CEVA, Inc. Announces First Quarter 2009 Financial Results
- Executed nine new licensing agreements, further penetrating next generation cellular and mobile multimedia markets
- Continued focus on operational efficiencies yielded record high operating margins
SAN JOSE, Calif., May 5 /PRNewswire-FirstCall/ -- CEVA, Inc. ; , a leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for the mobile handset, consumer electronics and portable device markets, today announced its financial results for the first quarter ended March 31, 2009.
Total revenue for the first quarter of 2009 was $9.5 million, a decrease of 6% compared to $10.1 million reported for the first quarter of 2008. First quarter of 2009 licensing revenue was $4.5 million, a decrease of 11% from $5.1 million reported for the first quarter of 2008. Royalty revenue for the first quarter of 2009 was $3.8 million, an increase of 1% over $3.7 million reported for the first quarter of 2008. Revenue from services for the first quarter of 2009 was $1.2 million, which was approximately the same amount as reported for the first quarter of 2008.
U.S. GAAP net income for the first quarter of 2009 was $1.4 million, compared to net income of $5.5 million for the same period of last year. U.S. GAAP diluted net income per share for the first quarter of 2009 was $0.07 per share, compared to diluted net income per share of $0.27 for the first quarter of 2008. U.S. GAAP financial results for the first quarter of 2009 include an equity-based compensation expense of $0.8 million. U.S. GAAP financial results for the first quarter of 2008 included a capital gain of $10.9 million from the divestment of the Company's equity investment in GloNav Inc. to NXP Semiconductors; a tax expense of $3.1 million related to such divestment; a reorganization expense associated with the termination of the long-term Harcourt lease in Ireland of $3.5 million; and equity-based compensation expense of $0.6 million. The contribution to the diluted net income per share for the first quarter of 2008 of the capital gain, net of taxes and the reorganization expenses were $0.37 and $(0.17), respectively.
Non-GAAP net income and diluted net income per share for the first quarter of 2009, excluding the equity-based compensation expense of $0.8 million, was an all-time record high of $2.2 million or $0.11 per share, an increase of 17% and 22%, respectively, over $1.9 million and $0.09 per share reported for the first quarter of 2008, excluding the items described above.
During the quarter, the Company concluded nine new license agreements. Eight agreements were for CEVA DSP cores and platforms and one was for CEVA Serial Attached SCSI (SAS) technology. Target applications for customer deployment are 3G and 4G handsets and data cards, smartphones, portable multimedia players and storage equipment. Geographically, four of the nine deals signed were in Europe, three were in the Asia Pacific region and two were in the U.S.
Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "We are encouraged by first quarter achievements. We signed key licensing agreements with customers in our target markets. During the quarter, we introduced a next generation DSP core, the CEVA-XC, which revolutionizes the architectures of future wireless solutions. Our continued focus on operational efficiencies and lucrative business opportunities yielded substantial profitability despite the overall economic slowdown that substantially impacted some of the end-markets we serve. We remain committed to enrich our product offerings and growing our business for the long-term. As we leverage the Company's solid balance sheet and strong cash position, we are confident that CEVA is well positioned to capitalize on the eventual market rebound."
Of the license deals concluded, four are strategic agreements with leading companies in their respective markets. Two of the agreements signed are with a leading player in the handset space who licensed the CEVA-X and CEVA-TeakLite-III DSP cores for use across a wide range of handset and smartphone platforms. Another strategic agreement signed is with a leading Japanese company who selected CEVA DSP technology for a next-generation portable consumer product. The fourth agreement is with a company in the WiMAX and 3G markets who licensed the CEVA-X DSP for its products.
Yaniv Arieli, Chief Financial Officer of CEVA, stated: "During the first quarter, we continued to set new standards for the Company's financial performance, generating record U.S. GAAP and non-GAAP operating margins of 12% and 20%, respectively. In addition, CEVA recorded all-time high non-GAAP net income and non-GAAP EPS. The Company generated positive cash flow of approximately $1.3 million before taking into account $0.8 million of cash outflow associated with our share buyback program. We saw an immediate positive impact in our operating expense levels in part attributable to the operational adjustments announced last quarter. Going forward, we will continue to monitor these variables closely and make additional adjustments as necessary."
During the first quarter, CEVA continued to implement its previously-announced one million share buy-back program. As of May 4, 2009, the Company repurchased approximately 894,000 shares at an average price of $7.44 per share for a total amount of approximately $6.6 million. The Company currently has approximately 106,000 shares remaining for repurchase under the existing program.
CEVA Conference Call
On May 05, 2009, CEVA management will conduct a conference call at 8:30 a.m. Eastern Time / 1.30 p.m. London time, to discuss the operating performance for the quarter.
The conference call will be available via the following dial in numbers:
- US Participants: Dial 1-877-493-9121 (Access Code: CEVA)
- UK/Rest of World: Dial +44-800-051-3806 (Access Code: CEVA)
For those who cannot access the live broadcast, a replay will be available by dialing 1-800-642-1687 (passcode: 93608270) for US domestic callers and +44-800-917-2646 (passcode: 93608270) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on May 12, 2009. The replay will also be available at CEVA's web site ceva-dsp.com.
About CEVA, Inc.
