Earnings Call Transcript - CEVA Q2 2023

Operator, Operator

Good day, and welcome to the CEVA Second Quarter 2023 Earnings Conference Call. Please note, today's event is being recorded. I would now like to turn the conference over to Richard Kingston, Vice President, Market Intelligence and Investor and Public Relations. Please go ahead, sir.

Richard Kingston, Vice President, Market Intelligence and Investor and Public Relations

Thank you, Rocco. Good morning, everyone. I'm well in the CEVA's second quarter 2023 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 discussions contain forward-looking statements that involve risks and uncertainties as well as assumptions that, if they materialize or prove incorrect, could cause the results of CEVA to differ materially from those expressed or implied by such forward-looking statements and assumptions. Forward-looking statements include statements regarding market trends and dynamics, including anticipated recovery in semiconductor startup funding and opportunities for WiFi and generative AI, our market position, strategy and growth drivers, demand for and benefits of our technologies, and expectations and financial guidance regarding future performance, including expected recovery in revenues and guidance for the third quarter and full year 2023. 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 effect of intense industry competition; the ability of CEVA technologies and products incorporating CEVA's technologies to achieve market acceptance; CEVA's ability to meet the changing needs of end users and evolving market demands; the cyclical nature of and general economic conditions in the semiconductor industry; CEVA's ability to diversify its royalty streams and license revenues; CEVA's ability to continue to generate significant revenues from the handset baseband market and to penetrate new markets; and CEVA assumes no obligation to update any forward-looking statements or information, which speak of their respective dates. In addition, we will 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-dsp.com. With that said, I'd like to turn the call over to Amir, who will review our business performance for the quarter and provide some insight into our ongoing business.

