CEVA, Inc. Announces Second Quarter 2023 Financial Results

ROCKVILLE, Md., Aug. 9, 2023 /PRNewswire/ -- CEVA, Inc. (NASDAQ: CEVA), the leading licensor of wireless connectivity and smart sensing technologies and custom SoC solutions, today announced its financial results for the second quarter ended June 30, 2023.

Total revenue for the second quarter of 2023 was $26.2 million, a 21% decrease compared to $33.2 million reported for the second quarter of 2022. Second quarter 2023 licensing, non-recurring engineering (NRE) and related revenue was $16.8 million, a decrease of 24% when compared to $22.1 million reported for the same quarter a year ago. Royalty revenue for the second quarter of 2023 was $9.4 million, a decrease of 15% when compared to $11.1 million reported for the second quarter of 2022, but up 17% sequentially.

Amir Panush, Chief Executive Officer of CEVA, remarked: "Our second quarter results reflect a challenging and dynamic environment, where our licensing business was impacted by a slowdown in funding of semiconductor startups that limited our ability to conclude certain anticipated customer licensing agreements. Nevertheless, we had a number of noteworthy licensing achievements in the quarter, including three customers for Wi-Fi & Bluetooth combos and four new agreements with customers targeting automotive applications. We are also encouraged by the sequential recovery in our royalty business, with strong shipments of smartphones for emerging markets and inventory restocking across PCs, 5G RAN and the broad IoT markets which we serve. We believe we are well positioned to capitalize on the insatiable demand to connect everything and deploy generative AI everywhere with our unrivalled portfolio of wireless connectivity and sensing AI technologies."

During the quarter, seventeen IP license and NRE agreements were concluded, targeting a wide variety of end markets and applications, including Wi-Fi 6 and Bluetooth 5 for combo connectivity chips targeting consumer, smart home and industrial IoT, 5G Redcap and cellular IoT wireless communications for industrial, UWB for digital car keys and in-cabin radar in automotive, AI for automotive ADAS and sensor fusion for digital pens. Five agreements were with first-time customers.

GAAP gross margin for both the second quarters of 2023 and 2022 was 79%. GAAP operating loss for the second quarter of 2023 was $6.3 million, as compared to a GAAP operating loss of $0.3 million for the same period in 2022. GAAP net loss for the second quarter of 2023 was $5.8 million, as compared to a GAAP net loss of $1.1 million reported for the same period in 2022. GAAP diluted losses per share for the second quarter of 2023 was $0.25, as compared to a GAAP diluted losses per share of $0.05 for the same period in 2022.

Non-GAAP gross margin for both the second quarters of 2023 and 2022 was 82%. Non-GAAP operating loss for the second quarter of 2023 was $1.1 million, as compared to Non-GAAP operating profit of $4.6 million reported for the second quarter of 2022. Non-GAAP net loss and diluted losses per share for the second quarter of 2023 were $0.5 million and $0.02, respectively, compared with Non-GAAP net income and diluted income per share of $4.3 million and $0.18, respectively, reported for the second quarter of 2022.

Non-GAAP gross margin for the second quarter of 2023 excluded: (a) equity-based compensation expenses of $0.4 million and (b) amortization of acquired intangibles of $0.4 million. Non-GAAP gross margin for the second quarter of 2022 excluded: (a) equity-based compensation expenses of $0.3 million and (b) amortization of acquired intangibles of $0.5 million.

Non-GAAP operating loss for the second quarter of 2023 excluded: (a) equity-based compensation expenses of $4.2 million, (b) the impact of the amortization of acquired intangibles of $0.7 million associated with the acquisition of the Intrinsix, VisiSonics and Hillcrest Labs businesses as well as investments in NB-IoT technologies, and (c) $0.3 million of costs associated with the Intrinsix and VisiSonics business acquisitions. 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 business and investments in NB-IoT and Immervision technologies and (c) $0.3 million of costs associated with the Intrinsix acquisition.

Non-GAAP net loss and diluted loss per share for the second quarter of 2023 excluded: (a) equity-based compensation expenses of $4.2 million, (b) the impact of the amortization of acquired intangibles of $0.7 million associated with the acquisition of the Intrinsix, VisiSonics  and Hillcrest Labs businesses as well as investments in NB-IoT technologies, (c) $0.3 million of costs associated with the Intrinsix and VisiSonics business acquisitions and (d) $0.1 million associated with the reevaluation of an investment in another company. Non-GAAP net income and diluted earnings per share 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 reevaluation of an investment in another company.

