deployment. We believe this kind of thing creates a demand, and we are set to support. To quantify it at this stage is how we are extremely happy about this 25. Basically, we are now guiding 25% yearly increase in license.
We'll see it as we go to next year, this is very good effect. Matt, let me add some color on the expense line. I think the increase in expense, some of it is associated with higher headcount, and we did increase our R&D this last quarter, just shy of the 10 engineers in that front, and that's some of the answer that Gideon also was referring to. The higher expense level in the 2Q specifically, and to some extent the rest of the year, is more to do with lower R&D grants specifically for this year compared to prior year. We're still trying to understand why, and trying to come up with some new different program to fill the gap, but this is something that we were not expecting, and did have higher levels in prior year.
A little bit also, contribution to the U.S. dollar is not being as strong from an FX perspective as we all perceived to be earlier in the year. You saw the EUR, we see some other local currencies in Israel as well, being much stronger than the U.S. dollar, and that's hurting us a little bit on the FX this 2H of the year. Those are the main reasons for the expense. With that said, we're putting more efforts in R&D by giving expense that additional headcount.
Oh, got it. Thank you for that color. I much appreciate it. I guess this is my follow-up. Gideon, there's been a lot of movement in both unit dynamics and in baseband market share within the Chinese handset market over the last, I don't know, 2 quarters. No secret, some pretty big share gains from Qualcomm in effect. I wonder if you might talk about that market a little bit more in detail, where we are in terms of an inventory correction and coming out of it, and how the share shifts between 2 of the big suppliers there that are not typically your licensees might have affected some of the dynamics with the companies that are. I'd appreciate any color there. Thank you.
First of all, when it comes to Qualcomm, as far as we could see here, Qualcomm's strength is in the mid-high-end space. Those companies like Vivo or Oppo that are targeting global expansion to Western companies tend to pick Qualcomm in this respect. By the way, very interestingly, in the conference call, we said that we have a design win for vision with Vivo. This is a good example of people using a Qualcomm Snapdragon and add a chip with our technology just for the camera performance. In a way, we share the success with Qualcomm at the mid-high end, at least from the vision. Our customer and Yaniv, in the very much touch on it about some kind of softness. I don't think, and this is in the low-end portion of it, I don't think this is a market maturity there. On the contrary.
We think that India and the low end is a big opportunity. It's a transition there. They are moving from 2G to LTE. There are new, what is called LTE feature phone, which are smartphone but not Android-based. The volume is there. 96% of the phone, the chip in India, the second largest, is an LTE smartphone. The volume is there. There was some inventory, but to us it looked like a pause rather than market maturity.
Got it. Thank you very much.
Sure. Thank you.
The next question comes from Joseph Wolf of Barclays. Please go ahead.
Thank you. Thank you for the detail on some of the non-baseband opportunities, which is what I wanted to start with. If you look at the base station win or the one that's contributing to revenues right now, can you talk about the technology and the application that you're seeing and the geographic location of that win?
The company that started to ship our base station chips are going to ship it worldwide. It's not geography-oriented. This is what is called 4.5G to 4.9G. It's not yet 5G, but it's the most advanced LTE standard, the provision standard, that you have to speak about gigabit speed. These are very complicated chips with 20 and more DSP, our DSPs into this chip. The royalty is reflective.
Okay, that's helpful. If you look out for the next couple of quarters with the guidance that you've kind of given for the second half, there's no seasonality to this base station deployment yet. We're talking about early rollout?
Yeah. This industry is not seasonal. It's more like infrastructure investment cycles, investment infrastructure. We started to see shipments there, and it's the first time that we get royalties from this space. We need to learn a bit more about the practices in this business. We'll see. You're right, it's not a seasonal type of business. Of course, after that, Joseph, next year, we believe that the magnitude of growth is coming from that market, as we've said for a while, should be significantly larger than the initial shipments that we are seeing now. Hopefully, they also get a nice volume, but it's just a start.
Okay. That's helpful. Then on the vision side, the application right now is more, I guess, advanced camera features, then you mentioned some drones. I just wanted to go into a little bit more detail there. For the vision side, you talked about that being the high end of the market with the Vivo phone. Are those the ones that are going into the market right now? Again, those shipments, it would seem, would follow some sort of seasonality or new product introduction with the revenues coming as we see some take rates on higher priced smartphones. Then with the drone market, can you talk about how many or which segment, how many markets you're in, or which segment of the market you're in in terms of high-end versus high performance or kind of kid toy kind of drones?
Yeah. These are good questions. Let me, if I may, to elaborate on the vision addressable market or available market. The vision market is, I should say, two or three times more than what we have in baseband processors. For us, we are addressing it with the same technology. The big market for now are smartphones, which is, I think I answered last question to Matt, which is something that popped up or started to flourish in the last six months. Here, what people are looking is to put a camera processor that is capable to run artificial intelligence or deep networks, and by this achieving, by far more, better performance on the camera in terms of low light condition, stabilization. This is what you need if you want to enable augmentation reality.