Amir Panush, Chief Executive Officer

Thank you, Richard. Welcome, everyone, and thank you for joining us today. Our second quarter results reflect the dynamic environment impacted by challenging macroeconomic conditions that have led to slower-than-expected recovery in some regions. On the other hand, we also saw resumption in chip demand following a few quarters of inventory correction. Our licensing business experienced a slowdown in the quarter, which I will explain momentarily. On royalties, we saw our royalty revenue recovered to grow 17% sequentially, and we anticipate this recovery to continue in the coming quarters. In licensing, our revenue came in below our expectations. The primary reason for this relates to semiconductor startups, a customer base that is an important contributor to any IP licensing business. Semiconductor startups rely on venture capital funding to underpin their businesses. Funding from VC for semiconductor startups slowed down towards the end of 2022, and global VC funding for the first quarter of 2023 fell 50% year-over-year. Consequently, some of the deals with startups we anticipated closing in the quarter did not come through as planned, and the resulting shortfall in licensing revenue was unexpected. However, we are already seeing funding for startups in the semiconductor ecosystem picking up again and anticipate licensing to these companies will recover in the coming quarters. We also saw mixed results in our design services activities in the quarter, where the overall defense industry is moving slower than expected to conclude new investments, and funding there takes more time. As a result, some projects in our sales pipeline are taking longer to get funded. Looking at licensing business, concluding in the quarter in more detail, we signed 17 new licensing and NRE agreements. We have ongoing interest in our wireless communications offerings encompassing 5G cellular IoT, WiFi, and UWB. All of these technologies continue to be in demand with build signs in each of these areas. We signed 3 WiFi 6 deals for ComboChips, where we also licensed our Bluetooth technology. One of these deals was with a strategic customer, a leading supplier of connectivity chips for IoT devices spanning consumer, industrial, and smart home. This latest deal with the customer is a multi-use agreement as they look to expand their Wi-Fi 6 business on the back of their highly successful WiFi 4 business. This latest deal is with a customer that has shipped more than 300 million CEVA powered Wi-Fi chips to date. As we have discussed previously, the average royalty per unit we receive for WiFi 6 is higher than previous generations of WiFi. Having established customers and leaders in this space migrate to WiFi 6 presents another potentially strong contributor to our WiFi royalty stream in the coming years. Other notable deals in the quarter include 4 new agreements for automotive, 2 for our UWB technology from digital keys and in-cabin applications, and 2 for our AI compiler technology that creates fully optimized software for our product offerings, which are very well aligned with the automotive industry’s push towards electrification and more powerful safety systems. We have many touchpoints already in the car, including our Vision AI processors for ADAS, sensor fusion DSPs for battery management systems, and UWB Bluetooth Wi-Fi, 5G and V2X for safety, infotainment, communications, and connectivity. Our inherently low power solutions are an excellent fit for automotive. While it can take quite a number of years before automotive design wins show up in production vehicles, we are very excited about the design wins we have secured to date and the potential royalty streams that we can generate from this lucrative market. Finally, we signed 2 new agreements in the cellular IoT space, one for our new Narrowband IoT technology and another targeting 5G applications. Now to royalties. After a weak first quarter, we saw a good recovery in the second quarter, driven by smartphones targeting emerging markets and restocking for consumer and industrial IoT products following the inventory correction. Royalties for the quarter reached $9.5 million, up 17% sequentially. We saw CEVA-powered chip volumes increased sequentially across the board in the structure of markets we address and a notable recovery in smartphones, PCs, and 5G base stations in particular. In our last earnings call, we explained there was a significant inventory correction taking place, particularly in the smartphone and consumer IoT spaces where we have meaningful exposure. Following conversations with our customers and other companies in the supply chain, we believe that this inventory has been worked through for the most part, and our royalties reflect a resumption in demand to refill the channels. We reiterate our belief that the first quarter was the bottom for our royalty business, and we anticipate continued recovery for our royalty business through the remainder of the year. Now, I would like to switch to discuss a new strategic market expansion opportunity that we are addressing with our products targeting AI from the cloud to the edge. Earlier this week, we announced our latest processors targeting generative AI applications. Generative AI is creating a lot of headlines recently, dominating the AI narrative, thanks to CET, GPT, and other generative pretrained transformers or GPT models. In general, AI is divided into training, including deep learning and inference, including computer vision, co-piloting, and fast optical networking. CEVA has addressed inference applications with our products for a number of years and has been successful in helping our customers deploy AI across multiple end markets and devices, including industrial, automotive, and consumer. Generative AI takes the AI experience to the next level. Transformer-based models have led to significant advancements in generative AI. They are key in both increasingly powerful text and image models such as DALL·E or Stable Diffusion, and language and instruction-following models such as GPT or Stanford Unpack. Today, such networks are typically executed on GPU-based compute infrastructure in the cloud because of their massive model sizes and high memory and bandwidth requirements. However, as transformer-based networks mature and become increasingly popular, there is an opportunity spanning all the way from the cloud to the edge to increase the performance and efficiency of executing generative AI. For example, new generative AI models, which are domain and enterprise-specific, reduce smaller proprietary data sets with fewer parameters and expert systems. These generative AI models don't require GPU-based computation to execute. Thanks to our extensive experience in developing processors that support AI in low-power devices, we have enhanced our new NPU family to support transformer-based large language models and generative AI models to allow natural language processing and generative capability locally, thus improving the latency and overall user experience of using generative AI while protecting the privacy of user data, addressing a key concern of cloud-based AI today and significantly reducing the cost per query. I believe that our ability to support transformer architecture with low power consumption and high efficiency positions us well to exploit this new wave of AI across the full spectrum of end markets from consumer IoT to industrial, automotive, and networking. Our new program is already available for licensing to customers, and we are very excited about the potential here to grow our AI footprint with this enhanced product family. In summary, despite the revenue shortfall in licensing this quarter, we believe our portfolio of wireless communications and sensing AI technologies is unparalleled and leads the industry in terms of performance, power efficiency, and quality. Our new processor family further expands our strength in AI to address the growing trend of deploying the incredible potential of generative AI to any device and application. With our technology leadership position and top-tier customer base and desire to grow and expand, we remain very optimistic about the long-term trends in our business and our ability to drive long-term shareholder value. Now, I will turn the call over to Yaniv for the financials.

