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CEVA, Inc. Announces Fourth Quarter and Year End 2019 Financial Results

- Record quarterly total revenue of $28.3 million, up 32% year-over-year

- Record 360 million CEVA-powered devices shipped in fourth quarter, up 45% year-over-year

- 21 agreements completed in the fourth quarter; 52 completed overall in 2019

- Record annual licensing revenue of $47.9 million, up 18% year-over-year

- Strong growth in non-handset baseband royalty revenue of $13 million, up 49% year-over-year

MOUNTAIN VIEW, Calif., Feb. 18, 2020 /PRNewswire/ -- CEVA, Inc. (NASDAQ: CEVA), the leading licensor of wireless connectivity and smart sensing technologies, today announced its financial results for the fourth quarter and year ended December 31, 2019.

CEVA, Inc. reported Q4 2019 earnings of $28.3 million and non-GAAP EPS of $0.30. 21 new agreements were signed, including 6 for smart sensing products and 15 for connectivity products. Licensing and related revenue was a record high $14.8 million and royalty revenue was a record high $13.5 million. On an annual basis, total revenue was $87.2 million, up 12% year-over-year. CEVA-powered shipments were more than 1 billion units for 2019. For more information and highlights, view the infographic.

Total revenue for the fourth quarter of 2019 was a record high $28.3 million, an increase of 32%, when compared to $21.4 million reported for the fourth quarter of 2018. Fourth quarter 2019 licensing and related revenue was a record high $14.8 million, an increase of 40%, when compared to $10.5 million reported for the same quarter a year ago. Royalty revenue for the fourth quarter of 2019 was a record high $13.5 million, an increase of 24%, when compared to $10.9 million reported for the fourth quarter of 2018.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "We are extremely pleased with our outstanding fourth quarter, as we set record highs in licensing and royalties. Our organization showed exceptional performance in executing twenty-one licensing agreements for a record revenue of $14.8 million, including a strategic agreement with a very large smartphone OEM for its in-house cellular modem development. Our record royalty revenue quarter of $13.5 million was driven by new handset launches and seasonal strength together with new production ramps of our non-handset baseband technologies."

Mr. Wertheizer continued: "Our broad and comprehensive product portfolio for wireless connectivity and smart sensing, together with an outstanding effort by our team in 2019, led to an all-time high $47.9 million in licensing revenue and a record fifty-two license agreements signed.  Our royalty business grew 5% to $39.3 million, driven by rapid expansion in the non-handset baseband category with 49% year-over-year growth to $13 million, offset by overall maturity in the handset space."

During the quarter, CEVA completed twenty-one license agreements. Six of the agreements were for smart sensing products and fifteen for connectivity products. Nineteen of the licensing agreements signed during the quarter were for non-handset baseband applications and ten were with first-time customers of CEVA. Customers' target applications include baseband processing for 5G base stations, smartphones and cellular IoT devices, AI and computer vision for consumer electronics, surveillance and automotive, audio and Bluetooth connectivity for true wireless stereo earbuds, sensor fusion for smart TV control, laptops and PC peripherals, and Bluetooth and Wi-Fi connectivity for a wide variety of IoT devices. Geographically, ten of the deals signed were in China, five were in the U.S., two in Europe and four were in the APAC region, including Japan.

GAAP net income for the fourth quarter of 2019 increased 33% to $3.1 million, compared to $2.3 million reported for the same period in 2018. GAAP diluted earnings per share for the fourth quarter of 2019 increased 40%, to $0.14 from $0.10 a year ago.

Non-GAAP net income and diluted earnings per share for the fourth quarter of 2019 were $6.8 million and $0.30, respectively, representing an increase of 29% and 30% respectively, over the $5.2 million and $0.23 reported for the fourth quarter of 2018. Non-GAAP net income and diluted earnings per share for the fourth quarter of 2019 excluded: (a) equity-based compensation expense, net of taxes, of $2.8 million, and (b) the impact of the amortization of acquired intangibles and other assets of $0.9 million associated with the acquisitions of RivieraWaves and the Hillcrest Labs business, and investments in NB-IoT and Immervision technologies. Net income and diluted earnings per share for the fourth quarter of 2018 excluded: (i) equity-based compensation expense, net of taxes, of $2.0 million, and (ii) the impact of the amortization of acquired intangibles of $0.3 million associated with the acquisition of RivieraWaves and the investment NB-IoT technologies, and (iii) revaluation of investment in other company, net of taxes, of $0.7 million.

