CEVA, Inc. Announces Second Quarter 2016 Financial Results

MOUNTAIN VIEW, Calif., Aug. 3, 2016 /PRNewswire/ -- CEVA, Inc. (NASDAQ: CEVA), the leading licensor of signal processing IP for smarter, connected devices, today announced its financial results for the second quarter ended June 30, 2016.

CEVA, Inc. reported Q2 2016 total revenues of $17.1 million, and non-GAAP earnings per share of 21 cents. More than 225 million CEVA-powered devices shipped in the quarter, including a record 56 million LTE smartphones. For more highlights from Q2, view the infographic.

Total revenue for the second quarter of 2016 was $17.1 million, a 28% increase compared to $13.4 million reported for the second quarter of 2015. Second quarter 2016 licensing and related revenue was $7.5 million, a decrease of 3% when compared to $7.7 million reported for the same quarter a year ago. Royalty revenue for the second quarter of 2016 was $9.6 million, an increase of 69% when compared to $5.7 million reported for the second quarter of 2015.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "We are very pleased with our performance for the quarter. We delivered record revenue for the second quarter in succession as royalties derived from LTE smartphones powered by our DSPs grew considerably. We continue to experience a healthy licensing environment and a stronger-than-normal sales pipeline as we capitalize on the accelerated industry transition towards ubiquitous connectivity and machine learning."

U.S. GAAP net income for the second quarter of 2016 was $2.7 million, compared to $0.2 million reported for the same period in 2015. U.S. GAAP diluted earnings per share for the second quarter of 2016 were $0.13, an increase of 1200% compared to $0.01 reported for the second quarter of 2015.

Non-GAAP net income and diluted earnings per share for the second quarter of 2016 were $4.6 million and $0.21, respectively, representing a 263% and 250% increase, respectively over the $1.3 million and $0.06 reported for the second quarter of 2015. Non-GAAP net income and diluted earnings per share for the second quarter of 2016 excluded: (a) equity-based compensation expense, net of taxes, of $1.6 million, and (b) the impact of the amortization of acquired intangibles, net of taxes, of $0.3 million associated with the acquisition of RivieraWaves. Non-GAAP net income and diluted earnings per share for the second quarter of 2015 excluded: (a) equity-based compensation expense, net of taxes, of $0.8 million, and (b) the impact of the amortization of acquired intangibles and other costs, net of taxes, of $0.3 million associated with the acquisition of RivieraWaves.  

During the quarter, CEVA completed ten license agreements. Four of the agreements were for CEVA DSP cores, platforms and software and six of the agreements were for CEVA connectivity IPs. All ten of the licensing agreements signed during the quarter were for non-handset baseband applications and three were with first-time customers for CEVA. Target applications for customer deployment are vision processing for a virtual reality product, 5G base stations, voice processors, Bluetooth low energy and Bluetooth 5 connectivity for various IoT devices and storage drives.  Geographically, four of the deals signed were in the U.S., four were in the APAC region and two were in Europe.

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "With a record fifty-six million CEVA-powered LTE chips shipped in the quarter, we were able to more than offset the traditional seasonal weakness of the second quarter and deliver a 23% sequential increase in royalty revenues, which contributed to overall profitability. At the end of the quarter, our cash balance, marketable securities and bank deposits totaled $138 million."

CEVA Conference Call
On Aug 3, 2016 CEVA management will conduct a conference call at 8:30 a.m. Eastern Time to discuss the operating performance for the quarter.

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

  • U.S. Participants: Dial 1-866-364-3869 (Access Code: CEVA)
  • International Participants: Dial +1-412-902-4215 (Access Code: CEVA)

The conference call will also be available live via the Internet at the following link:  https://www.webcaster4.com/Webcast/Page/984/16067. 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: 10089128) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on August 10, 2016. The replay will also be available at CEVA's investor web site investors.ceva-dsp.com.

About CEVA, Inc.
CEVA is the leading licensor of signal processing IP for a smarter, connected world. We partner with semiconductor companies and OEMs worldwide to create power-efficient, intelligent and connected devices for a range of end markets, including mobile, consumer, automotive, industrial and IoT. Our ultra-low-power IPs for vision, audio, communications and connectivity include comprehensive DSP-based platforms for LTE/LTE-A/5G baseband processing in handsets, infrastructure and machine-to-machine devices, computer vision and computational photography for any camera-enabled device, audio/voice/speech and ultra-low power always-on/sensing applications for multiple IoT markets. For connectivity, we offer the industry's most widely adopted IPs for Bluetooth (Smart and Smart Ready), Wi-Fi (802.11 a/b/g/n/ac up to 4x4) and serial storage (SATA and SAS).  Visit us at www.ceva-dsp.com and follow us on Twitter, YouTube and LinkedIn.