These are valuable features that you can do whenever processor and capability to run neural networks and algorithms. The second largest market today is surveillance market. Just in China today, I am speaking about public surveillance camera, you have 150 million and expected to grow in 2020 to 450. These are just outdoor camera that runs all sort of face recognition. They can identify you or anybody else walking and even violating traffic lights and stuff like this. This is the second largest market. You can take Ring in the U.S. for a smart doorbell, the camera has to be smart and using technology that we offer. Then comes markets that are growing. You asked me about drone. Drone is a market. The primary use today is drone, at least from our standpoint, is in industrial, agriculture, not necessarily a consumer one.
These are also very smart, using artificial intelligence for sense and avoid. We have a lot of different camera, consumer camera, mirrorless camera, action cameras, and all sorts of things. There are things, and going forward, robots and stuff. It's a big market, and the good thing about it is that, because it's so diversified, we will not come and say, well, seasonality and things go ups and downs. It's somehow shared between the different verticals. That's what I. It's the same engine from our point of view. We can address all these different markets with XM6 or XM4. Back to the question on R&D, on this front at least, it's a very efficient solution that we came up with and can build on these markets that we discussed.
Thank you.
Thanks, Joseph. Watch out when you cross the street. I only dream large.
The next question comes from Gary Mobley of Benchmark. Please go ahead.
Hi, guys. Congrats on the continuation of strong licensing trends. On that topic, this new portfolio agreement, I am curious to know, is this with a first-time licensee or an existing licensee?
Existing. A significant customer of ours that right now we enable them to use not just one segment of technology that has been used in the past, but everything, essentially vision, sound, connectivity, Bluetooth, Wi-Fi, base station, handsets, and a really nice diversification of technology. Hopefully, these new designers will carry new royalties down the road.
Okay. Did this portfolio agreement contribute at all to deferred revenue? Relating to deferred revenue is down roughly $3 million sequentially. I know that is just one component of the total backlog.
No, not yet. That $3 million was an older deal. The new deal has not been yet recorded on the balance sheet, it probably should increase deferred revenue next quarter as soon as it gets paid. The very back end older deal. That specific one.
All right. Last question from me. You did not disclose this time the LTE royalty units. Could you give us that number?
LTE was 71 million units in the second quarter.
Okay. I lied. I do have one additional metric question. The non-mobile handset baseband royalty unit growth, I believe, was 39%. I think that was the number you quoted, more than a doubling in overall revenue, obviously implying a per-unit royalty rate increase probably fairly substantially. Is that mix-related? Is that base station SoC-related royalty contribution driving that? Could you give us a sense of what that base station SoC royalty unit contribution might be?
Sure. Let me first add on the LTE count that I answered earlier, a good question that you didn't talk about. During the first half of the year, when you look at some of the royalty reports that we received, the next quarter will be essentially already made up the annual volume of LTE shipments a year ago. That is so far progressing well. We talked about Q4 and what it stands for, that needs to run on top of last year's number to start off on the LTE count. On the non-baseband royalty. Now that overall number is still relatively small because the 10.2, it still contributes not a big portion of that overall. With that said, as you mentioned, it's more than doubled on a revenue per se.
The business and ASP in the base station market, I think is very similar to other segments that we have. In some cases, we could take more than 1% of ASP. These are very expensive. This could be $100, $150 type of devices. The ASP is much, much higher, of course, when you extrapolate that than what we had in any other markets in the past. Add to that a little bit higher vision royalties than our average, and that also has an interesting element of ASP. As long as we think of ourselves, with blended ASP, so many moving pieces, some lower, some higher, that you miss the point as long as the overall dollars are in the right trends.
I think we're happy to analyze that because the market, the mix doesn't make too much sense overall when you have some of the higher with some of the lower PPC.
All right. Thanks, guys.
Thank you.
Our next question comes from David O'Connor from BNP Paribas. Please go ahead.
Great. Thanks for taking my question, gentlemen. Congratulations on the solid results. I have a question about the China smartphone weakness that you're calling out. If I remember back to Q1 call, you mentioned that your Chinese-based customers were mainly shipping into India, where smartphone growth continues to be very strong. I'm just wondering, has there been some change in the dynamics this quarter versus last quarter among your Chinese handset customers? That's my first question. Thanks.
Hi, it's Gideon. That's exactly how it works. The supply to India is coming from Chinese OEMs and ODMs that specialize in the low-cost segment. Because in India, it's primarily low cost. Now, in India, when you look at the statistics last quarter, Q2, it was flat in overall phones and 4% in smartphone. These are very low numbers that we are used to in India, 20%-25% year-over-year growth. We are speaking here of 4% in smartphone. I believe as a result of this market demand, and I think we know the reason for that, created inventory in China. That's the reason that our customers who specialize, our chief customers who specialize in China, didn't ship that much, that many into the market of India. India is a very dynamic market.