Yaniv Arieli, Chief Financial Officer

Thank you, Amir, and good day to all. I'll now start by reviewing the results of our operations for the second quarter of 2023. Revenue for the second quarter was $26.2 million, compared to $33.2 million for the same quarter last year. The revenue breakdown is as follows: Licensing and related revenue, reflecting 64% of total revenues, was $16.8 million compared to $22.1 million for the second quarter of 2022. The licensing business can be volatile in the IP industry, and in recent periods, it has been influenced by both cyclical macroeconomic trends and short-term conditions such as shifts in funding for startup customers. Royalty revenue, reflecting 36% of total revenue, was $9.4 million compared to $11.1 million for the same quarter last year, illustrative of the overall soft demand in our end markets for this time last year. Encouragingly, on a sequential basis, royalty revenue grew 17%, as we expected a significant improvement and experienced significant improvement in the smartphone, 5G base station, and PC markets from the first quarter level. Quarterly gross margin came in lower on GAAP and non-GAAP basis as compared to our guidance due to a lower revenue base and higher subcontracting and related expenses in our cost of revenues. Gross margin was 79% on a GAAP basis and 82% on a non-GAAP basis compared to our guidance of 82% and 85% on GAAP and non-GAAP, respectively. Our non-GAAP quarterly gross margin excluded approximately $400,000 of equity-based compensation expenses and amortization of acquired intangibles of $400,000. Total GAAP operating expenses for the second quarter were lower than the low end of our guidance at $26.9 million due to immediate actions taken by management associated with lower overall employee-related benefit accruals, a stronger U.S. dollar compared to other currencies, and lower overall marketing-related activities. Total GAAP operating expenses for the second quarter, excluding equity-based compensation expenses, amortization of intangibles, and holdback expenses, were $22.4 million, also below the low end of our guidance due to the same reasons I just explained. GAAP operating loss for the second quarter was $6.3 million, up from a GAAP operating loss of $0.3 million for the same quarter last year. Non-GAAP operating loss was $1 million compared to operating income of $4.6 million for the same quarter a year ago. GAAP and non-GAAP tax expenses of $0.5 million were recorded, mainly associated with the holding tax deducted by our customers that could not be utilized. Our GAAP net loss was $5.8 million, and diluted loss per share was $0.25 for the second quarter of 2023, compared to a loss of $1.1 million and diluted loss per share of $0.05 for the second quarter a year ago. With respect to other related data, shipments by our licensees during the second quarter of 2023 were 370 million units, up 25% sequentially compared to the first quarter of 2023, which reported shipments of 297 million units and down from 433 million units a year ago, primarily due to the reasons Amir discussed earlier. Of the 370 million units reported, 79 million units, or 21%, were for handset-based chips, up from 27 million in the first quarter of the year. Our base station and IoT product shipments were 291 million units, up 8% sequentially from 270 million units for the first quarter of 2023 and down 17% year-over-year from 349 million units. Bluetooth shipments were 210 million for the quarter compared to 190 million for the first quarter of 2023. We saw the beginning of restocking following the inventory correction we experienced. WiFi shipments were 29 million units compared to 21 million units in the first quarter of 2023. Cellular IoT shipments were 21 million units compared to 29 million units in the first quarter. Other shipments under our base station IoT umbrella totaled 31 million units in the quarter. This includes our computer vision, AI, audio sensor fusion, 5G RAN, and DSPs for non-cellular communications. As Amir stated, we saw a significant recovery in handset baseband shipments for smartphones in the quarter, driven by channel restocking in emerging markets following the inventory correction in the prior quarter. As for balance sheet items, at the end of the quarter, our cash, cash equivalent balances, marketable securities, and bank deposits were approximately $136 million. Our DSOs for the second quarter were 47 days, better than the first quarter's 55 days. During the second quarter, we used $4.8 million in cash from operating activities. Our ongoing depreciation and amortization was $1.4 million, and the purchase of fixed assets was $1.1 million. At the end of the second quarter, our headcount was 497 people, the same as we had at the end of the first quarter. Now, turning to our outlook, our licensing and related revenue business is fueled by a strong portfolio of wireless connectivity and sensing AI technologies and provides critical building blocks for many in the semiconductor industry. With that said, and with the current market conditions, we're taking a cautious approach and forecasting a lower base revenue level than achieved last year. In royalties, the correction and improved environment in handset baseband royalties can continue into the second half of the year. Our base station IoT customers also look more positively in the upcoming two quarters. So we anticipate sequentially higher royalties for the third and fourth quarters. In parallel, we'll continue to monitor market trends. Earlier in the year, on our Q4 earnings conference call, Amir outlined the potential impact of the licensing business from project expense adjustment and realignments within the semiconductor industry. At the time, we also stated that this may further our cost control measures if required. In light of the recent financial results, we focus on product and technology investments and, to some extent, also tied to the current macroeconomic environment. We have taken a few immediate measures to reduce overall headcount and expenses and forecast overall lower expenses in both the third and fourth quarters. We will continue to monitor our expenses closely and strategically invest our resources. Specifically, for the third quarter of 2023, gross margin is expected to be higher than the second quarter, approximately 82% on a GAAP basis and higher sequentially on a non-GAAP basis at 85%, excluding equity-based compensation expenses of $0.4 million and amortization of acquired intangibles of $0.4 million. Operating expenses for the third quarter are anticipated to be slightly higher compared to the second quarter of 2023 due to R&D effort allocation from cost of goods, in the range of $26.7 million to $27.7 million, including an anticipated $4.7 million of equity-based compensation and $0.8 million for amortization of acquired intangibles. Non-GAAP operating expenses are also expected to be slightly behind the second quarter due to the reasons I just explained, and in the range of $22.2 million to $23.2 million. I want to emphasize that overall expenses for CEVA in the third quarter are forecasted to be lower than the second quarter expense level that we recorded due to the cost measures I just mentioned. Net interest income is approximately $1 million. Taxes for the third quarter are expected to be shy of $1 million, derived mainly from holding taxes associated with new deals to be signed and reported royalties during the quarter. The share count for the third quarter is expected to be approximately 24.7 million shares. Rocco, we could open the Q&A session.