Headquartered in San Jose, Calif., CEVA is a leading licensor of silicon intellectual property (SIP) DSP Cores and platform solutions for the mobile handset, portable and consumer electronics markets. CEVA's IP portfolio includes comprehensive solutions for multimedia, audio, voice over packet (VoP), Bluetooth and Serial ATA (SATA), and a wide range of programmable DSP cores and subsystems with different price/performance metrics serving multiple markets. In 2008, CEVA's IP was shipped in over 300 million devices. For more information, visit ceva-dsp.com.
Forward-Looking Statements
This press release 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. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including Mr. Wertheizer's statements about CEVA-XC and the company being well positioned to capitalize on the eventual market rebound. The risks, uncertainties and assumptions include: the ability of the CEVA DSP cores and other technologies to continue to be strong growth drivers for us; our success in penetrating new markets and maintaining our market position in existing markets; the success of operational adjustments in producing their anticipated benefits; the effect of intense competition within our industry; the effect of the challenging period of growth experienced by industries in which we license our technologies; the possibility that the markets for our technologies may not develop as expected; the possibility that our customers' products incorporating our technologies do not succeed as expected; our ability to timely and successfully develop and introduce new technologies; our reliance on revenue derived from a limited number of licensees; our ability to continue to improve our royalty revenue in future periods; 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.
CEVA, INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - U.S. GAAP
U.S. dollars in thousands, except per share data
Quarter ended
March 31,
2009 2008
Unaudited Unaudited
Revenues:
Licensing $4,544 $5,088
Royalties 3,759 3,733
Other revenues 1,210 1,246
Total revenues 9,513 10,067
Cost of revenues 1,210 1,170
Gross profit 8,303 8,897
Operating expenses:
Research and development, net 4,075 5,120
Sales and marketing 1,636 1,773
General and administrative 1,472 1,590
Amortization of intangible assets - 21
Reorganization expense - 3,537
Total operating expenses 7,183 12,041
Operating income (loss) 1,120 (3,144)
Financial income, net 476 808
Other income - 10,869
Income before taxes on income 1,596 8,533
Taxes on income 228 3,022
Net income $1,368 $5,511
Basic and diluted net income per share $0.07 $0.27
Weighted-average number of Common Stock used
in computation of net income per share (in
thousands):
Basic 19,557 20,095
Diluted 19,754 20,724
Unaudited Reconciliation of GAAP to Non GAAP Financial Measures
(U.S. Dollars in thousands, except per share amounts)
Quarter ended
March 31,
2009 2008
Unaudited Unaudited
GAAP net income $1,368 $5,511
Equity-based compensation expense included in
cost of revenue 35 28
Equity-based compensation expense included in
research and development expenses 262 267
Equity-based compensation expense included in
sales and marketing expenses 162 95
Equity-based compensation expense included in
general and administrative expenses 349 188
Reorganization expense (1) - 3,537
Other income (2) - (10,865)
Taxes on income (2) - 3,105
Non-GAAP net income $2,176 $1,866
GAAP weighted-average number of Common Stock
used in computation of diluted net income
per share (in thousands) 19,754 20,724
Weighted-average number of shares related to
outstanding options - 169
Weighted-average number of Common Stock used
in computation of diluted net income per
share excluding equity-based compensation
expense, reorganization expense, net and
capital gains associated with CEVA's equity
divestment of GloNav Inc., net (in thousands) 19,754 20,893
GAAP diluted net income per share $0.07 $0.27
Equity-based compensation expense $0.04 $0.02
Reorganization expense (1) - $0.17
Other income (2) - $(0.52)
Taxes on income (2) - $0.15
Non GAAP diluted net income per share $0.11 $0.09
(1) Results for the three months ended March 31, 2008 included a
reorganization expense of $3.5 million related to termination of the
long-term Harcourt lease property in Ireland.
(2) Results for the three months ended March 31, 2008 included a capital
gain of $10.9 million reported in other income and the applicable tax
expense of $3.1 million reported in taxes on income, related to the
divestment of CEVA's equity interest in GloNav Inc. to NXP
Semiconductors.
CEVA, INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. Dollars in Thousands
March 31, December 31,
2009 2008
Unaudited Audited
ASSETS
Current assets:
Cash and cash equivalents $15,483 $13,328
Marketable securities and short term bank
deposits 69,596 71,301
Trade receivables, net 4,553 5,390
Deferred tax assets 925 1,085
Prepaid expenses and other accounts
receivables 5,019 4,921
Total current assets 95,576 96,025
Long-term investments:
Severance pay fund 3,238 3,441
Deferred tax assets 552 351
Property and equipment, net 1,217 1,271
Goodwill 36,498 36,498
Total assets $137,081 $137,586
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade payables $400 $615
Deferred revenues 730 1,034
Taxes payable 77 44
Accrued expenses and other payables 9,342 10,446
Total current liabilities 10,549 12,139
Accrued severance pay 3,592 3,788
Total liabilities 14,141 15,927
Stockholders' equity:
Common Stock 19 20
Additional paid in-capital 154,520 153,712
Treasury Stock (5,140) (5,077)
Other comprehensive loss (668) (24)
Accumulated deficit (25,791) (26,972)
Total stockholders' equity 122,940 121,659
Total liabilities and stockholders' equity $137,081 $137,586
SOURCE: CEVA, Inc.
Web site: https://www.ceva-ip.com/
