CEVA, Inc. Announces Record Fourth Quarter and Year End 2011 Financial Results

MOUNTAIN VIEW, Calif., Jan. 31, 2012 /PRNewswire/ -- CEVA, Inc. (NASDAQ: CEVA); (LSE: CVA), the leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for the mobile handset, portable and consumer electronics markets, today announced its financial results for the fourth quarter and year ended December 31, 2011.

Fourth Quarter 2011

Total revenue for the fourth quarter of 2011 was $16.0 million, which represents an increase of 22% compared to $13.0 million reported for the fourth quarter of 2010. Fourth quarter 2011 licensing revenue was $4.7 million, a 2% increase when compared to $4.6 million reported for the fourth quarter of 2010. Royalty revenue for the fourth quarter of 2011 was a record $10.2 million, an increase of 36% compared to $7.5 million reported for the fourth quarter of 2010. Revenue from services for the fourth quarter of 2011 was $1.1 million, an increase of 19% compared to $0.9 million reported for the fourth quarter of 2010.

U.S. GAAP net income for the fourth quarter of 2011 was $4.9 million, an increase of 15% over $4.2 million reported for the same period in 2010. U.S. GAAP diluted earnings per share for the fourth quarter of 2011 were $0.20, an increase of 11% compared to $0.18 for the fourth quarter of 2010.

Non-GAAP net income and diluted earnings per share for the fourth quarter of 2011 were $6.4 million and $0.26, respectively, representing an increase of 47% and 37%, respectively, over the $4.3 million and $0.19 reported for the fourth quarter of 2010. Non-GAAP net income and diluted earnings per share for the fourth quarter of 2011 and 2010 exclude an aggregate equity-based compensation expense, net of taxes, of $1.5 million and $0.1 million, respectively.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated, "During the fourth quarter we were able to drive meaningful growth and generate significant momentum throughout our operations, producing record-setting results. CEVA-powered cellular baseband processor shipments increased for the twelfth consecutive quarter and continued to drive growth for us in every segment of the wireless market, from low cost feature phones through to 4G LTE smartphones and tablets. We also continued our strategic expansion into new markets during the quarter with customer wins for smart TV and connectivity applications."

Mr. Wertheizer continued, "Looking back at a very successful 2011, we delivered on our two main strategic goals: driving strong growth of CEVA-powered baseband chipsets and extending our technology leadership in the DSP space. Our customers shipped more than 927 million CEVA-powered basebands during the year, and more than 1 billion CEVA-based chipsets overall. We introduced new DSP products for audio and imaging aimed to diversify our revenue beyond baseband.  We remain ideally positioned to further benefit from ongoing market trends, specifically the evolution in cellular networks in both developed and emerging economies, the expansion of wireless connectivity in devices beyond handsets, as well as mass adoption and feature set enhancement of smartphones and other smart devices."

During the fourth quarter of 2011, the Company concluded seven new license agreements. Four of the agreements were for CEVA DSP cores, platforms, and software, two agreements were for CEVA SATA/SAS technology and one agreement was for CEVA Bluetooth technology. Target applications for customer deployment are TD-SCDMA baseband processors for handsets, smart TV for emerging markets, connectivity for smartphones and solid state drives. Geographically, two of the agreements signed were in the U.S. and five were in Asia.

Full Year 2011 Review

Total revenue for 2011 was $60.2 million, an increase of 34% compared to $44.9 million reported for 2010. Royalty revenue for 2011 was a record high $36.4 million, representing an increase of 59% compared to $22.9 million reported for 2010. Licensing revenue for 2011 was $20.2 million, an increase of 10% compared to $18.4 million reported for 2010.

U.S. GAAP net income and diluted earnings per share for 2011 were $18.6 million and $0.77, respectively, an increase of 63% and 51%, respectively, compared to $11.4 million and $0.51 reported for 2010.

Non-GAAP net income and diluted earnings per share for 2011 were $23.5 million and $0.97, respectively, representing an increase of 86% and 73%, respectively, over the $12.7 million and $0.56 reported for 2010. Non-GAAP net income and diluted earnings per share for 2011 exclude an aggregate equity-based compensation expense, net of taxes, of $5.0 million. Non-GAAP net income and diluted earnings per share for 2010 excluded an aggregate equity-based compensation expense, net of taxes, of $1.3 million.

Yaniv Arieli, Chief Financial Officer of CEVA, stated, "We delivered another exceptionally strong set of earnings in the fourth quarter, underpinned by record high royalty revenues, which yielded strong GAAP and non-GAAP results. On an annual basis, 2011 was a record-breaking year for CEVA across every financial metric and delivered earnings far in excess of our initial annual guidance. We concluded the year with a very strong balance sheet, which included cash and cash equivalent balances, marketable securities and long term bank deposits of approximately $165 million, up from $131 million at the end of 2010."

CEVA Conference Call

On January 31, 2012, 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 fourth quarter and year ended December 31, 2011.

The conference call will be available via the following dial in numbers:

  • U.S. Participants: Dial 1-800-860-2442 (Access Code: CEVA)
  • International Participants: Dial +1-412-858-4600 (Access Code: CEVA)

The conference call will also be available live via the Internet at the following link:  http://www.videonewswire.com/event.asp?id=84399.  Please go to the web site at least fifteen minutes prior to the call to register, download and install any necessary audio software.

For those who cannot access the live broadcast, a replay will be available by dialing +1-877-344-7529 or +1-412-317-0088 (access code:10008472) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on February 08, 2012. The replay will also be available at CEVA's web site www.ceva-dsp.com.

About CEVA, Inc.

