SAN JOSE, Calif., Oct. 29 /PRNewswire-FirstCall/ -- CEVA, Inc. [(NASDAQ: CEVA); (LSE: CVA)], a leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for mobile handset, consumer electronics and storage applications, today announced its financial results for the quarter ended September 30, 2008.
Total revenue for the third quarter of 2008 was a record high $10.2 million, an increase of 17% compared to $8.7 million reported for the third quarter of 2007. Licensing revenue for the third quarter of 2008 was $6.0 million, an increase of 12% from $5.3 million reported for the third quarter of 2007. Royalty revenue for the third quarter of 2008 was $3.3 million, an increase of 51% from $2.2 million reported for the third quarter of 2007 and an 8% sequential increase from the second quarter of 2008. Revenue from services was $0.9 million, compared to $1.2 million reported for the third quarter of 2007.
Net income was $1.4 million for the third quarter of 2008, which represents an increase of 26% as compared to the $1.1 million for the same quarter of 2007. Diluted net income per share for the third quarter of 2008 increased 40% to $0.07 per share, compared to diluted net income of $0.05 per share for the third quarter of 2007.
During the third quarter of 2008, the Company concluded six new license agreements, of which five are for CEVA DSP cores, platforms and software. Target applications for customer deployment are 3.5G, LTE modems, femtocells and consumer electronics. Geographically, three of the six deals are in Europe, while two are with U.S.-based companies and one was concluded in the Asia Pacific region.
During the quarter, CEVA continued to execute on its strategy of licensing to global industry leaders, including two agreements for the Company's most advanced DSP cores. The first strategic agreement was signed with a major U.S. semiconductor company who licensed the CEVA-X1641 DSP core to develop an ASIC chip for a multinational OEM targeting the femtocell market. The second strategic agreement was signed with a major Asian OEM manufacturer who will use the CEVA-TeakLite-III DSP core to develop a chip for next-generation LTE applications. These two agreements illustrate the continued expansion of the wireless use model beyond cellular handsets to new applications in home gateways and mobile Internet markets.
Over the last few months, CEVA implemented its previously-announced 1 million share buy-back program, of which 500,000 shares were subject to a 10b5-1 plan that was established during the quarter. During the third quarter of 2008, CEVA repurchased approximately 200,000 shares at an average price of $8.2 per share, totaling approximately $1.6 million. As of today, CEVA repurchased approximately 675,000 shares at an average price of $7.87 per share, totaling approximately $5.3 million. It also fully utilized the shares available for repurchase under its 10b5-1 plan.
Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "These solid third quarter results are a direct result of our focused strategy on growth opportunities in the mobile and consumer markets. Additionally, we are encouraged by our customers' progress in growing their businesses and expanding their markets shares with their customers, such as manufacturers of handsets, personal multimedia devices, portable game consoles and smartphones."
Yaniv Arieli, Chief Financial Officer of CEVA, stated: "During the third quarter, we executed record operating margins and operating income. We also generated positive cash flow of approximately $1.4 million, after taking into account $1.2 million of cash outflow associated with our buyback program. CEVA's cash balances and marketable securities as of September 30, 2008 were $87.9 million, and our DSO level was at 35 days."
"Given the current market environment, we remain vigilant in monitoring and controlling our expenses. Further, our strategy is supported by a strong balance sheet and business fundamentals that provide opportunities for continued stockholder value creation," concluded Arieli.
CEVA Conference Call
On October 29, 2008, CEVA management will conduct a conference call at 8:30 a.m. Eastern Time / 12:30 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 will also be available live via the Internet at the following link: http://www.videonewswire.com/event.asp?id=52145. 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 1-800-642-1687 (passcode: 68242364) for US domestic callers and +44-800-917-2646 (passcode: 68242364) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on November 05, 2008. 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 and Serial ATA (SATA), and a wide range of programmable DSP cores and subsystems with different price/performance metrics serving multiple markets. In 2007, CEVA's IP was shipped in over 225 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 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, including the statement that we are encouraged by the growing adoption of our technologies beyond cellular handsets to home gateways and mobile Internet markets; Mr. Wertheizer's statement about our growth opportunities in the mobile and consumer markets and our prospects from the growing businesses and increasing market shares of our customers; and Mr. Arieli's statement that our strong balance sheet and business fundamentals provide opportunities for continued stockholder value creation. The risks, uncertainties and assumptions include: the ability of CEVA's DSP cores and other technologies to continue to be strong growth drivers for the Company, including adapting to