CEVA, Inc. Announces Third Quarter 2011 Financial Results

MOUNTAIN VIEW, Calif., Oct. 27, 2011 /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 third quarter ended September 30, 2011.

Total revenue for the third quarter of 2011 was $14.8 million, an increase of 39% compared to $10.7 million reported for the third quarter of 2010. Third quarter 2011 licensing revenue was $5.2 million, representing an increase of 17% when compared to $4.5 million reported for the same quarter a year ago. Royalty revenue for the third quarter 2011 was $8.8 million, an increase of 67% compared to $5.2 million reported for the third quarter of 2010. Revenue from services for the third quarter of 2011 was $0.9 million, a decrease of 12% compared to $1 million reported for the third quarter of 2010.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated, "CEVA's strong third quarter performance reflects the continued strength of our cellular baseband presence, as shipment volumes of CEVA-powered products increased for the eleventh consecutive quarter, reaching 250 million units during the quarter. We continue to see considerable interest in our diverse technology portfolio from both existing and new customers, as evidenced by strategic licensing agreements with a high volume semiconductor vendor for our new CEVA-MM3000 platform to be used for smartphones and smart TVs and with a tier one handset and tablet OEM for our audio platform."

Of the eight new license agreements concluded during the third quarter of 2011, six agreements were for CEVA DSP cores, platforms and software, one agreement was for CEVA SATA/SAS product lines and one agreement was for CEVA Bluetooth technology. Target applications for customer deployment are 4G baseband processors, video, imaging and audio in application processors, power line communications (PLC), connectivity and solid state drives (SSDs). Geographically, two of the agreements signed were in the U.S. and six were in Asia Pacific, including Japan.

U.S. GAAP net income for the third quarter of 2011 was $4.9 million, an increase of 65% over $3.0 million reported for the same period in 2010. U.S. GAAP diluted earnings per share for the third quarter of 2011 were $0.20, an increase of 54% compared to $0.13 for the third quarter of 2010.

Non-GAAP net income and diluted earnings per share for the third quarter of 2011 were $6.3 million and $0.26 respectively, representing an increase of 107% and 86%, respectively, over the $3.0 million and $0.14 reported for the third quarter of 2010. Non-GAAP net income and diluted earnings per share for the third quarter of 2011 and 2010 excluded an aggregate equity-based compensation expense, net of taxes, of $1.4 million and $0.5 million, respectively.

Yaniv Arieli, Chief Financial Officer of CEVA, stated, "Our third quarter financial performance achieved a number of significant milestones and maintained the momentum generated during the first half of the year. We produced record high gross margins, operating margins, non-GAAP net income and earnings per share through a combination of solid licensing pipeline, reflecting our excellent product portfolio, continued strength in our royalty business and a company-wide commitment to conservative financial management. At the end of the third quarter, our cash balance, marketable securities and bank deposits totaled approximately $156 million."

CEVA Conference Call

On October 27, 2011, 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 third quarter ended September 30, 2011.

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

  • U.S. Participants: Dial 1-800-860-2442 (Access Code: CEVA or 10005147)
  • International Participants: Dial +1-412-858-4600 (Access Code: CEVA or 10005147)

The conference call will also be available live via the Internet at the following link:  http://www.videonewswire.com/event.asp?id=82668.  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 (passcode: 10005147) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on November 03, 2011. 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 and audio, voice over packet (VoP), Bluetooth, Serial Attached SCSI (SAS) and Serial ATA (SATA). In 2010, CEVA's IP was shipped in over 600 million devices, powering handsets from 7 out of the top 8 handset OEMs, including Nokia, Samsung, LG, Motorola, Sony Ericsson and ZTE. Today, more than one in every three handsets shipped worldwide is powered by a CEVA DSP core. For more information, visit www.ceva-dsp.com. Follow CEVA on twitter at www.twitter.com/cevadsp.

