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CEVA, Inc. Announces First Quarter 2019 Financial Results

- Licensing revenue of $11 million, up 9% year-over-year

- Strategic AI licensing agreement with major automotive OEM for autonomous driving

- Three 5G licensing agreements targeting base station RAN, mmWave small cells and cellular V2X

MOUNTAIN VIEW, Calif., May 6, 2019 /PRNewswire/ -- CEVA, Inc. (CEVA), the leading licensor of signal processing platforms and artificial intelligence processors for smarter, connected devices, announced today its financial results for the first quarter ended March 31, 2019.

CEVA, Inc. reported Q1 2019 earnings of $17 million and non-GAAP EPS of $0.01. Eight new agreements were signed, including a major design win for CEVA's NeuPro AI processor with one of the world’s largest automotive OEMs and three agreements with key players targeting 5G use cases. Non-baseband royalties were up 22% year-over-year. For more information and highlights, view the infographic.

Total revenue for the first quarter of 2019 was $17.0 million, a 3% decrease compared to $17.6 million reported for the first quarter of 2018. First quarter 2019 licensing and related revenue was $11.0 million, an increase of 9% when compared to $10.1 million reported for the same quarter a year ago. Royalty revenue for the first quarter of 2019 was $6.0 million, a decrease of 20% when compared to $7.5 million reported for the first quarter of 2018.

Gideon Wertheizer, CEO of CEVA, stated: "Our team executed another strong licensing quarter, including multiple strategic agreements signed. We achieved a major design win for our NeuPro AI processor with one of the world's largest automotive OEMs which positions us at the forefront of level 3 and above autonomous driving. We also expanded our 5G footprint, concluding three agreements with key players targeting 5G networking. Our royalty revenue from handsets suffered substantial headwinds due to excess channel inventory. Our royalties from our non-handset baseband customer base continued to expand, delivering 22% year-over-year growth."

Of the eight license agreements completed during the quarter, three were for smart sensing products and five were for connectivity products. All of the licensing agreements signed during the quarter were for non-handset baseband applications and four were with first-time customers of CEVA. Customers' target markets include AI for autonomous cars, 5G for base station RAN, mmWave small cells and cellular V2X, Bluetooth earbuds, smart speakers and a range of IoT devices. Geographically, three of the deals signed were in China, one was in the U.S., one was in Europe and three were in the APAC region, including Japan.

GAAP net loss for the first quarter of 2019 was $2.3 million, as compared to a net loss of $2.2 million reported for the same period in 2018. GAAP diluted loss per share for both first quarters of 2019 and 2018 was ($0.10).

Non-GAAP net income and diluted earnings per share for the first quarter of 2019 were $0.3 million and $0.01, respectively, down from the $0.8 million and $0.04 reported for the first quarter of 2018. Non-GAAP net income and diluted earnings per share for the first quarter of 2019 excluded: (a) equity-based compensation expense, net of taxes, of $2.3 million, (b) the impact of the amortization of acquired intangibles of $0.3 million associated with the acquisition of RivieraWaves and an investment in NB-IoT technologies. Non-GAAP net income and diluted earnings per share for the first quarter of 2018 excluded: (a) equity-based compensation expense, net of taxes, of $2.6 million, and (b) the impact of the amortization of acquired intangibles of $0.4 million associated with the acquisition of RivieraWaves and an investment in NB-IoT technologies.

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "We continue to make prudent R&D investments in strategic growth areas that have enabled us to expand our licensing business. While our royalty business is suffering from weakness in the handset space, we are encouraged by the sustainable year-over-year progress of our non-handset baseband business, particularly in the base station RAN, Bluetooth and IoT markets. Additionally, the company repurchased approximately $2.5 million of its common stock under our existing share repurchase program. At the end of the quarter, our cash balance, marketable securities and bank deposits totaled $171 million, with no debt."

CEVA Conference Call
On May 6, 2019 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://www.webcaster4.com/Webcast/Page/984/30118. 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 (access code: 10130212) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on May 13, 2019. The replay will also be available at CEVA's web site www.ceva-dsp.com.