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 continues to experience a healthy licensing environment and a stronger-than-normal sales pipeline as it capitalizes on the accelerated industry transition towards ubiquitous connectivity and machine learning. The risks, uncertainties and assumptions include: the ability of the CEVA DSP cores and other technologies, including connectivity IPs, 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 speed and extent of the expansion of the 3G and LTE networks, the effect of intense industry competition and consolidation, global chip market trends, the possibility that markets for CEVA's 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

CONSOLIDATED STATEMENTS OF INCOME – U.S. GAAP

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

Three months ended

Six months ended

June 30,

June 30,

2016

2015

2016

2015

Unaudited

Revenues:

Licensing and related revenues

$   7,470

$   7,669

$   16,120

$   15,508

Royalties

9,633

5,690

17,491

11,685

Total  revenues

17,103

13,359

33,611

27,193

Cost of revenues

1,403

1,550

3,031

2,735

Gross profit

15,700

11,809

30,580

24,458

Operating expenses:

Research and development, net

7,811

7,241

15,725

14,604

Sales and marketing

2,855

2,548

5,700

4,974

General and administrative

2,078

1,666

4,068

3,638

Amortization of intangible assets

309

324

618

649

Total operating expenses

13,053

11,779

26,111

23,865

Operating income

2,647

30

4,469

593

Financial income, net

561

269

1,002

242

Income  before taxes on income

3,208

299

5,471

835

 Income tax expenses

497

131

960

181

Net income

2,711

168

4,511

654

Basic net income per share

$0.13

$0.01

$0.22

$0.03

Diluted  net income per share

$0.13

$0.01

$0.21

$0.03

Weighted-average number of Common Stock used in computation of net income  per share (in thousands):

Basic

20,604

20,564

20,562

20,491

Diluted

21,371

20,984

21,149

20,971

 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

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

Three months  ended

Six months ended

June 30

June 30

2016

2015

2016

2015

Unaudited

GAAP net income

$2,711

$168

$4,511

$654

Equity-based compensation expense included in cost of revenue

54

42

114

77

Equity-based compensation expense included in research and development expenses

775

494

1,421

885

Equity-based compensation expense included in sales and marketing expenses

255

165

502

244

Equity-based compensation expense included in general and administrative expenses

525

126

1,046

470

Income tax benefit related to equity-based compensation expenses

(53)

-

(97)

-

Costs associated with the RivieraWaves acquisition, net of taxes

49

147

Amortization of intangible assets related to RivieraWaves transaction, net of taxes

309

216

618

428

Non-GAAP net income

$4,576

$1,260

$8,115

$2,905

GAAP weighted-average number of Common Stock used in computation of diluted net income  per share (in thousands)

21,371

20,984

21,149

20,971

Weighted-average number of shares related to outstanding stock-based awards (in thousands)

344

259

397

187

Weighted-average number of Common Stock used in computation of diluted earnings per share, excluding the above (in thousands)

21,715

21,243

21,546

21,158

GAAP diluted net income per share

$0.13

$0.01

$0.21

$0.03

Equity-based compensation expense, net of taxes

$0.07

$0.04

$0.14

$0.08

Costs associated with the RivieraWaves acquisition, net of taxes

-

-

$0.01

Amortization of intangible assets related to RivieraWaves transaction, net of taxes

$0.01

$0.01

$0.03

$0.02

Non-GAAP diluted net income  per share

$0.21

$0.06

$0. 38

$0.14

 

CEVA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

June 30,

December 31,

2016

2015 (*)

Unaudited

Unaudited

ASSETS

Current assets:

Cash and cash equivalents

$        18,664

$        18,909

Marketable securities and short term bank deposits

103,853

79,033

Trade receivables, net

10,775

4,068

Prepaid expenses and other current assets

3,826

4,017

Total current assets

137,118

106,027

Long-term assets:

Long term bank deposits

15,099

41,334

Severance pay fund

7,720

7,297

Deferred tax assets

1,884

1,628

Property and equipment, net

4,105

3,731

Goodwill

46,612

46,612

Intangible assets, net

3,596

4,214

Other long-term assets

3,972

1,806

Total assets

$        220,106

$        212,649

 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Trade payables

$           1,249

$            693

Deferred revenues

2,113

2,763

Accrued expenses and other payables

14,466

15,527

Total current liabilities

17,828

18,983

Long-term liabilities:

Accrued severance pay

8,201

7,571

Total liabilities

26,029

26,554

Stockholders' equity:

Common stock:

21

21

Additional paid in-capital

209,334

208,744

Treasury stock

(47,463)

(51,798)

Accumulated other comprehensive loss

(6)

(419)

Retained earnings

32,191

29,547

Total stockholders' equity

194,077

186,095

Total liabilities and stockholders' equity

$     220,106

$     212,649

(*) Derived from audited financial statements

 

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SOURCE CEVA, Inc.