Company Announcements

CEVA, Inc. Announces Third Quarter 2022 Financial Results

- Total revenue of $33.7 million, up 3% year-over-year
- Consistent royalty revenue growth from 5G RAN helps to grow base station & IoT royalties 16%    quarter-over-quarter to $8.2 million
- Amir Panush announced as new CEO following Gideon Wertheizer's impending retirement at year end

ROCKVILLE, Md. , Nov. 9, 2022 /PRNewswire/ -- CEVA, Inc. (NASDAQ: CEVA), the leading licensor of wireless connectivity and smart sensing technologies and co-creation solutions, today announced its financial results for the third quarter ended September 30, 2022.

Total revenue for the third quarter of 2022 was $33.7 million, a 3% increase compared to $32.8 million reported for the third quarter of 2021. Third quarter 2022 licensing, non-recurring engineering (NRE) and related revenue was $22.3 million compared to $21.6 million reported for the same quarter a year ago. Royalty revenue for the third quarter of 2022 was $11.4 million compared to $11.2 million reported for the third quarter of 2021.

During the quarter, eighteen IP license and NRE agreements were concluded with customers targeting a wide variety of applications including ADAS, Wi-Fi access points and endpoints, wireless audio devices and satellite communications. Five of the agreements were with first-time customers. Geographically, nine of the deals signed were in China, seven were in the U.S., and two were in Japan.

Gideon Wertheizer, CEO of CEVA, stated: "Despite the challenging demand environment, we delivered year-over-year revenue growth in both licensing and royalties in the third quarter. Our royalties from 5G RAN are benefiting from share gains in China and the consistent rollout of new base stations in the U.S., helping to grow our base station & IoT royalties 16% quarter-over-quarter to $8.2 million. Moreover, we expect 5G RAN royalties to grow further next year as 5G base station rollouts in India begin. Of note, our presence in the wearable space expanded during the quarter as a major OEM launched a new wearable device using our cellular technology."

Wertheizer concluded: "CEVA is well-positioned to continue its track record of consistently delivering innovation, further cementing its industry leadership position. I have decided now is the right time for me to retire and to hand the reins to our next leader. Amir Panush brings strategic vision, management skills and customer expertise that will help drive CEVA's continued growth in years to come. I am very pleased the board has chosen Amir to lead the company in the new year and look forward to supporting him as a board member and advisor."

GAAP operating loss for the third quarter of 2022 was $4.0 million, as compared to GAAP operating income of $1.7 million for the same period in 2021. GAAP net loss for the third quarter of 2022 was $22.3 million, as compared to a GAAP net loss of $0.2 million reported for the same period in 2021. GAAP diluted loss per share for the third quarter of 2022 was $0.96, as compared to a GAAP diluted loss per share of $0.01 for the same period in 2021. GAAP net loss for the third quarter of 2022 compared to the prior period is primarily attributable to: (a) a $15.7 million write-off of deferred tax assets, including withholding tax assets that we will not be able to utilize as a tax credit, which was recorded in the income tax expense line item, (b) a $5.0 impairment charge with respect to Immervision-related assets, as we decided to cease the development of this product line, $3.5 million of which was recorded in operating expenses and $1.5 million of which was recorded in cost of revenues, and (c) a $0.5 million impairment charge with respect to certain non-performing assets related to NB-IoT technology, which was recorded in cost of revenues.

Non-GAAP operating income for the third quarter of 2022 was $6.8 million up 4% from $6.5 million reported for the third quarter of 2021. Non-GAAP net income and diluted earnings per share for the third quarter of 2022 and 2021 were $4.7 million and $0.20, respectively. Non-GAAP operating income for the third quarter of 2022 excluded: (a) equity-based compensation expenses of $3.7 million, (b) the impact of the amortization of acquired intangibles of $1.3 million associated with the acquisition of the Intrinsix and Hillcrest Labs businesses and investments in NB-IoT and Immervision technologies, (c) $0.3 million of costs associated with the Intrinsix acquisition and (d) impairment charges of $5.5 million relating to discontinued Immervision technology and non-performing assets of certain NB-IoT technology. Non-GAAP net income and diluted earnings per share for the third quarter of 2022 excluded: (a) equity-based compensation expenses of $3.7 million, (b) the impact of the amortization of acquired intangibles of $1.3 million associated with the acquisition of the Intrinsix and Hillcrest Labs businesses and investments in NB-IoT and Immervision technologies, (c) $0.3 million of costs associated with the Intrinsix acquisition, (d) $0.5 million loss associated with the remeasurement of marketable equity securities, (e) impairment charges of $5.5 million relating to discontinued Immervision technology and non-performing assets of certain NB-IoT technology and (f) a $15.7 million write-off of a deferred tax asset, including withholding tax assets that we will not be able to utilize as a tax credit. Non-GAAP operating income, net income and diluted earnings per share for the third quarter of 2021 excluded: (a) equity-based compensation expenses of $3.4 million, (b) the impact of the amortization of acquired intangibles of $1.0 million associated with the acquisition of the Intrinsix and Hillcrest Labs business and investments in NB-IoT and Immervision technologies and (c) $0.4 million of costs associated with the Intrinsix acquisition.