Forward Looking Statement
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 Mr. Wertheizer's statements about our new NeuPro AI processor design win with an automotive OEM positioning the company at the forefront of level 3 and above autonomous driving, and the decrease in royalty revenue being attributable to excess channel inventory, as well as Mr. Arieli's statement on prospects of a sustainable non-handset baseband business, particularly in the base station RAN, Bluetooth and IoT market segments.  The risks, uncertainties and assumptions that could cause differing CEVA results  include: the ability of the CEVA DSP cores and other technologies to continue to be strong growth drivers for us; our continued success in penetrating new markets, including in non-baseband markets, and maintaining our market position in existing markets; our ability to diversify the company's royalty streams, the ability of products incorporating our technologies to achieve market acceptance, the speed and extent of the expansion of the 4G, 5G and LTE networks, the maturation of the autonomous driving and IoT markets, the effect of intense industry competition and consolidation, global chip market trends, the possibility that markets for CEVA's technologies may not develop as expected or that products incorporating our technologies do not achieve market acceptance; our ability to timely and successfully develop and introduce new technologies; and general market conditions and other risks relating to our 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 signal processing platforms and artificial intelligence processors for a smarter, connected world. We partner with semiconductor companies and OEMs worldwide to create power-efficient, intelligent and connected devices for a range of end markets, including mobile, consumer, automotive, industrial and IoT. Our ultra-low-power IPs for vision, audio, communications and connectivity include comprehensive DSP-based platforms for LTE/LTE-A/5G baseband processing in handsets, infrastructure and cellular IoT (NB-IoT and Cat-M) enabled devices, 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 artificial intelligence, we offer a family of AI processors capable of handling the complete gamut of neural network workloads, on-device. For connectivity, we offer the industry's most widely adopted IPs for Bluetooth (low energy and dual mode) and Wi-Fi (Wi-Fi 4 (802.11n), Wi-Fi 5 (802.11ac) and Wi-Fi 6 (802.11ax) up to 4x4). Visit us at www.ceva-dsp.com and follow us on Twitter, YouTube, Facebook, LinkedIn and Instagram.

 

 

 

CEVA, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME – U.S. GAAP

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




Quarter ended


March 31,


2019

2018


Unaudited

Unaudited

Revenues:



Licensing and related revenues

$  11,011

$  10,083

Royalties

5,958

7,486




Total revenues

16,969

17,569




Cost of revenues

2,023

1,972




Gross profit

14,946

15,597




Operating expenses:



Research and development, net

12,330

12,016

Sales and marketing

3,021

3,176

General and administrative

2,317

2,954

Amortization of intangible assets

210

359




Total operating expenses

17,878

18,505




Operating loss

(2,932)

(2,908)

Financial income, net

800

927




Loss before taxes on income

(2,132)

(1,981)

Taxes on income

165

201




Net loss

$  (2,297)

$  (2,182)




Basic and diluted net loss per share

($0.10)

( $0.10)

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



Basic

21,917

22,148

Diluted

21,917

22,148

 

 

 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

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




Quarter ended


March 31,


2019

2018


Unaudited

Unaudited

GAAP net loss

(2,297)

(2,182)

Equity-based compensation expense included in cost of revenues

136

157

Equity-based compensation expense included in research and development
     expenses

1,362

1,269

Equity-based compensation expense included in sales and marketing
     expenses

356

454

Equity-based compensation expense included in general and administrative
     expenses

562

891

Income tax benefit related to equity-based compensation expenses

(137)

(129)

Amortization of intangible assets related to RivieraWaves transaction

    and NB-IoT technologies                   

 

289

359

Non-GAAP net income

$  271

$  819




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

21,917

22,148

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

775

968










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

 

22,692

23,116







GAAP diluted loss per share

($ 0.10)

($  0.10)

Equity-based compensation expense, net of taxes

$  0.10

$  0.12

Amortization of intangible assets related to RivieraWaves transaction

      and NB-IoT technologies 

 

              

 

$  0.01

 

 

 

$  0.02

 

 

Non-GAAP diluted earnings per share

$  0.01

$  0.04




 

 

CEVA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)





March 31,

December 31,


2019

2018 (*)


Unaudited

Unaudited 

ASSETS






Current assets:



Cash and cash equivalents

$        21,469

$           22,260

Marketable securities and short-term bank deposits

135,340

123,608

Trade receivables, net

19,351

26,156

Prepaid expenses and other current assets

7,630

5,264

Total current assets

183,790

177,288

Long-term assets:



Bank deposits

14,510

21,864

Severance pay fund

9,629

9,026

Deferred tax assets, net

6,186

5,924

Property and equipment, net

7,265

7,344

Operating lease right-of-use assets

9,501

Goodwill

46,612

46,612

Intangible assets, net

2,411

2,700

Other long-term assets

6,928

6,505

Total assets

$        286,832

$        277,263



LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:



Trade payables

$           750

$           632

Deferred revenues

2,811

3,593

Accrued expenses and other payables

17,849

17,527

Operating lease liabilities

1,549

Total current liabilities

22,959

21,752




Long-term liabilities:



Accrued severance pay

10,349

9,632

Operating lease liabilities

7,651

Other accrued liabilities

561

Total liabilities

41,520

31,384




Stockholders' equity:



Common stock

22

22

Additional paid in-capital

221,071

223,250

Treasury stock

(35,686)

(39,132)

Accumulated other comprehensive loss

(427)

(1,114)

Retained earnings

60,332

62,853

Total stockholders' equity

245,312

245,879

Total liabilities and stockholders' equity

$   286,832

$   277,263




(*) Derived from audited financial statements



 

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