Full Year 2019 Review

Total revenue for 2019 was $87.2 million, an increase of 12%, when compared to $77.9 million reported for 2018. Licensing and related revenue for 2019 was $47.9 million, an increase of 18%, when compared to $40.4 million reported for 2018. Royalty revenue for 2019 was $39.3 million, representing an increase of 5%, as compared to $37.4 million reported for 2018.

U.S. GAAP net income diluted earnings per share for 2019 were $0.0 million and $0.00, respectively, compared to U.S GAAP net income and diluted net income $0.6 million and $0.03, respectively reported for 2018.

Non-GAAP net income and diluted earnings per share for 2019 were $13.4 million and $0.59, respectively, representing an increase of 10% and 11% respectively, over $12.1 million and $0.53 reported for 2018, respectively. Non-GAAP net income and diluted earnings per share for 2019 excluded (a) equity-based compensation expense, net of taxes, of $10.1 million, (b) the impact of the amortization of acquired intangibles of $2.3 million associated with the acquisitions of RivieraWaves and the Hillcrest Labs business, and the investments in NB-IoT and Immervision technologies, and (c) deal expenses and write-off of an acquired lease associated with the Hillcrest Labs transaction of $0.8 million. Non-GAAP net income and diluted earnings per share for 2018 excluded (a) equity-based compensation expense, net of taxes, of $9.7 million, and (b) the impact of the amortization of acquired intangibles of $1.2 million associated with the acquisition of RivieraWaves and the investment NB-IoT technologies, and (c) revaluation of investment in other company, net of taxes, of $0.7 million.

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "We reached a number of financial and business milestones in 2019 as our diversification strategy continued to drive growth. We surpassed 1 billion CEVA-powered unit shipments reported by our customers as we ended the year with a record 360 million unit shipments in the fourth quarter alone. We invested $21 million in the expansion of our business and our addressable markets with the acquisition of the Hillcrest Labs sensor fusion business and the technology investment in Immervision. We also purchased approximately $9.1 million of our common stock through our stock buyback program in 2019. Indeed, the Board of Directors authorized the expansion of the Company's share repurchase program with an additional 700,000 shares of common stock available for repurchase.  As of December 31, 2019, CEVA's cash and cash equivalent balances, marketable securities and bank deposits totaled $150 million, with no debt."

CEVA Conference Call

On February 18, 2020, 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/984/32718. 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: 10138027) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on February 28, 2020. The replay will also be available at CEVA's web site at www.ceva-dsp.com.

About CEVA, Inc.

CEVA is the leading licensor of wireless connectivity and smart sensing technologies. We offer Digital Signal Processors, AI processors, wireless platforms and complementary software for sensor fusion, image enhancement, computer vision, voice input and artificial intelligence, all of which are key enabling technologies 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, robotics, industrial and IoT. Our ultra-low-power IPs include comprehensive DSP-based platforms for 5G baseband processing in mobile and infrastructure, advanced imaging and computer vision for any camera-enabled device and audio/voice/speech and ultra-low power always-on/sensing applications for multiple IoT markets. For sensor fusion, our Hillcrest Labs sensor processing technologies provide a broad range of sensor fusion software and IMU solutions for AR/VR, robotics, remote controls, and IoT. For artificial intelligence, we offer a family of AI processors capable of handling the complete gamut of neural network workloads, on-device. For wireless IoT, we offer the industry's most widely adopted IPs for Bluetooth (low energy and dual mode), Wi-Fi 4/5/6 (802.11n/ac/ax) and NB-IoT. Visit us at www.ceva-dsp.com and follow us on Twitter, YouTube, Facebook, LinkedIn and Instagram.

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 that in 2020, CEVA is expected to continue its top-line revenue growth, driven by strong momentum in licensing and expansion in royalties from non-handset baseband products. 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 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 maturation of the connectivity, IoT and 5G 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.