changes in the cellular handset market and expanding into wireless and consumer electronics markets; the effect of intense competition within our industry; the possibility that the market for our technology may not develop as expected; the possibility that our customers' products incorporating our technologies do not succeed 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 reliance on revenue derived from a limited number of licensees; our ability to continue to improve our license and royalty revenue in future periods, general market conditions and other risks relating to our business, including, but not limited to, those that are described from time to time in CEVA'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, 2008 2007 2008 2007 Unaudited Unaudited Unaudited Unaudited Revenues: Licensing $5,974 $5,314 $17,088 $15,487 Royalties 3,296 2,178 10,067 6,053 Other revenues 936 1,237 3,201 3,430 Total revenues 10,206 8,729 30,356 24,970 Cost of revenues 1,105 1,001 3,543 2,926 Gross profit 9,101 7,728 26,813 22,044 Operating expenses: Research and development, net 4,778 4,705 15,133 14,015 Sales and marketing 1,822 1,471 5,401 4,645 General and administrative 1,705 1,515 4,991 4,134 Amortization of intangible assets 12 41 53 124 Reorganization expense - - 3,537 - Total operating expenses 8,317 7,732 29,115 22,918 Operating income (loss) 784 (4) (2,302) (874) Interest and other income, net 1,003 1,170 13,226 2,620 Income before taxes on income 1,787 1,166 10,924 1,746 Taxes on income 384 54 3,319 204 Net income 1,403 1,112 7,605 1,542 Basic net income per share $0.07 $0.06 $0.38 $0.08 Diluted net income per share $0.07 $0.05 $0.37 $0.08 Weighted-average number of Common Stock used in computation of net income per share (in thousands): Basic 20,157 19,647 20,131 19,516 Diluted 20,799 20,287 20,776 19,900 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, 2008 2007 2008 2007 Unaudited Unaudited Unaudited Unaudited GAAP net income 1,403 1,112 7,605 1,542 Equity-based compensation expense included in cost of revenue 28 19 83 55 Equity based compensation expense included in research and development expenses 273 234 805 646 Equity based compensation expense included in sales and marketing expenses 143 76 380 250 Equity based compensation expense included in general and administrative expenses 343 196 816 558 Reorganization expense (1) - - 3,537 - Other income (2)(3)(4) (358) (425) (11,247) (425) Taxes on income (2) (19) - 3,177 - Non-GAAP net income 1,813 1,212 5,156 2,626 GAAP weighted-average number of Common Stock used in computation of diluted net income per share (in thousands) 20,799 20,287 20,776 19,900 Weighted-average number of shares related to outstanding options 169 152 169 162 Weighted-average number of Common Stock used in computation of diluted net income per share, excluding equity-based compensation expense; reorganization expense, net; capital gains associated with the divestment of CEVA's equity investment in GloNav Inc, net; and disposal of an investment, net (in thousands) 20,968 20,439 20,945 20,062 GAAP diluted net income per share $0.07 $0.05 $0.37 $0.08 Equity-based compensation expense $0.04 $0.03 $0.10 $0.07 Reorganization expense - - $0.17(1) - Other income (0.02)(3) (0.02)(4) (0.54)(2) (0.02)(4) Taxes on income $0.00 - $0.15(2) - Non-GAAP diluted net income per share $0.09 $0.06 $0.25 $0.13 (1) Results for the nine months ended September 30, 2008 included a reorganization expense of $3.5 million related to the termination of the long-term Harcourt lease property in Ireland. (2) Results for the nine months ended September 30, 2008 included a capital gain of $11.22 million reported in interest and other income, net, and the applicable tax expense of $3.2 million reported in taxes on income, related to the divestment of CEVA's equity interest in GloNav Inc. to NXP Semiconductors and a gain of $0.02 million reported in interest and other income, net, related to the disposal of an investment. (3) Results for the three months ended September 30, 2008 included a capital gain of $0.36 million reported in interest and other income, net, related to the divestment of CEVA's equity interest in GloNav Inc. (4) Results for the three months and nine months ended September 30, 2007 included a gain of $0.4 million 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, 2008 2007 Unaudited Audited ASSETS Current assets: Cash and cash equivalents $11,144 $40,697 Marketable securities and bank deposits 76,713 35,678 Trade receivables, net 3,838 2,502 Deferred tax assets 1,300 861 Prepaid expenses 1,375 904 Investment - 4,233 Other current assets 2,619 2,391 Total current assets 96,989 87,266 Long-term investments: Severance pay fund 3,943 3,091 Deferred tax assets 616 455 Property and equipment, net 1,510 1,626 Goodwill 36,498 36,498 Other intangible assets, net - 53 Total assets $139,556 $128,989 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade payables $501 $455 Accrued expenses and other payables 8,809 8,452 Taxes payable 862 320 Deferred revenues 1,732 727 Total current liabilities 11,904 9,954 Accrued severance pay 4,153 3,141 Accrued liabilities - 1,506 Total liabilities 16,057 14,601 Stockholders' equity: Common Stock: 20 20 Additional paid in-capital 152,874 149,772 Treasury Stock (910) - Other comprehensive income (loss) (557) 7 Accumulated deficit (27,928) (35,411) Total stockholders' equity 123,499 114,388 Total liabilities and stockholders' equity $139,556 $128,989
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SOURCE: CEVA, Inc.
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