CEVA is the world's 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 technologies for cellular baseband (2G / 3G / 4G), multimedia (HD video, Image Signal Processing (ISP) and HD audio), voice over packet (VoP), Bluetooth, Serial Attached SCSI (SAS) and Serial ATA (SATA). In 2011, CEVA's IP was shipped in over 1 billion devices, powering handsets from 7 out of the top 8 handset OEMs, including Nokia, Samsung, LG, Motorola, Sony and ZTE. Today, more than 40% of handsets shipped worldwide are powered by a CEVA DSP core. For more information, visit www.ceva-dsp.com. Follow CEVA on twitter at www.twitter.com/cevadsp.

Forward Looking Statement

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.  Forward-looking statements include Mr. Wertheizer's statements that CEVA is ideally positioned to further benefit from ongoing market trends. 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 ability of products incorporating our technologies to achieve market acceptance, the effect of intense industry competition and consolidation, global chip market trends, the possibility that markets for our technologies may not develop as expected or that products incorporating our technologies do not achieve market acceptance; our ability to timely and successfully develop and introduce new technologies; 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 INCOME – U.S. GAAP

U.S. dollars in thousands, except per share data

Quarter ended

Year ended

December 31,

December 31,

2011

2010

2011

2010

Unaudited

Unaudited

Unaudited

Audited

Revenues:

Licensing

$  4,711

$  4,621

$  20,239

$  18,395

Royalties

10,159

7,494

36,403

22,866

Other revenues

1,082

911

3,597

3,650

Total revenues

15,952

13,026

60,239

44,911

Cost of revenues

924

1,134

3,559

3,712

Gross profit

15,028

11,892

56,680

41,199

Operating expenses:

Research and development, net

5,730

4,666

21,543

17,909

Sales and marketing

2,287

2,060

8,937

7,308

General and administrative

2,096

1,399

7,649

6,108

Total operating expenses

10,113

8,125

38,129

31,325

Operating income

4,915

3,767

18,551

9,874

Interest and other income, net

873

504

2,919

2,095

Income before taxes on income

5,788

4,271

21,470

11,969

Taxes on income

935

64

2,908

591

Net income

$4,853

$4,207

$18,562

$11,378

Basic earnings per share

$0.21

$0.19

$0.80

$0.54

Diluted earnings per share

$0.20

$0.18

$0.77

$0.51

Weighted-average number of Common Stock

  used in computation of earnings per share

  (in thousands):

Basic

23,491

22,029

23,173

21,251

Diluted

24,293

23,367

24,153

22,430

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(U.S. Dollars in thousands, except per share amounts)

Quarter ended

Year ended

December 31,

December 31,

2011

2010

2011

2010

Unaudited

Unaudited

Unaudited

Unaudited

GAAP net income

4,853

4,207

18,562

11,378

Equity-based compensation expense included in cost of revenue

68

21

239

77

Equity-based compensation expense included in research and development expenses

562

163

1,934

652

Equity-based compensation expense included in sales and marketing expenses

347

80

1,094

380

Equity-based compensation expense included in general and administrative expenses

641

207

1,891

1,023

Taxes on income (benefit)

(106) (1)

(342) (1)

(204) (1)

(842) (1)

Non-GAAP net income

6,365

4,336

23,516

12,668

GAAP weighted-average number of Common Stock used in

  computation of diluted earnings per share (in thousands)

24,293

23,367

24,153

22,430

Weighted-average number of shares related to outstanding options

9

49

16

60

Weighted-average number of Common Stock used in computation

  of diluted earnings per share, excluding equity-based

  compensation expense and tax (in thousands)

24,302

23,416

24,169

22,490

GAAP diluted earnings per share

$0.20

$0.18

$0.77

$0.51

Equity-based compensation expense

$0.07

$0.02

$0.21

$0.09

Taxes on income (benefit)

($0.01)

($0.01)

($0.01)

($0.04)

Non-GAAP diluted earnings per share

$0.26

$0.19

$0.97

$0.56

(1)

Results for the three months and for the year ended December 31, 2011 included tax gains of $0.1 and $0.2 million, respectively, reported in taxes on income, mainly related to tax benefits associated with equity-based compensation.   Results for the three months and for the year ended December 31, 2010 included tax gains of $0.3 and $0.8 million, respectively, reported in taxes on income, mainly related to tax benefits associated with equity-based compensation.

CEVA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

December 31,

December 31,

2011

2010

Unaudited

Audited

ASSETS

Current assets:

Cash and cash equivalents

$  14,954

$  17,098

Marketable securities and short term bank deposits

124,458

98,681

Trade receivables, net

5,116

5,906

Deferred tax assets

2,248

1,288

Prepaid expenses and other accounts receivables

2,320

4,609

Total current assets

149,096

127,582

Long-term investments:

Long term bank deposits

25,106

15,173

Severance pay fund

5,473

5,433

Property and equipment, net

1,235

1,348

Goodwill

36,498

36,498

Other long term assets

1,732

574

Total assets

$  219,140

$  186,608

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Trade payables

$  580

$  616

Deferred revenues

1,074

616

Accrued expenses and other payables

10,669

10,521

Deferred tax liabilities

290

901

Total current liabilities

12,613

12,654

Accrued severance pay

5,607

5,486

Total liabilities

18,220

18,140

Stockholders' equity:

Common Stock:

24

23

Additional paid in-capital

191,945

176,838

Other comprehensive income (loss)

(901)

317

Retained earnings (accumulated deficit)

9,852

(8,710)

Total stockholders' equity

200,920

168,468

Total liabilities and stockholders' equity

$  219,140

$  186,608

SOURCE CEVA, Inc.