I think there are a lot of initiatives to move past 20, including free smartphones and including feature phones which are unique to India. As I said in the beginning of the call, I don't think there is a maturity in the market. It's a pause. It's a transition from where they are today, 2G and 3G, to LTE, they should recover one way or another. Whether the partition between Q3, Q4, this is something that where we are today, we don't know. I think what's important for us, is the fact that the market is there and our customers are well-established in supporting the market needs.
Okay. Thank you for that. That's helpful. As a follow-on as well, looking at your 40% baseband share, when you look at that, how sustainable do you think that level is? Can we expect it to still edge upwards when you look at the dynamics among the major players in the smartphone space at the moment? I have one additional question. Thanks.
Sure. The 40% we were there before, it changes anywhere from mid-30s to the 40, every 1% or 2% jump. Overall, it depends on the mix. Today in 2G, we have probably north of 85% to 90% in 2G. The major is our low-cost guys that run that business. In 3G, just shy of 60% of the market. Again, sometimes every quarter, you have a little bit of either phones that are going into market or less new SKUs into that. In LTE is where we put most of the emphasis in. There we have about 20%. Last quarter is about 20% worldwide market share. The goal here, of course, over time, is to increase it partially by these markets that Gideon talked about, partially from high-end, well-known SKUs that are coming out every once in a while.
I think we're trying to tackle every market segment of the LTE. A few years ago, our market share there was zero or 1%. Today, it's 20%, the goal is to further increase that.
Okay, thank you. As a final question, I have a question on your vision in automotive. The main application you see with your automotive customers or licensees, is it primarily vision, or do you think there's other applications in there that you're discussing with your customers as well as we go forward towards the autonomous car? Thanks.
When it comes to vision, this is a technology for camera. The customers that are taking the technology are looking for the ADAS, which means installing either a front-facing camera or smart mirror cameras on the rear side for parking purposes. In general, CEVA, we can address and already engage with customers both on the connectivity side, people who install, we have in the car LTE and 5G. We have customers that shipping modems into this space, and also in Wi-Fi and Bluetooth. Wi-Fi, most of the cars today have a Wi-Fi access point, we have customers targeting this space. Bluetooth has what we call infotainment, the capability to speak with cell phone using the speakers of the car. These are technologies that can boost up Bluetooth. We are addressing the car market from different technology.
Very helpful. Thank you.
Thank you.
The last question will come from Suji Desilva of Roth Capital. Please go ahead.
Hi, Gideon. How are you? Congratulations on the strong progress here. The customers that are new to CEVA, can you talk about what areas you're seeing those customers in? Because you already have a very strong licensing base. I'm curious where the new ones are coming in.
Well, the newer are smartphone, as I said, smartphone, the SoC guy. I am not talking about guys that doing camera chips side by side, the SoC, the AP, the application processor. These new ones, and these are high volume guys that we license in the quarter and the quarter before. surveillance camera, we have a very big customer that licensed our technology this quarter. The drones I mentioned in my prepared remarks. It is a top-rated company. It is known as the kind of all-doing surveillance intelligence drone and two vehicles. Sorry. Did you ask about these or on the overall new customers? Okay. These new customers that built the spec.
Okay, great. My other question is on the wireless infrastructure that started ramping here. What kind of linearity do you expect to that ramp? Will it be lumpy, or do you have a sense of whether it will grow every quarter just to get an understanding how that will play out?
The wireless infrastructure is a sexy kind of an industry. It is not a seasonal business. Meaning there is a ramp-up investment by the operator, and they build up base stations. For us, it is new. We do not know exactly at this stage where these base stations are going and what are the cycles that are there. We know it is a so-called 5, so-called 4.9G, not LTE anymore. This is what we know at this stage. We will let know and probably share more information.
Okay, that's helpful. Great. Thanks, guys.
Thank you.
This concludes our question and answer session. I would like to turn the conference back over to Richard Kingston for closing remarks.
Thank you, Andrew. Thanks everybody for joining us today and for your continued interest and support of CEVA. We will be attending the following upcoming conferences and events and invite you to meet us there. On August eighth, we'll be in Boston at the Oppenheimer Annual TMT Conference. On August ninth, we'll be in Boston at the 37th Annual Canaccord Genuity Growth Conference. September sixth, we'll be in New York at the Drexel Hamilton TMT Conference. September seventh, New York again for the Citi Global Technology Conference. September twelfth, we'll be in Las Vegas for the Deutsche Bank Technology Conference. Please visit the investor section of our website for further information on these events and other events we will be attending. Thank you and goodbye.
The conference has now concluded. Thank you for attending today's presentation.