CEVA, Inc. Reports Fourth Quarter and Year End 2005 Financial Results

SAN JOSE, Calif. - January 26, 2006 - CEVA, Inc. (NASDAQ: CEVA;
LSE: CVA), the leading licensor of digital signal processor (DSP) cores
and communications solutions to the semiconductor industry, today
announced financial results for the fourth quarter and year ended December
31, 2005.

Total revenue for the fourth quarter of 2005 was $7.7 million, compared
to $9.2 million reported in the fourth quarter of 2004. Fourth quarter of
2005 licensing revenue was $4.6 million compared to $5.8 million in the
fourth quarter of 2004. Fourth quarter of 2005 royalty revenue was $1.9
million (25% of total revenue), slightly down from $2.0 million reported
in the fourth quarter of 2004, and 32% higher than royalty revenue
reported in the third quarter of 2005. Revenue from services was $1.2
million for the fourth quarter of 2005 compared to $1.3 million in the
fourth quarter of 2004.

Net loss for the fourth quarter of 2005 was $0.1 million, compared to
net income of $0.2 million in the fourth quarter of 2004. Net loss per
share for the fourth quarter of 2005 was $0.01 per share compared to net
income of $0.01 per share for the fourth quarter of 2004.

In the fourth quarter, the Company signed ten new license agreements,
two were for CEVA Mobile-Media2000 video and audio software, one for the
CEVA-Audio platform, two for the CEVA-TeakLite DSP Core, three for the
CEVA Bluetooth platform, one for the CEVA SATA platform and one prepaid
royalty arrangement with an existing customer shipping in high volumes. In
addition, a number of smaller deals for GPS design services and PLL
technologies were completed.

Full Year 2005 Review:

Total revenue for 2005 was $35.6 million, compared to $37.7 million
reported in 2004. With a total of 27 new license agreements in the year
2005, compared to 24 agreements in 2004, licensing revenue was $24.0
million, compared to $26.2 million reported in 2004. 2005 royalty revenue
was $6.8 million, representing an increase of 13% compared to $6.0 million
reported in 2004. Shipped units by licensees increased 8% to a record 115
million in 2005 compared to 106 million shipped in 2004.

2005 net loss was $2.3 million or $0.12 per share, compared to net
income of $1.7 million or $0.09 per share in 2004.

Gideon Wertheizer, Chief Executive Officer of CEVA stated: "CEVA's
flagship technology, the CEVA-X DSP managed to drive licensing activity in
2005 with ten new deals signed, particularly in the Asia Pacific region
where it is recognized as the DSP-of-choice for leading wireless
semiconductor companies. In addition, we licensed our mobile multimedia
solutions to four of our strategic customers who plan to deploy it in 3G
multimedia phones and portable video players."

Wertheizer, continued; "In 2005, CEVA launched three new platforms, two
of which are DSP-based: CEVA-Audio, a low-cost digital audio platform;
CEVA-VoP, a voice-over packet platform; and CEVA-SAS, a serial
connectivity platform. The market in 2005 indicated a clear shift in
customer preference away from the traditional approach of licensing
standalone DSPs, and towards licensing highly integrated application
platforms incorporating all the necessary hardware and software for their
target applications. The introduction of these platforms, along with the
continued development and improvement of the CEVA mobile multimedia, GPS
and SATA platforms provides CEVA licensees with ease-of-integration,
faster time-to-market and lower development costs for their leading-edge
products."

Yaniv Arieli, Chief Financial Officer of CEVA stated: "Although we
experienced a challenging year with respect to revenue, we have managed to
improve the financial strength of the company. We generated positive cash
flow of $2.0 million during the year. CEVA's cash balances and marketable
securities were $61.6 million at December 31, 2005, compared to $59.6
million at the end of 2004. In addition, DSOs improved significantly
during the year to 63 days compared to 105 days in 2004 and our working
capital increased by $3.3 million. In 2005 our gross margins improved to
88% of revenue from 86% in 2004 and reached 90% gross margins in the
fourth quarter of 2005. Finally, we are constantly monitoring our
operating expenses closely and have managed to reach lower than expected
costs in the fourth quarter of 2005."

