SAN JOSE, Calif., Nov. 1 /PRNewswire-FirstCall/ -- CEVA, Inc. (NASDAQ: CEVA); (LSE: CVA), a leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for mobile, consumer electronics and storage applications, today announced its financial results for the quarter ended September 30, 2007.
Total revenue for the third quarter of 2007 was $8.7 million, an increase of 11% compared to $7.9 million reported for the third quarter of 2006. Third quarter of 2007 licensing revenue was $5.3 million, a decrease of 4% from $5.5 million reported for the third quarter of 2006. Royalty revenue for the third quarter of 2007 was $2.2 million, an increase of 55% over $1.4 million for the third quarter of 2006. Revenue from services for the third quarter of 2007 was $1.2 million, an increase of 30% compared to $1.0 million reported for the third quarter of 2006.
Net income for the third quarter of 2007 was $1.1 million, an increase of 226% compared to net income of $0.3 million for the third quarter of 2006. Diluted net income per share for the third quarter of 2007 was $0.05 per share, an increase of 150% compared to diluted net income of $0.02 per share for the third quarter of 2006.
In the third quarter of 2007 and 2006, the Company recognized an equity- based compensation expense of $0.5 million pursuant to the adoption of SFAS 123R. In the third quarter of 2007, the Company also recorded a gain of $0.4 million in interest and other income related to the disposal of an investment. Non-GAAP net income and diluted net income per share for the third quarter of 2007, excluding the equity-based compensation expense and gain on disposal of the investment, was $1.2 million and $0.06, respectively, an increase of 42% and 50%, respectively, compared to $0.9 million of non-GAAP net income and $0.04 of non-GAAP diluted net income per share for the third quarter of 2006. Non-GAAP net income and net income per share for the third quarter of 2006 excluded an equity-based compensation expense of $0.5 million.
During the third quarter of 2007, the Company concluded ten new license agreements, bringing the total number of new license agreements signed during the first nine months of 2007 to 27. Eight agreements were for CEVA DSP cores and platforms and two were for CEVA SATA technology. Target applications for customer deployment are 2G/3G/4G phones, wireless headsets, solid state disk (SSD) devices, surveillance equipment and fingerprint recognition systems. Geographically, two of the ten deals signed were in the U.S., five were in Europe and three were in the Asia Pacific region.
During the third quarter, CEVA signed a strategic licensing agreement with one of the Company's largest customers who extended their use of CEVA-X DSP cores to products for wireless applications. In addition, one of Japan's largest, branded, original equipment manufacturers licensed the CEVA MM2000 multimedia platform for its development of next generation surveillance camera equipment. This license agreement represents a key design win for CEVA in the fast growing surveillance market as the underlying technology transitions from analog to digital IP network-based systems.
Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "The third quarter of 2007 was another solid quarter for CEVA in terms of expanding the licensee base, increasing the royalty revenue and building the pipeline. Our royalty revenue surpassed the $2.0 million mark for the first time in the Company's history, and we received during the third quarter the first royalty payment from one of the leaders in the 3G chipset market who is now shipping products incorporating our CEVA-X DSP cores in high volumes. We also are pleased with the recent traction our customers that incorporate our DSP core technologies have generated with leading mobile handset manufacturers."
Yaniv Arieli, Chief Financial Officer of CEVA, stated: "In the third quarter we achieved a few important financial milestones: royalty revenue trend is positive, profitability continues to improve during the first three quarters of 2007 and net income and EPS increased sequentially during the same period. The Company's positive cash flow also continues to improve sequentially and in the third quarter reached approximately $1.1 million. As of September 30, 2007, CEVA's cash balances and marketable securities were $66.0 million."
CEVA Conference Call
On November 1, 2007, 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 quarter.
The conference call will be available via the following dial-in numbers: * US Participants: Dial 1-877-493-9121 (Access Code: CEVA) * UK/Rest of World: Dial +44-800-032-3836 (Access Code: CEVA)
The conference call also will be available live via the Internet at the following link: http://www.videonewswire.com/event.asp?id=43147. 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: 9337401) for US domestic callers and +44- 800-169-3875 (passcode: 9337401) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on November 8, 2007. The replay will also be available at CEVA's web site http://www.ceva-dsp.com/.
About CEVA, Inc.
