CEVA, Inc. Announces Second Quarter 2022 Financial Results

ROCKVILLE, Md., Aug. 9, 2022 /PRNewswire/ -- CEVA, Inc. (NASDAQ: CEVA), the leading licensor of wireless connectivity and smart sensing technologies and co-creation solutions, today announced its financial results for the second quarter ended June 30, 2022.

Our wireless connectivity IP continues to drive our licensing business, as it is a cornerstone of the IoT market.

Total revenue for the second quarter of 2022 was $33.2 million, a 9% increase compared to $30.5 million reported for the second quarter of 2021. Second quarter 2022 licensing, non-recurring engineering (NRE) and related revenue was $22.1 million, an increase of 42% when compared to $15.5 million reported for the same quarter a year ago. Royalty revenue for the second quarter of 2022 was $11.1 million, a decrease of 26% when compared to $14.9 million reported for the second quarter a year ago. Second quarter 2021 royalty revenue included revenue of approximately $3.3 million following the resolution of a disagreement on royalty rates with a customer. Carving out the $3.3 million amount, royalty revenue for the second quarter of 2022 was down 4% when compared to the second quarter of 2021.

During the quarter, twenty-two IP license and NRE agreements were concluded, targeting a wide variety of smart and connected markets, including Wi-Fi 6 enabled-IoT devices, AI-driven sensors, wireless audio and satellite communications. Five of the agreements were with first-time customers. Geographically, eleven of the deals signed were in China, five in the U.S., three in APAC, and three in Europe.

Gideon Wertheizer, CEO of CEVA, stated: "We delivered solid second quarter results against a challenging macroeconomic backdrop. Our wireless connectivity IP continues to drive our licensing business, as it is a cornerstone of the IoT market. We continue to capitalize on our strength in wireless to make inroads to a new customer base and add value via our co-creation business proposition. In royalties, our base station & IoT category was $7 million, highlighting our resilience, as 5G RAN rollout in China and the rest of the world moves forward and our Bluetooth, Wi-Fi and cellular IoT customers leverage our IP to gain market share."

GAAP operating loss for the second quarter of 2022 was $0.3 million, as compared to a GAAP operating income of $1.6 million for the same period in 2021. GAAP net loss for the second quarter of 2022 was $1.1 million, as compared to GAAP net income of $0.3 million reported for the same period in 2021. GAAP diluted loss per share for the second quarter of 2022 was $0.05, as compared to a GAAP diluted income per share of $0.01 for the same period in 2021.

Non-GAAP operating income for the second quarter of 2022 was $4.6 million compared to $6.3 million reported for the second quarter of 2021. Non-GAAP net income and diluted earnings per share for the second quarter of 2022 were $4.3 million and $0.18, respectively, and $5.1 million and $0.22 reported for the second quarter of 2021.

Non-GAAP operating income for the second quarter of 2022 excluded: (a) equity-based compensation expenses of $3.3 million, (b) the impact of the amortization of acquired intangibles of $1.3 million associated with the acquisition of the Intrinsix and Hillcrest Labs businesses and investments in NB-IoT and Immervision technologies, and (c) $0.3 million of costs associated with the Intrinsix acquisition. Non-GAAP operating income for the second quarter of 2021 excluded: (a) equity-based compensation expenses of $2.9 million, (b) the impact of the amortization of acquired intangibles of $0.9 million associated with the acquisition of the Intrinsix and Hillcrest Labs business and investments in NB-IoT and Immervision technologies, and (c) $1.0 million of costs associated with the Intrinsix acquisition.

Non-GAAP net income and diluted EPS for the second quarter of 2022 excluded: (a) equity-based compensation expenses of $3.3 million, (b) the impact of the amortization of acquired intangibles of $1.3 million associated with the acquisition of the Intrinsix and Hillcrest Labs businesses and investments in NB-IoT and Immervision technologies, (c) $0.3 million of costs associated with the Intrinsix acquisition and (d) $0.5 million loss, net of taxes, associated with the remeasurement of marketable equity securities. Net income and diluted EPS for the second quarter of 2021 excluded: (a) equity-based compensation expenses of $2.9 million, (b) the impact of the amortization of acquired intangibles of $0.9 million associated with the acquisition of the Intrinsix and Hillcrest Labs business and investments in NB-IoT and Immervision technologies, and (c) $1.0 million of costs associated with the Intrinsix acquisition.

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "Forty-two percent year-over-year growth in licensing, NRE and related revenues in the second quarter reflects our strength in the wireless space and the potential for further royalty revenue growth, as these new customers reach production. During the quarter, the company repurchased approximately $4.5 million of its common stock under its existing share repurchase program and ended the quarter with cash and cash equivalent balances, marketable securities and bank deposits of approximately $146 million."