2005 Customer Adoption Highlights

  • K-Micro Licenses CEVA'S 90nm 3.0Gbps Serial ATA Technology to Enable
    Topaz Sub-System for Storage Applications

  • Silicon Laboratories Deploys CEVA-Teak DSP Core in Industry's Most
    Highly-Integrated Single-Chip Phone for GSM/GPRS Handsets

  • CEVA Xpert-Teak DSP Subsystem Powers National Semiconductor's New
    CP3SP33 Telematics Chip Targeting Analog-Rich Automotive Multimedia
    Applications

  • CEVA and Ignios Demonstrate Multicore DSP
  • CEVA-TeakLite DSP License Extended By STMicroelectronics For Next
    Generation DSL Central Office Chipsets

  • TransChip and CEVA Collaborate to Create Highly Compact Video
    Streaming Solution for Multimedia Applications

  • CEVA and Comsys to Demonstrate Comprehensive EDGE/GPRS/GSM Solution
    for Cellular Handsets at 3GSM World Congress 2005

2005 CEVA Technology Highlights

  • CEVA Announces First Available Silicon of Mobile-Media2000 Solution
    For High-End Mobile Multimedia Applications

  • CEVA Introduces Fully Integrated Ultra-Low Power Voice over IP
    (VoIP) Platform for Dual Mode VoIP/Cellular Phone Applications and
    Residential Gateways

  • CEVA Expands Storage Interface Offering with Comprehensive Serial
    Attached SCSI (SAS) IP Solution

  • CEVA Brings a High Performance, Low-Power Audio Platform to Consumer
    Devices

  • CEVA Unveils a New Addition to the Powerful CEVA-X DSP Family
  • CEVA-TeakLite-II Boosts Performance and Functionality of CEVA's Most
    Deployed DSP Core

CEVA Conference Call

On January 26, 2006 CEVA management will conduct a conference call at
8:30a.m. Eastern Time / 1:30p.m. London time, to discuss the operating
performance for the fourth quarter and year ended December 31, 2005.

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

  • US Participants: Dial 1-800-322-0079 (CEVA reference number #
    6904220)

  • UK/Rest of World: Dial +44-800-032-3836 (CEVA reference number #
    6904220)

The conference call will also be available live via the Internet by
accessing the CEVA web site at www.ceva-dsp.com. 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 1-877-519-4471 (passcode: 6588892) for US domestic
callers and +44-800-917-2646 (passcode: 1394489) for international callers
from two hours after the end of the call until 11:59 p.m. (Eastern Time)
on February 9, 2006. The replay will also be available at CEVA's web site
www.ceva-dsp.com.

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Condensed Consolidated Statements Of Income &
Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Income & Condensed
Consolidated Balance Sheets are available for download here
(pdf )

About CEVA, Inc.

Headquartered in San Jose, Calif., CEVA is the leading licensor of digital signal processor (DSP) cores, multimedia, GPS and storage platforms to the semiconductor industry. CEVA licenses a family of programmable DSP cores, associated SoC system platforms and a portfolio of application platforms including multimedia, audio, Voice over Packet (VoP), GPS location, Bluetooth, Serial Attached SCSI and Serial ATA (SATA). In 2005 CEVA's IP was shipped in over 115 million devices. CEVA was created through the merger of the DSP licensing division of DSP Group and Parthus Technologies. For more information, visit www.ceva-dsp.com.

A PDF copy of this press release is also available here

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. All statements other than statements of
historical fact are statements that could be deemed forward-looking
statements. The risks, uncertainties and assumptions include: the ability
of the CEVA-X line of products to continue to be a strong growth driver
for the Company; intense competition within our industry; the industries
in which we license our technology have experienced a challenging period
of growth; that the market for our technology may not develop as expected,
especially in the case of newly introduced or planned to be introduced
technologies; our ability to timely and successfully develop and introduce
new technologies; our reliance on revenue derived from a limited number of
licensees; we have no control and assurance that the improved royalty
revenue achieved in 2005 will continue into 2006 and other risks relating
to our business, including, but not limited to, those that are described
from time to time in the Company's Securities and Exchange Commission
filings, including but not limited to its Annual Report on Form 10-K for
the fiscal year ended December 31, 2004, and its quarterly reports filed
after the Form 10-K. CEVA assumes no obligation to update any
forward-looking statements or information, which speak as of their
respective dates.