Headquartered in San Jose, Calif., CEVA is a leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for mobile, consumer electronics and storage applications. CEVA's IP portfolio includes comprehensive solutions for multimedia, audio, voice over packet (VoP), Bluetooth, Serial Attached SCSI (SAS) and Serial ATA (SATA), and a wide range of programmable DSP cores and subsystems with different price/performance metrics serving multiple markets. In 2006, CEVA's IP was shipped in over 190 million devices. For more information, visit http://www.ceva-dsp.com/
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 CEVA's results 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, including statements about optimism about the pipeline buildup, the positive royalty revenue and profitability trend, and CEVA's ability to capitalize on the fast growing surveillance market and the traction generated by CEVA's customers with mobile handset manufacturers; and the potential additional royalty revenue associated with a CEVA customer that is a leader in the 3G chipset market and the ramp-up production of other customers with products that incorporate CEVA's technologies. The risks, uncertainties and assumptions include: the ability of the CEVA DSP cores and other technologies to continue to be strong growth drivers for the Company; the effect of intense competition within our industry; the effect of the challenging period of growth experienced by the industries in which we license our technology; the possibility that the market for our technology may not develop as expected; our ability to timely and successfully develop and introduce new technologies; our reliance on revenue derived from a limited number of licensees; our ability to improve our royalty revenue in future periods and other risks relating to our business and the pipeline of companies interested in our technologies, including, but not limited to, those that are described from time to time in the Company's Securities and Exchange Commission 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 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, 2007 2006 2007 2006 Unaudited Unaudited Unaudited Unaudited Revenues: Licensing and royalties $7,492 $6,938 $21,540 $21,553 Other revenues 1,237 955 3,430 2,886 Total revenues 8,729 7,893 24,970 24,439 Cost of revenues 1,001 992 2,926 3,022 Gross profit 7,728 6,901 22,044 21,417 Operating expenses: Research and development, net 4,705 4,270 14,015 14,159 Sales and marketing 1,471 1,414 4,645 4,791 General and administrative 1,515 1,577 4,134 4,535 Amortization of intangible assets 41 42 124 373 Total operating expenses 7,732 7,303 22,918 23,858 Operating loss (4) (402) (874) (2,441) Interest and other income, net 1,170 778 2,620 1,949 Income (loss) before taxes on income 1,166 376 1,746 (492) Taxes on income 54 35 204 185 Net income (loss) $1,112 $341 $1,542 $(677) Basic net income (loss) per share $0.06 $0.02 $0.08 $(0.04) Diluted net income (loss) per share $0.05 $0.02 $0.08 $(0.04) Weighted-average number of Common Stock used in computation of net income (loss) per share (in thousands): Basic 19,647 19,239 19,516 19,150 Diluted 20,287 19,324 19,900 19,150 CEVA, INC. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON GAAP U.S. dollars in thousands, except per share data Quarter ended Nine Months ended September 30, September 30, 2007 2006 2007 2006 Unaudited Unaudited Unaudited Unaudited Revenues: Licensing and royalties $7,492 $6,938 $21,540 $21,553 Other revenues 1,237 955 3,430 2,886 Total revenues 8,729 7,893 24,970 24,439 Cost of revenues 982 978 2,871 2,984 Gross profit 7,747 6,915 22,099 21,455 Operating expenses: Research and development, net 4,471 4,100 13,369 13,636 Sales and marketing 1,395 1,336 4,395 4,533 General and administrative 1,319 1,328 3,576 3,693 Amortization of intangible assets 41 42 124 373 Total operating expenses 7,226 6,806 21,464 22,235 Operating income (loss) 521 109 635 (780) Interest and other income, net 745 778 2,195 1,892 Income before taxes on income 1,266 887 2,830 1,112 Taxes on income 54 35 204 185 Net income $1,212 $852 $2,626 $927 Non-GAAP basic and diluted net income per share $0.06 $0.04 $0.13 $0.05 Weighted-average number of Common Stock used in computation of non-GAAP net income per share (in thousands): Basic 19,647 19,239 19,516 19,150 Diluted 20,439 19,324 20,062 19,350 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 2007 2006 2007 2006 Unaudited Unaudited Unaudited Unaudited GAAP net income (loss) $1,112 $341 $1,542 $(677) Equity-based compensation expense included in cost of revenue 19 14 55 38 Equity-based compensation expense included in research and development expenses 234 170 646 523 Equity-based compensation expense included in sales and marketing expenses 76 78 250 258 Equity-based compensation expense included in general and administrative expenses 196 249 558 842 Interest and other income, net (1) (425) - (425) (57) Non-GAAP net income $1,212 $852 $2,626 $927 GAAP weighted-average number of Common Stock used in computation of net income (loss) per share (in thousands) (diluted) 20,287 19,324 19,900 19,150 Weighted-average number of shares related to outstanding options - - - 200 Weighted-average number of options related to equity-based compensation expense 152 - 162 - Non-GAAP weighted-average number of Common Stock used in computation of net income per share (in thousands) (diluted) 20,439 19,324 20,062 19,350 GAAP diluted net income (loss) per share $0.05 $0.02 $0.08 $(0.04) Equity-based compensation expense $0.03 $0.02 $0.07 $0.09 Interest and other income, net (1) $(0.02) - $(0.02) $(0.00) Non-GAAP diluted net income per share $0.06 $0.04 $0.13 $0.05 (1) Results for the three months and nine months ended September 30, 2007 and for the nine months ended September 30, 2006 included a gain of $0.4 million, $0.4 million and $0.1 million, respectively, reported in interest and other income related to the disposal of an investment. CEVA, INC. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS U.S. Dollars in Thousands September 30, December 31, 2007 2006 Unaudited Audited ASSETS Current assets: Cash and cash equivalents $42,679 $37,968 Marketable securities and bank deposits 23,278 26,266 Trade receivables, net 10,994 8,421 Deferred tax assets 761 613 Prepaid expenses 803 564 Other current assets 1,494 1,890 Total current assets 80,009 75,722 Long-term investments: Severance pay fund 2,573 2,338 Deferred tax assets 600 382 Property and equipment, net 1,767 1,706 Investment 4,233 4,233 Goodwill 36,498 36,498 Other intangible assets, net 77 201 Total assets $125,757 $121,080 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade payables $541 $718 Accrued expenses and other payables 8,691 9,462 Taxes payable 131 135 Deferred revenues 683 406 Total current liabilities 10,046 10,721 Accrued severance pay 2,842 2,519 Accrued liabilities 1,305 1,697 Total liabilities 14,193 14,937 Stockholders' equity: Common Stock 20 19 Additional paid in-capital 146,567 142,826 Other comprehensive income 137 - Accumulated deficit (35,160) (36,702) Total stockholders' equity 111,564 106,143 Total liabilities and stockholders' equity $125,757 $121,080
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