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "Our team showed impressive execution against a very challenging macroeconomic backdrop. We continue to carefully manage our operating expenses and research and development priorities, as evidenced in the first 9 months of 2022, where our non-GAAP net income and diluted earnings per share increased 33% and 31%, respectively. Our GAAP results this quarter included a one-time tax asset write-off and impairment charges totaling $21.2 million. We also implemented our stock buyback activities in the quarter, repurchasing approximately $2.3 million of our common stock, and ended the quarter with cash and cash equivalent balances, marketable securities and bank deposits of approximately $144 million."

CEVA Conference Call
On November 9, 2022, 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://app.webinar.net/n8d4Y8EwBbD. 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: 3266604) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on November 16, 2022. 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 growth in royalties and total addressable market for CEVA's technology and the timing and impacts of changes to CEVA's management and Mr. Arieli's statements regarding the Company's management of operating expenses.  The risks, uncertainties and assumptions that could cause differing CEVA results include: the scope and duration of the COVID-19 pandemic; the extent and length of the restrictions associated with the COVID-19 pandemic and the impact on customers, consumer demand and the global economy generally; 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 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 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 wireless connectivity and smart sensing technologies and co-creation solutions for a smarter, safer, connected world. We provide Digital Signal Processors, AI engines, wireless platforms, cryptography cores and complementary software for sensor fusion, image enhancement, computer vision, voice input and artificial intelligence. These technologies are offered in combination with our Intrinsix IP integration services, helping our customers address their most complex and time-critical integrated circuit design projects. Leveraging our technologies and chip design skills, many of the world's leading semiconductors, system companies and OEMs create power-efficient, intelligent, secure and connected devices for a range of end markets, including mobile, consumer, automotive, robotics, industrial, aerospace & defense and IoT.

Our DSP-based solutions include platforms for 5G baseband processing in mobile, IoT and infrastructure, 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 sensor fusion, our Hillcrest Labs sensor processing technologies provide a broad range of sensor fusion software and inertial measurement unit ("IMU") solutions for markets including hearables, wearables, AR/VR, PC, robotics, remote controls and IoT. For wireless IoT, our platforms for Bluetooth (low energy and dual mode), Wi-Fi 4/5/6 (802.11n/ac/ax), Ultra-wideband (UWB) and NB-IoT are the most broadly licensed connectivity platforms in the industry.  

CEVA is a sustainable and environmentally conscious company, adhering to our Code of Business Conduct and Ethics. As such, we emphasize and focus on environmental preservation, recycling, the welfare of our employees and privacy – which we promote on a corporate level. At CEVA, we are committed to social responsibility, values of preservation and consciousness towards these purposes.

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 LOSS – U.S. GAAP

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



Three months ended

Nine months ended


September 30,

September 30,


2022

2021

2022

2021


Unaudited

Unaudited

Unaudited

Unaudited

Revenues:





Licensing, NRE and related revenues

$  22,268

$  21,568

$  66,784

$  51,500

Royalties

11,392

11,222

34,462

37,149






Total revenues

33,660

32,790

101,246

88,649






Cost of revenues

7,948

4,830

21,177

10,904






Gross profit

25,712

27,960

80,069

77,745






Operating expenses:





Research and development, net

18,469

18,760

58,217

53,810

Sales and marketing

3,410

3,162

9,056

9,357

General and administrative

3,558

3,495

10,829

10,534

Amortization of intangible assets

750

849

2,250

2,092

Impairment of assets

3,556

0

3,556

0

Total operating expenses

29,743

26,266

83,908

75,793






Operating income (loss)

(4,031)

1,694

(3,839)

1,952

Financial income (loss), net

108

(47)

803

345

Remeasurement of marketable equity securities

(455)

(2,271)






Income (loss) before taxes on income

(4,378)

1,647

(5,307)

2,297

Income tax expense

17,926

1,814

19,816

5,779






Net loss

$  (22,304)

$  (167)

$  (25,123)

$  (3,482)






Basic net loss per share

$  (0.96)

$  (0.01)

$  (1.08)

$  (0.15)

Diluted net loss per share

$  (0.96)

$  (0.01)

$  (1.08)

$  (0.15)

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





Basic

23,211

22,925

23,163

22,766

Diluted

23,211

22,925

23,163

22,766

 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

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



Three months ended

Nine months ended


September 30,

September 30,


2022

2021

2022

2021


Unaudited

Unaudited

Unaudited

Unaudited

GAAP net loss

$  (22,304)