Operator, Operator

And ladies and gentlemen, our first question today comes from Matt Ramsay with TD Cowen.

Matt Ramsay, Analyst

Thank you very much. For my first question, Amir, I understand the current changes in the licensing environment, especially regarding smaller and start-up companies and their funding challenges for obtaining licenses. I would like to hear more about the licensing trends in China. We've heard from several sources that with HiSilicon Huawei's semiconductor business unable to manufacture at the leading edge, many new companies have emerged from the same engineering background and are well-funded. Can you discuss any restrictions you might face regarding export controls and licensing into China, as well as the current licensing trends there? I'm somewhat surprised that these new companies haven’t compensated for the shortfall you mentioned in the Western markets.

Yaniv Arieli, Chief Financial Officer

Yes, very good point. I think, Matt, several things here. First, that's definitely a potential as we look forward. Some of those companies that you mentioned, there is a very strong engineering base there that's actually familiar with our technologies, and we see that interest coming later on in the year. But those changes have happened more recently and will take some time for these companies to establish, secure funding, build, and then decide on their technology product line. So the activity overall is still very strong. It's just that some of those decisions are taking longer. Our business in China is solid. Actually, we see a lot of potential as we keep driving towards the next few quarters. But overall, as I mentioned in my prepared remarks, the overall macroeconomics and with VC funding and decisions to take on new projects and use their cash are just taking longer. That's what's really happening this quarter as we look towards the rest of the year.

Amir Panush, Chief Executive Officer

And I'll add that, as you asked about export control, we obviously comply with export control and don't have any special limitations that we are aware of, nor has anything changed recently. So that's really not the case. But those types of companies that you mentioned may have started off great but haven't reached the final stage of signing and executing those deals that we are working with.

Matt Ramsay, Analyst

As my follow-up question, Yaniv, I wanted to focus on the model a little bit. You mentioned in your script and obviously, in the results and guidance, the lower licensing revenue. So I'm just trying to get my head around what you guys are trying to convey there. I mean, for the full year 2023, are we looking at licensing revenue similar to what it was in 2021? So like around $73 million, give or take? I'm just trying to use that as a benchmark to see if that's in the right ballpark. And then the second piece is you mentioned lower OpEx for Q3 and then Q4 as well. But maybe you could go through the non-GAAP guidance again on OpEx because maybe I misheard, but it looks like it might be actually up a little bit sequentially in September versus June. So if you could help on those two items, I'd appreciate it.