CEVA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – U.S. GAAP

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

Quarter ended

Nine months ended

September 30,

September 30,

2011

2010

2011

2010

Unaudited

Unaudited

Unaudited

Unaudited

Revenues:

Licensing

$  5,225

$  4,459

$  15,528

$  13,774

Royalties

8,766

5,238

26,244

15,372

Other revenues

856

978

2,515

2,739

Total revenues

14,847

10,675

44,287

31,885

Cost of revenues

811

1,001

2,635

2,578

Gross profit

14,036

9,674

41,652

29,307

Operating expenses:

Research and development, net

5,158

4,129

15,813

13,243

Sales and marketing

2,099

1,664

6,650

5,248

General and administrative

2,057

1,593

5,553

4,709

Total operating expenses

9,314

7,386

28,016

23,200

Operating income

4,722

2,288

13,636

6,107

Interest and other income, net

784

493

2,046

1,591

Income before income tax

5,506

2,781

15,682

7,698

Income tax expense  (income)

571

(208)

1,973

527

Net income

4,935

2,989

13,709

7,171

Basic net income per share

$0.21

$0.14

$0.59

$0.34

Diluted net income per share

$0.20

$0.13

$0.57

$0.32

Weighted-average number of Common Stock used in computation of net income

per share (in thousands):

Basic

23,390

21,244

23,065

20,989

Diluted

24,253

22,356

24,105

22,114

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

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

Quarter ended

Nine months ended

September 30,

September 30,

2011

2010

2011

2010

Unaudited

Unaudited

Unaudited

Unaudited

GAAP net income

4,935

2,989

13,709

7,171

Equity-based compensation expense included in cost of revenue

61

23

171

56

Equity-based compensation expense included in research and development expenses

510

183

1,372

489

Equity-based compensation expense included in sales and marketing expenses

291

92

747

300

Equity-based compensation expense included in general and administrative expenses

553

239

1,250

816

Income tax expense  (income)

(99)(2)

(500)(1)

(98)(2)

(500)(1)

Non-GAAP net income

6,251

3,026

17,151

8,332

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

24,253

22,356

24,105

22,114

Weighted-average number of shares related to outstanding options

11

41

19

64

Weighted-average number of Common Stock used in computation of diluted net income per share, excluding equity-based compensation expense and tax income (in thousands)

24,264

22,397

24,124

22,178

GAAP diluted net income per share

$0.20

$0.13

$0.57

$0.32

Equity-based compensation expense

$0.06

$0.03

$0.14

$0.08

Income tax  expense (income)

-

$(0.02)(1)

-

$(0.02)(1)

Non-GAAP diluted net income per share

$0.26

$0.14

$0.71

$0.38

(1)  Results for the three months and the nine months ended September 30, 2010 included $0.5 million of tax income associated with adjustments related to international cost allocations, as well as tax planning strategies to utilize certain deferred tax assets.

(2)  Results for the three months and the nine months ended September 30, 2011 included $0.1 million of tax income related to equity-based compensation expenses.

CEVA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. Dollars in Thousands

September 30,

December 31,

2011

2010

Unaudited

Audited

ASSETS

Current assets:

Cash and cash equivalents

$  22,695

$  17,098

Marketable securities and short term bank deposits

114,537

98,681

Trade receivables, net

4,485

5,906

Deferred tax assets

1,973

1,288

Prepaid expenses and other accounts  receivables

4,508

4,609

Total current assets

148,198

127,582

Long-term investments:

Long-term bank deposits  

18,369

15,173

Severance pay fund

5,525

5,433

Deferred tax assets

893

574

Property and equipment, net

1,192

1,348

Goodwill

36,498

36,498

Total assets

$  210,675

$  186,608

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Trade payables

$  562

$  616

Deferred revenues

1,450

616

Accrued expenses and other payables

9,353

10,521

Deferred tax liabilities

136

901

Total current liabilities

11,501

12,654

Accrued severance pay

5,782

5,486

Total liabilities

17,283

18,140

Stockholders' equity:

Common Stock

23

23

Additional paid in-capital

189,256

176,838

Accumulated other comprehensive income (loss)

(886)

317

Accumulated income (deficit)

4,999

(8,710)

Total stockholders' equity

193,392

168,468

Total liabilities and stockholders' equity

$  210,675

$  186,608

SOURCE CEVA, Inc.