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "As we navigate the current macroeconomic conditions, we have implemented cost-saving initiatives to reduce expense levels for the remainder of the year. We believe these initiatives will enable us to remain lean and dynamic, which combined with our strong balance sheet will allow us to act decisively to support our future growth strategy."

CEVA Conference Call

On August 9, 2023, 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/ZBNxQXMOR09. 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 (conference replay code: 5117586) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on August 16, 2023. The replay will also be available at CEVA's web site www.ceva-ip.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. Forward-looking statements include statements regarding CEVA's ability to capitalize on demand with its portfolio of technologies, the impact of CEVA's cost-savings initiatives, and CEVA's growth prospects and potential. The risks, uncertainties and assumptions that could cause differing CEVA results include: the effect of intense industry competition; the ability of CEVA's technologies and products incorporating CEVA's technologies to achieve market acceptance; CEVA's ability to meet changing needs of end-users and evolving market demands; the cyclical nature of and general economic conditions in the semiconductor industry; CEVA's ability to diversify its royalty streams and license revenues; CEVA's ability to continue to generate significant revenues from the handset baseband market and to penetrate new markets; and general market conditions and other risks relating to CEVA's 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 custom SoC solutions for a smarter, safer, connected world. We provide Digital Signal Processors, AI engines, wireless platforms, cryptography cores and complementary embedded software for sensor fusion, image enhancement, computer vision, spatial audio, 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 motion sensing solutions, 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 connectivity (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 www.ceva-ip.com and follow us on Twitter, YouTube, Facebook,, LinkedIn and Instagram.

CEVA, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF LOSS – U.S. GAAP

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

Three months ended

Six months ended

Jun 30,

Jun 30,

2023

2022

2023

2022

Unaudited

Unaudited

Unaudited

Unaudited

Revenues:

Licensing, NRE and related revenues

$  16,801

$  22,123

$  37,522

$  44,516

Royalties

9,371

11,072

17,385

23,070

Total revenues

26,172

33,195

54,907

67,586

Cost of revenues

5,572

6,825

10,887

13,229

Gross profit

20,600

26,370

44,020

54,357

Operating expenses:

Research and development, net

19,594

19,538

40,385

39,748

Sales and marketing

2,795

2,723

5,840

5,646

General and administrative

4,169

3,635

8,217

7,271

Amortization of intangible assets

316

750

645

1,500

Total operating expenses

26,874

26,646

55,087

54,165

Operating income (loss)

(6,274)

(276)

(11,067)

192

Financial income, net

1,121

413

2,576

695

Reevaluation of marketable equity securities

(119)

(685)

(236)

(1,816)

Loss before taxes on income

(5,272)

(548)

(8,727)

(929)

Income tax expense

546

575

1,963

1,890

Net loss

$  (5,818)

$  (1,123)

$  (10,690)

$  (2,819)

Basic and diluted net loss per share

$  (0.25)

$  (0.05)

$  (0.46)

$  (0.12)

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

Basic and diluted

23,476

23,174

23,405

23,139

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

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

Three months ended

Six months ended

Jun 30,

Jun 30,

2023

2022

2023

2022

Unaudited

Unaudited

Unaudited

Unaudited

GAAP net loss

$  (5,818)

$  (1,123)

$  (10,690)

$  (2,819)

Equity-based compensation expense included in cost of
revenues

390

344

794

683

Equity-based compensation expense included in research
and development expenses

2,420

2,006

4,593

4,001

Equity-based compensation expense included in sales
and marketing expenses

468

340

861

673

Equity-based compensation expense included in general
and administrative expenses

927

613

1,816

1,335

Amortization  of intangible assets related to acquisition
of Intrinsix, VisiSonics business in 2023 and Hillcrest
Labs business, and investments in NB-IoT and
Immervision technologies

702

1,282

1,379

2,564

Costs associated with the Intrinsix and VisioSonics
business acquisition

312

325

638

651

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

119

527

236

1,398

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

0

0

0

42

Non-GAAP net income (loss)

$  (480)

$  4,314

$  (373)

$  8,528

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

23,476

23,174

23,405

23,139

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

820

795

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

23,476

23,994

23,405

23,934

GAAP diluted loss per share

$  (0.25)