Yaniv Arieli, Chief Financial Officer

Sure. Let's start with the licensing. I think for Q3 and Q4, we're keeping the licensing more or less stable. So obviously, it could be a range, plus/minus $1 million to $2 million, depending on how the quarter looks. But we're looking at about $17-ish million, very similar to what we came out right now for Q3 and Q4. Again, pending deals that we could get signed maybe earlier than planned or larger in size, but that's the model. So probably a little bit shy of the 2021 levels. But that's in the ballpark that you asked about. That's on the licensing royalties we mentioned, we started with $8 million, which has gone up to $9.4 million. We are looking at both Q3 and Q4 for sequential growth. We don't know exactly the pace and magnitude of that growth. So we are taking it slow, but all indications from the reports we received from Q2 showed that there is a significant recovery in handsets, PCs, and base stations. So, all of that is baked in, and we expect continuous growth in the next two quarters—not necessarily 17% sequential growth, but we will need to wait for the actual report and have better visibility. Regarding the expense level, I want to again emphasize the two expense lines. There are the cost of goods for us and the R&D on the operating expenses, and the expense that moves around a bit from quarter-to-quarter between R&D and cost of goods is the actual service costs and EDA costs that are associated with those services that we provide. So gross margins were slightly higher at 85% for both Q3 and Q4 compared to the 82% we just reported. On the other hand, some of those higher expenses and better margins or lower cost of goods expenses go back to the R&D line. So you're right, for Q3, it's slightly higher in operating expenses. We guided $22.2 million to $23.2 million, so somewhere in the middle is probably where we end up, including those variable expenses that shift from R&D to cost of goods. But if you look at overall expenses, considering that higher gross margin, you'll see that overall expenses from Q2 to Q3 will go down. That's the plan for Q4 as well.

Operator, Operator

And our next question today comes from Kevin Cassidy at Rosenblatt Securities.

Kevin Cassidy, Analyst

My questions are around the licensing during the quarter. When you're working on these deals, did they get flipped out or were they cancelled?

Yaniv Arieli, Chief Financial Officer

Kevin, that's a good question. It's actually, to some degree, a mix. But for the most part, they are getting delayed. There are definitely companies that are taking longer to make those decisions. It takes time for them to get the final approval of the funding they need in order to call and make the final call to license from us. That's the majority of the cases. However, there are also a few cases where the company decided not to proceed.

Amir Panush, Chief Executive Officer

I'll add one more thing, Kevin, that we also found one or two deals that were signed, but because of payment concerns until the funding gets executed, we didn't deliver and didn't recognize. So you will see that, and that's just for this quarter; it has happened in the past as well. If we're not sure about the collectibility, we don't deliver and don't recognize any revenue. So it's on both sides of the layer.

Kevin Cassidy, Analyst

Okay. Great. And on your new NPU, that's exciting for generative AI. I'm sure you've been developing this with customers already or potential customers. Can you say where the applications are—in the handset, in the PC, or is it in new types of products?

Yaniv Arieli, Chief Financial Officer

It's actually across a wide variety of applications. You're seeing that right now in small edge devices, co-piloting use cases. The types you mentioned like PCs, tablets, and handsets are definitely where you will see these things deployed in the future. In addition, we're looking at high-speed photonics as well as areas within automotive for similar or different types of use cases and a wide range of applications in the consumer space and automotive.

Operator, Operator

Our next question comes from Chris Reimer of Barclays.

Chris Reimer, Analyst

I was wondering if you could give any more color about the industrial and the larger consumer products markets. What needs to happen before you break more into that area?

Yaniv Arieli, Chief Financial Officer

Yes, we are actually already playing quite a bit in the industrial space for various AI applications and DSP processing, as well as with our leadership in wireless communication. There is already quite high adoption with our different types of WiFi and 5G technologies in the industrial space. I don't think there is one thing in particular that we need to do differently, but we will keep driving innovation in our product line to address this market. Overall, similar to the other markets, we are focusing a lot on power efficiencies, high performance, and high quality of our products, and this is very applicable for the industrial space.

Chris Reimer, Analyst

Okay. And touching on the efficiency measures, how sustainable are they? Can you touch on what measures were taken to reduce expenses?