CEVA Conference Call

On August 9, 2022, 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 1-844-435-0316 (Access Code: CEVA)
  • International Participants: Dial +1-412-317-6365 (Access Code: CEVA)

The conference call will also be available live via webcast at the following link: https://app.webinar.net/Wq3Dd84dpw6. 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: 6812163) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on August 16, 2022. The replay will also be available at CEVA's web site ceva-dsp.com.

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 regarding the Company's wireless connectivity IP driving its licensing business and the Company's ability to capitalize on strength in wireless to make inroads to a new customer base and add value via the Company's co-creation business proposition and Mr. Arieli's statements regarding the potential for future royalty revenue growth. The risks, uncertainties and assumptions that could cause differing CEVA results include: the scope and duration of the COVID-19 pandemic; the extent and length of the restrictions associated with the COVID-19 pandemic and the impact on customers, consumer demand and the global economy generally; the ability of CEVA DSP cores and other technologies to continue to be strong growth drivers for us; our success in penetrating new markets, including in the base station and IoT markets, and maintaining our market position in existing markets; our ability to diversify the company's royalty streams, the ability of products incorporating our technologies to achieve market acceptance, the maturation of the connectivity, IoT and 5G markets, the effect of intense industry competition and consolidation, global chip market trends, including supply chain issues as a result of COVID-19 and other factors, 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; our ability to successfully integrate Intrinsix into our business; 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.

About CEVA, Inc.

CEVA is the leading licensor of wireless connectivity and smart sensing technologies and co-creation solutions for a smarter, safer, connected world. We provide Digital Signal Processors, AI engines, wireless platforms, cryptography cores and complementary software for sensor fusion, image enhancement, computer vision, voice input and artificial intelligence. These technologies are offered in combination with our Intrinsix IP integration services, helping our customers address their most complex and time-critical integrated circuit design projects. Leveraging our technologies and chip design skills, many of the world's leading semiconductors, system companies and OEMs create power-efficient, intelligent, secure and connected devices for a range of end markets, including mobile, consumer, automotive, robotics, industrial, aerospace & defense and IoT.

Our DSP-based solutions include platforms for 5G baseband processing in mobile, IoT and infrastructure, advanced imaging and computer vision for any camera-enabled device, audio/voice/speech and ultra-low-power always-on/sensing applications for multiple IoT markets. For sensor fusion, our Hillcrest Labs sensor processing technologies provide a broad range of sensor fusion software and inertial measurement unit ("IMU") solutions for markets including hearables, wearables, AR/VR, PC, robotics, remote controls and IoT. For wireless IoT, our platforms for Bluetooth (low energy and dual mode), Wi-Fi 4/5/6 (802.11n/ac/ax), Ultra-wideband (UWB), NB-IoT and GNSS are the most broadly licensed connectivity platforms in the industry.

CEVA is a sustainable and environmentally conscious company, adhering to our Code of Business Conduct and Ethics. As such, we emphasize and focus on environmental preservation, recycling, the welfare of our employees and privacy – which we promote on a corporate level. At CEVA, we are committed to social responsibility, values of preservation and consciousness towards these purposes.

Visit us at ceva-dsp.com and follow us on Twitter, YouTube, Facebook, LinkedIn and Instagram.

CEVA, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS) – U.S. GAAP
U.S. dollars in thousands, except per share data

Three months ended

Six months ended

June 30,

June 30,

2022

2021

2022

2021

Unaudited

Unaudited

Unaudited

Unaudited

Revenues:

Licensing, NRE and related revenues

$   22,123

$   15,535

$   44,516

$   29,932

Royalties

11,072

14,922

23,070

25,927

Total revenues

33,195

30,457

67,586

55,859

Cost of revenues

6,825

3,693

13,229

6,074

Gross profit

26,370

26,764

54,357

49,785

Operating expenses:

Research and development, net

19,538

17,457

39,748

35,050

Sales and marketing

2,723

2,893

5,646

6,195

General and administrative

3,635

4,159

7,271

7,039

Amortization of intangible assets

750

667

1,500

1,243

Total operating expenses

26,646

25,176

54,165

49,527

Operating income (loss)

(276)

1,588

192

258

Financial income , net

413

356

695

392

Remeasurement of marketable equity securities

(685)

(1,816)

Income (loss) before taxes on income

(548)

1,944

(929)

650

Income tax expense

575

1,629

1,890

3,965

Net Income (loss)

$   (1,123)

$   315

$   (2,819)

$   (3,315)

Basic net income (loss) per share

$   (0.05)

$   0.01

$   (0.12)

$   (0.15)