 

CEVA, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME – U.S. GAAP

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



Three months ended

Year ended


December 31,

December


2019

2018

2019

2018


Unaudited

Revenues:





Licensing and related revenues

$  14,806

$  10,539

$    47,890

$    40,446

Royalties

13,506

10,862

39,262

37,431






Total revenues

28,312

21,401

87,152

77,877






Cost of revenues

2,823

1,985

10,106

7,951






Gross profit

25,489

19,416

77,046

69,926






Operating expenses:





Research and development, net

14,250

11,999

52,843

47,755

Sales and marketing

3,554

2,859

12,363

12,161

General and administrative

3,481

2,161

11,841

10,354

Amortization of intangible assets

746

225

1,923

901






Total operating expenses

22,031

17,244

78,970

71,171






Operating income (loss)

3,458

2,172

(1,924)

(1,245)

Financial income, net

992

883

3,291

3,418

Revaluation of investment in other company 

(870)

(870)






Income before taxes on income

4,450

2,185

1,367

1,303

Income taxes (benefit)

1,388

(118)

1,339

729






Net income

$3,062

$2,303

$28

$574






Basic net income per share

$0.14

$0.11

$0.00

$0.03

Diluted net income per share

$0.14

$0.10

$0.00

$0.03

Weighted-average number of Common Stock used in computation of net income per share (in thousands):





Basic

21,920

21,863

21,932

22,034

Diluted

22,373

22,197

22,323

22,503

 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

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



Three months ended

Year ended


December 31

December


2019

2018

2019

2018


Unaudited






GAAP net income

$3,062

$2,303

$28

$574

Equity-based compensation expense included in cost of revenue

166

108

630

588

Equity-based compensation expense included in research and development expenses

1,543

1,267

5,857

5,141

Equity-based compensation expense included in sales and marketing expenses

383

341

1,495

1,587

Equity-based compensation expense included in general and administrative expenses

779

568

2,736

3,051

Income tax benefit related to equity-based compensation expenses

(101)

(312)

(574)

(712)

Amortization of intangible assets related to acquisitions of RivieraWaves and Hillcrest Labs business, investments in NB-IoT and Immervision technologies, and deal costs and write off of an acquired lease related the Hillcrest Labs transaction

945

304

3,203

1,241

Revaluation of investment in other company, net of taxes

670

670

Non-GAAP net income

$6,777

$5,249

$13,375

$12,140






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

22,373

22,197

22,323

22,503

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

462

404

475

388

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

22,835

22,601

22,798

22,891






GAAP diluted net income per share

$0.14

$0.10

$0.00

$0.03

Equity-based compensation expense, net of taxes

$0.12

$0.09

$0.45

$0.42

Amortization of intangible assets related to acquisitions of RivieraWaves and Hillcrest Labs business, investments in NB-IoT and Immervision technologies, and deal costs and write off of an acquired lease related the Hillcrest Labs transaction

$0.04

$0.01

$0.14

$0.05

Revaluation of investment in other company, net of taxes

$0.03

$0.03






Non-GAAP diluted net income per share

$0.30

$0.23

$0.59

$0.53






 

CEVA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)



December 31,

December 31,


2019

2018 (*)


Unaudited

Unaudited 

ASSETS



Current assets:



Cash and cash equivalents

$           22,803

$           22,260

Marketable securities and short term bank deposits

121,782

123,608

Trade receivables, net

11,066

9,971

Unbilled receivables

17,241

16,185

Prepaid expenses and other current assets

5,660

5,264

Total current assets

178,552

177,288

Long-term assets:



Bank deposits

5,368

21,864

Severance pay fund

9,881

9,026

Deferred tax assets

10,605

5,924

Property and equipment, net

7,879

7,344

Operating lease right-of-use assets

11,066

̶

Goodwill

51,070

46,612

Intangible assets, net

13,424

2,700

Other long term assets

9,176

6,505

Total assets

$        297,021

$        277,263




LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:



Trade payables

$           701

$           632

Deferred revenues

3,642

3,593

Accrued expenses and other payables

19,642

17,527

Operating lease liabilities

2,393

̶

Total current liabilities

26,378

21,752




Long-term liabilities:



Accrued severance pay

10,551

9,632

Operating lease liabilities

8,273

̶

Other accrued liabilities

662

̶

Total liabilities

45,864

31,384




Stockholders' equity:



Common stock:

22

22

Additional paid in-capital

228,005

223,250

Treasury stock

(39,390)

(39,132)

Accumulated other comprehensive income (loss)

94

(1,114)

Retained earnings

62,426

62,853

Total stockholders' equity

251,157

245,879

Total liabilities and stockholders' equity

$   297,021

$   277,263


(*) Derived from audited financial statements

 

CEVA - a global leader in signal processing IP for everything smart and connected. (PRNewsFoto/CEVA, Inc.)
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