Amir Panush, Chief Executive Officer

Yes. I think the best way to look at it is really starting with strategic decisions first where I want our team to focus in terms of driving long-term growth. So first, we really have a very strong leadership in wireless communication, spanning from 5G to WiFi. That's definitely a focus area that we'll keep investing in and enlarging our capabilities. Our second focus area is around DSP processing moving into the AI space. Our new processors with additional great capabilities to support transformers and generative AI will be key. These are our focus areas for investment. I keep working with the team to identify activities that are not aligned with the company's long-term strategy, which is what we used to drive more efficiencies and overall cost reduction. We've done that towards the end of this quarter, and as we enter Q3 and Q4, we will continue monitoring our success in the market and the strategic activities we want to drive to ensure our focus. Overall, we have a very strong focus on our IP portfolio to drive growth in the market.

Operator, Operator

And our next question comes from Gus Richard with Northland.

Unidentified Analyst, Analyst

I was just wondering if you could give us some color on the geographic distribution of your licensing business.

Amir Panush, Chief Executive Officer

The same as in the past, nothing too dramatic. All of our service business is in the U.S. relating to aerospace and defense, with a strong presence in China. More than half of the business usually comes from China, as we were asked earlier, and also from new startups emerging, with significant investments overall in the last decade. We're seeing more activity in Europe and the U.S. opening and creating fabs, with a very large semiconductor player. All of that fuels both the U.S. and Europe to more sensitive services, IPs, and chip design activities to fill up those fabs. Trying to shoot in different areas, new markets, will also change the geographic mix for us a bit. Japan has been strong this last quarter, and Taiwan has been strong for us with some nice deals there. Overall, we are trying to increase offerings and revenues over time in both Europe and the U.S.

Yaniv Arieli, Chief Financial Officer

I will add a little bit more color on that. We have talked about four deals that we had this quarter in the automotive space. With generative AI and overall focus on high-performance NPUs for an AI, those are the type of technology that will help us expand significantly in other regions. Additionally, in previous earning calls, I mentioned the expected additional $10 million in revenues towards 2024 and 2025, which is finding local funding for the semiconductor industries from fab to overall development. This is definitely something that we see happening in different regions, and that will also propel more opportunities for us. So with the combination of focusing on the AI space and automotive, in addition to our leadership in wireless communication, we will drive more adoption of our technology outside of the U.S.

Unidentified Analyst, Analyst

Got it. Very helpful. And then, just back to the licensing business, as you look forward, where do you see your best opportunities for licensing over the next couple of years? Is it AI, automotive, or does it remain wireless? Any insight would be helpful.

Amir Panush, Chief Executive Officer

It's quite similar to what I mentioned previously. There is, first, of course, everything related to wireless communication. We are in a very strong position and expect that to continue and strengthen. That will continue to drive a significant portion of our licensing business overall. Also, in addition, DSP processing and moving into AI is the new growth area that will drive our success. Lastly, in previous calls, I mentioned our software embedded applications that drive much more demand directly with OEMs will drive additional growth, especially on the royalty side long-term.

Kevin Cassidy, Analyst

Okay. And just for a little more detail on core deals in automotive. Are those traditional semiconductor companies? Or are they Tier 1s, or have you been dealing with automotive companies that are designing their own semiconductors?

Amir Panush, Chief Executive Officer

In most cases, we are dealing with Tier 1s or semiconductor suppliers. In some cases, we also work directly with Tier 1s; it really depends on the application and how they would like to deploy it in their systems. It's a combination, primarily with semiconductor companies.

Operator, Operator

Thank you. And ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to Richard Kingston for closing remarks.

Richard Kingston, Vice President, Market Intelligence and Investor and Public Relations

Thank you 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 and accessible through the Investors section on our website. With regards to upcoming events, we will be participating in the following conferences: the Oppenheimer 26th Annual Internet Communications and Technology Conference taking place today virtually; the 3rd Annual Technology Summit, the Age of AI, taking place August 22 to 24, virtually; the Jefferies Semiconductor, IT, Hardware and Communications technologies summit on August 29 and 30 in Chicago; and the Jefferies Israel Tech Trek from September 11 to 13 in Israel. 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.

Operator, Operator

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