Question-and-Answer Session
Operator
(Operator Instructions). Your first question comes from Anil Doradla – William Blair & Company.
[Brian] – William Blair & Company
Good morning, it's [Brian] for Anil. Can you just elaborate a little bit on the overall design pipeline? Are you guys seeing customers opening up R&D broadly? And also do you feel like there's some pent up demand there still?
Gideon Wertheizer
Well, I would say there is openness to explore seriously new projects. It started in this quarter. This was not the case in the second quarter and thus we have a very distant pipeline for technologies that we think are next generation product. And I mentioned in my prepared remarks this is in HD and data cards. These are the projects that people are looking out to do.
[Brian] – William Blair & Company
And can you just elaborate on the higher rate per contract this quarter? Did you guys have any CEVA-XC licenses and broadly on the applications, are there any application processors that you feel like you're winning licenses there, too?
Yaniv Arieli
I'll start with the quarter. In Q2 we did not have yet any CEVA-XC licenses, although as we mentioned earlier in the prepared remarks we see and are very active with numerous customers that are evaluating this technology.
So we're quite bullish that this is going to be leading edge technology and one of the strong licensing revenue contributors for 2010. We will see if we could also accommodate such a deal in the fourth quarter, but until the deal is signed it's not signed yet. But we have a healthy pipeline around this new core.
And the other part of your question, if you could repeat please?
[Brian] – William Blair & Company
I'm just trying to figure out why the rate per contract was so much higher this quarter and how sustainable that is?
Yaniv Arieli
Oh, I see. No, no, the simple math of taking the overall licensing revenues and dividing it by the number of deals has always been a bit misleading. It's simple math that the one does every quarter but it doesn't have that much to do with reality. I think our business model has been intact meaning some companies ,usually large name employers, like to have a multi-use license for technology. For that they pay us few millions of dollars and then they have the right to use a specific DSP core or platform across all their industry or product lines shipped.
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