$  (167)

$  (25,123)

$  (3,482)

Equity-based compensation expense included in cost of revenues

393

247

1,076

509

Equity-based compensation expense included in research and development expenses

2,180

2,007

6,181

5,435

Equity-based compensation expense included in sales and marketing expenses

392

400

1,065

1,185

Equity-based compensation expense included in general and administrative expenses

726

749

2,061

2,378

Amortization, Impairment and Write-off of intangible and prepaid expenses assets, net of taxes, related to acquisition of Intrinsix and Hillcrest Labs business, investments in NB-IoT and Immervision technologies

6,796

1,034

9,360

2,571

Costs associated with the Intrinsix acquisition

326

383

977

1,388

Loss associated with the remeasurement of marketable equity securities.

455

2,271

Income tax expense as a result of a write off of a deferred tax asset and withholding tax that can't be utilized

15,741

15,323

NRE revenues associated with the purchase price allocation (PPA) related to Intrinsix acquisition

42

Non-GAAP net income

$  4,705

$  4,653

$  13,233

$  9,984

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

23,211

22,925

23,163

22,766

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

872

746

821

741

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

24,083

23,671

23,984

23,507






GAAP diluted loss per share

$  (0.96)

$  (0.01)

$  (1.08)

$  (0.15)

Equity-based compensation expense

$  0.16

$  0.15

$  0.45

$  0.40

Amortization, Impairment and Write-off of intangible and prepaid expenses assets, net of taxes, related to acquisition of Intrinsix and Hillcrest Labs business, investments in NB-IoT and Immervision technologies

$  0.29

$  0.04

$  0.39

$  0.11

Costs associated with the Intrinsix acquisition

$  0.01

$  0.02

$  0.04

$  0.06

Loss associated with the remeasurement of marketable equity securities.

$  0.02

$  —

$  0.10

$  —

Income tax expense as a result of a write off of a deferred tax asset and withholding tax that can't be utilized

$  0.68

$  —

$  0.65

$  —

Non-GAAP diluted earnings per share

$  0.20

$  0.20

$  0.55

$  0.42

 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

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



Three months ended

Nine months ended


September 30,

September 30,


2022

2021

2022

2021


Unaudited

Unaudited

Unaudited

Unaudited

GAAP Operating Income (loss)

($4,031)

$1,694

($3,839)

$1,952

Adjustments:





Stock compensation

3,691

3,403

10,383

9,507

Amortization, impairment and write-off of intangible and prepaid expenses assets, related to acquisition of Intrinsix and Hillcrest Labs business, investments in NB-IoT and Immervision technologies

6,796

1,034

9,360

2,646

Costs associated with the Intrinsix acquisition

326

383

977

1,388

Purchase price allocation (PPA) for the Intrinsix acquisition

42

Total non-GAAP Operating Income

$6,782

$6,514

$16,923

$15,493

 

CEVA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


(U.S. Dollars in thousands)



September 30,

December 31,


2022

2021(*)


Unaudited

Unaudited

ASSETS



Current assets:



Cash and cash equivalents

$  29,510

$  33,153

Marketable securities and short-term bank deposits

106,763

121,708

Trade receivables, net

11,022

14,644

Unbilled receivables

15,741

12,805

Prepaid expenses and other current assets

8,133

6,670

                              Total current assets

171,169

188,980

Long-term assets:



Bank deposits

8,128

0

Severance pay fund

8,431

10,175

Deferred tax assets, net

4,669

15,850

Property and equipment, net

7,370

6,765

Operating lease right-of-use assets

8,116

8,827

Investment in marketable equity security

648

2,919

Goodwill

74,777

74,777

Intangible assets, net

7,549

14,607

Other long-term assets

3,957

5,759

Total assets

$  294,814

$  328,659


LIABILITIES AND STOC KHOLDERS' EQUITY 

Current liabilities:



Trade payables

$  1,721

$  1,464

Deferred revenues

3,540

8,661

Accrued expenses and other payables

20,566

22,041

Operating lease liabilities

2,235

3,274

Total current liabilities

28,062

35,440




Long-term liabilities:



Accrued severance pay

9,018

10,551

Operating lease liabilities

4,940

5,130

Other accrued liabilities

497

806

Total liabilities

42,517

51,927

Stockholders' equity:



Common stock

23

23

Additional paid in-capital

239,445

235,386

Treasury stock

(10,633)

(13,790)

Accumulated other comprehensive loss

(6,761)

(372)

Retained earnings

30,223

55,485

Total stockholders' equity

252,297

276,732

Total liabilities and stockholders' equity

$  294,814

$  328,659

 (*) Derived from audited financial statements

 

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SOURCE CEVA, Inc.