$  (0.05)

$  (0.46)

$  (0.12)

Equity-based compensation expense

$  0.18

$  0.14

$  0.34

$  0.28

Amortization of intangible assets related to acquisition of
Intrinsix, VisiSonics business in 2023 and Hillcrest Labs
business, and investments in NB-IoT and Immervision
technologies

$  0.03

$  0.06

$  0.06

$  0.11

Costs associated with the Intrinsix and VisioSonics
business acquisitions

$  0.01

$  0.01

$  0.03

$  0.03

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

$  0.01

$  0.02

$  0.01

$  0.06

Non-GAAP diluted earnings (loss) per share

$  (0.02)

$  0.18

$  (0.02)

$  0.36

Three months ended

Six months ended

Jun 30,

Jun 30,

2023

2022

2023

2022

Unaudited

Unaudited

Unaudited

Unaudited

GAAP Operating Income (loss)

$  (6,274)

$  (276)

$  (11,067)

$    192

Equity-based compensation expense included in cost of
revenues

390

344

794

683

Equity-based compensation expense included in
research and development expenses

2,420

2,006

4,593

4,001

Equity-based compensation expense included in sales
and marketing expenses

468

340

861

673

Equity-based compensation expense included in
general and administrative expenses

927

613

1,816

1,335

Amortization of intangible assets related to acquisition
of Intrinsix, VisiSonics business in 2023 and Hillcrest
Labs business, and investments in NB-IoT and
Immervision technologies

702

1,282

1,379

2,564

Costs associated with the Intrinsix and VisiSonics
business acquisitions

312

325

638

651

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

0

0

0

42

Total non-GAAP Operating Income (Loss)

$  (1,055)

$  4,634

$  (986)

$    10,141

Three months ended

Six months ended

Jun 30,

Jun 30,

2023

2022

2023

2022

Unaudited

Unaudited

Unaudited

Unaudited

GAAP Gross Profit

$  20,600

$  26,370

$  44,020

$  54,357

GAAP Gross Margin

79 %

79 %

80 %

80 %

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

0

0

0

42

Equity-based compensation expense included in cost of
revenues

390

344

794

683

Amortization of intangible assets related to acquisition
of Intrinsix, acquisition of
VisiSonics business in 2023,
and investments in NB-IoT and Immervision
technologies

386

532

734

1,064

Total Non-GAAP Gross profit

21,376

27,246

45,548

56,146

Non-GAAP Gross Margin

82 %

82 %

83 %

83 %

CEVA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

June 30,

December 31,

2023

2022 (*)

Unaudited

Unaudited

ASSETS

Current assets:

Cash and cash equivalents

$  27,511

$  21,285

Marketable securities and short-term bank deposits

108,136

118,194

Trade receivables, net

13,502

12,297

Unbilled receivables

18,370

18,953

Prepaid expenses and other current assets

7,753

6,896

Total current assets

175,272

177,625

Long-term assets:

Bank deposits

8,205

Severance pay fund

7,916

8,475

Deferred tax assets, net

8,936

8,599

Property and equipment, net

6,868

7,099

Operating lease right-of-use assets

9,836

10,283

Investment in marketable equity securities

172

408

Goodwill

76,771

74,777

Intangible assets, net

6,907

6,680

Other long-term assets

7,595

6,291

Total assets

$  300,273

$  308,442

LIABILITIES AND STOCKHOLDERS'
EQUITY

Current liabilities:

Trade payables

$  1,104

$  1,995

Deferred revenues

3,788

3,168

Accrued expenses and other payables

18,340

25,133

Operating lease liabilities

2,895

2,982

Total current liabilities

26,127

33,278

Long-term liabilities:

Accrued severance pay

8,702

9,064

Operating lease liabilities

6,239

6,703

Other accrued liabilities

621

526

Total liabilities

41,689

49,571

Stockholders' equity:

Common stock

24

23

Additional paid in-capital

244,250

242,841

Treasury stock

(1,462)

(9,904)

Accumulated other comprehensive loss

(5,583)

(6,249)

Retained earnings

21,355

32,160

Total stockholders' equity

258,584

258,871

Total liabilities and stockholders' equity

$  300,273

$  308,442

(*) Derived from audited financial statements.

SOURCE CEVA, Inc.