Diluted net income (loss) per share

$   (0.05)

$   0.01

$   (0.12)

$   (0.15)

Weighted-average shares used to compute net income
(loss) per share (in thousands):

Basic

23,174

22,823

23,139

22,685

Diluted

23,174

23,140

23,139

22,685

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
U.S. Dollars in thousands, except per share amounts

Three months ended
June 30,

Six months ended
June 30,

2022

2021

2022

2021

Unaudited

Unaudited

Unaudited

Unaudited

GAAP net income (loss)

$  (1,123)

$  315

$  (2,819)

$  (3,315)

Equity-based compensation expense included in cost of
revenues

344

119

683

262

Equity-based compensation expense included in research
and development expenses

2,006

1,743

4,001

3,428

Equity-based compensation expense included in sales
and marketing expenses

340

367

673

785

Equity-based compensation expense included in general
and administrative expenses

613

677

1,335

1,629

Amortization of intangible assets, net of taxes, related to
acquisition of Intrinsix in 2021 and Hillcrest Labs
business, investments in NB-IoT and Immervision
technologies

1,282

851

2,564

1,537

Costs associated with the Intrinsix acquisition

325

1,005

651

1,005

Income associated with the remeasurement of marketable
equity securities, net of taxes.

527

1,398

NRE revenues associated with the purchase price
allocation (PPA) related to Intrinsix acquisition

42

Non-GAAP net income

$   4,314

$   5,077

$   8,528

$   5,331

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

23,174

23,140

23,139

22,685

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

820

343

795

739

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

23,994

23,483

23,934

23,424

GAAP diluted earnings (loss) per share

$  (0.05)

$  0.01

$  (0.12)

$  (0.15)

Equity-based compensation expense, net of taxes

$  0.14

$  0.13

$  0.28

$  0.27

Amortization of intangible assets, net of taxes, related to
acquisition of Intrinsix and Hillcrest Labs business,
investments in NB-IoT and Immervision technologies

$  0.06

$  0.04

$  0.11

$  0.07

Costs associated with the Intrinsix acquisition

$  0.01

$  0.04

$  0.03

$  0.04

Income associated with the remeasurement of marketable
equity securities, net of taxes.

$  0.02

$  0.06

Non-GAAP diluted earnings per share

$  0.18

$  0.22

$  0.36

$  0.23

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
U.S. Dollars in thousands, except per share amounts

Three months ended
June 30,

Six months ended
June 30,

2022

2021

2022

2021

Unaudited

Unaudited

Unaudited

Unaudited

GAAP Operating Income (loss)

$  (276)

$  1,588

$  192

$  258

Adjustments:

Stock compensation

3,303

2,906

6,692

6,104

Amortization of intangible assets

1,282

851

2,564

1,612

Aquisition related cost - Intrinsix

325

1,005

651

1,005

Purchase price allocation (PPA) for the Intrinsix
acquisition

42

Total non-GAAP Operating Income

$  4,634

$  6,350

$  10,141

$  8,979

CEVA, INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. Dollars in thousands)

June 30,

December 31,

2022

2021(*)

Unaudited

Unaudited

ASSETS

Current assets:

Cash and cash equivalents

$   19,289

$   33,153

Marketable securities and short-term bank deposits

118,759

121,708

Trade receivables, net

16,013

14,644

Unbilled receivables

11,949

12,805

Prepaid expenses and other current assets

7,562

6,670

Total current assets

173,572

188,980

Long-term assets:

Bank deposits

8,052

Severance pay fund

8,604

10,175

Deferred tax assets, net

20,629

15,850

Property and equipment, net

7,610

6,765

Operating lease right-of-use assets

7,767

8,827

Investment in marketable equity security

1,103

2,919

Goodwill

74,777

74,777

Intangible assets, net

12,272

14,607

Other long-term assets

5,021

5,759

Total assets

$   319,407

$         328,659

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Trade payables

$   2,241

$   1,464

Deferred revenues

4,546

8,661

Accrued expenses and other payables

22,113

22,041

Operating lease liabilities

2,689

3,274

Total current liabilities

31,589

35,440

Long-term liabilities:

Accrued severance pay

9,182

10,551

Operating lease liabilities

4,329

5,130

Other accrued liabilities

592

806

Total liabilities

45,692

51,927

Stockholders' equity:

Common stock

23

23

Additional paid in-capital

237,379

235,386

Treasury stock

(11,691)

(13,790)

Accumulated other comprehensive loss

(4,525)

(372)

Retained earnings

52,529

55,485

Total stockholders' equity

273,715

276,732

Total liabilities and stockholders' equity

$  319,407

$  328,659

(*) Derived from audited financial statements

SOURCE CEVA, Inc.