CEVA, Inc. Announces Fourth Quarter 2021 Financial Results

- Full year - record licensing, NRE and related revenue and number of customer agreements concluded, totaling $72.8 million and 73, respectively

- Full year - record royalty revenue of $49.9 million, from CEVA-powered shipments of more than 1.6 billion units - 52 CEVA-powered devices every second in 2021

- Q4 - Record revenues for third consecutive quarter

- Q4 - Strategic agreements concluded with key customers for 5G fixed wireless access, Wi-Fi 7, Edge AI and first integrated IP solutions deal

ROCKVILLE, Md., Feb. 15, 2022 /PRNewswire/ -- CEVA, Inc. (NASDAQ: CEVA), the leading licensor of wireless connectivity and smart sensing technologies and integrated IP solutions, today announced its financial results for the fourth quarter and full year ended December 31, 2021.

 

2021 was a remarkable year for CEVA as our business continues to benefit from accelerated digitalization of everything.

Total revenue for the fourth quarter of 2021 was $34.1 million, an all-time record high and a 21% increase compared to $28.1 million reported for the fourth quarter of 2020. Fourth quarter 2021 licensing, non-recurring engineering (NRE) and related revenue was $21.3 million, an increase of 77% when compared to $12.1 million reported for the same quarter a year ago. Royalty revenue for the fourth quarter of 2021 was $12.7 million, a decrease of 21% when compared to $16.1 million reported for the fourth quarter of 2020. Non-GAAP licensing, NRE and related revenues for the fourth quarter of 2021 was $21.5 million and non-GAAP total revenue for the fourth quarter of 2021 was $34.2 million.  Non-GAAP licensing, NRE and related revenues and non-GAAP total revenues for the fourth quarter of 2021, both included a $0.2 million purchase price allocation adjustment associated with the Intrinsix acquisition.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "Our record fourth quarter revenue and strong overall performance highlight the incredible demand for our comprehensive IP and chip design portfolio. In licensing, we concluded strategic agreements in 5G Fixed Wireless Access, Wi-Fi 7, Edge AI and the first integrated IP solution agreement combining IP and Intrinsix chip design. Royalties were impacted by the continued ramp down of 4G smartphones by a large Tier 1 OEM, but our base station & IoT product category continued to thrive, with quarterly revenue up 21% year-over-year from more than 330 million CEVA-powered smart and connected devices."

Mr. Wertheizer continued: "2021 was a transformative year for CEVA as we expanded our technology proposition to address the abundant opportunities for comprehensive solutions that involve the combination of IP and chip design. Our record year is the result of our long-term strategic mission to grow and diversify our business and customer base beyond handset modems. This can be clearly seen by secular growth in our base station & IoT royalties, which grew 28% year over year to $28.6 million, resulting from 1.3 billion CEVA-powered devices, which more than offset the ramp down of 4G smartphones by the large Tier 1 OEM. We continue forming tighter relationships with key customers that trust our excellence and are interested in expanding the scope of business beyond IP licensing toward integrated IP solutions, where we benefit from a higher revenue share. This is evident in our record licensing, NRE and related revenue, which grew 39% year-over-year to $72.8 million. Heading into 2022, we're invigorated and excited to address the huge opportunities ahead for the Company, and ultimately drive more value for our shareholders."

During the quarter, 20 IP license and NRE agreements were concluded, targeting a wide variety of smart and connected use cases, including 5G for fixed wireless access, next-generation Wi-Fi 7 for access points, Edge AI for ADAS, 3D audio headsets, wireless audio and Bluetooth and Wi-Fi connectivity for a broad range of IoT applications. Four agreements were with first-time customers. Geographically, seven of the deals signed were in China, six in the U.S., six in APAC, and one in Europe.

GAAP operating income for the fourth quarter was $1.6 million, as compared to a GAAP operating income of $2.4 million for the same period in 2020. GAAP net income for the fourth quarter of 2021 was $3.9 million, as compared to a GAAP net income of $0.6 million reported for the same period in 2020. GAAP diluted earnings per share for the fourth quarter of 2021 was $0.17, as compared to a GAAP diluted earnings per share of $0.03 for the same period in 2020.

Non-GAAP operating income for the fourth quarter of 2021 increased 8% to $7.2 million from $6.7 million reported for the fourth quarter of 2020. Non-GAAP net income and diluted earnings per share for the fourth quarter of 2021 increased 13% and 10%, respectively, to $5.3 million and $0.22, respectively, from $4.7 million and $0.20 reported for the fourth quarter of 2020.

Non-GAAP operating income for the fourth quarter of 2021 excluded: (a) equity-based compensation expenses of $3.5 million, (b) the impact of the amortization of acquired intangibles of $1.6 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) an addition of $0.2 million in licensing, NRE and related revenues associated with purchase price allocation for the Intrinsix acquisition. Non-GAAP operating income for the fourth quarter of 2020 excluded: (a) equity-based compensation expenses of $3.6 million and (b) the impact of the amortization of acquired intangibles of $0.8 million associated with the acquisition of the Hillcrest Labs business and investments in NB-IoT and Immervision technologies.

Non-GAAP net income and diluted earnings per share for the fourth quarter of 2021 excluded: (a) equity-based compensation expenses, net of taxes, of $2.7 million, (b) the impact of the amortization of acquired intangibles, net of taxes, of $1.4 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) $1.5 million of income, net of taxes associated with the reevaluation of an investment in another company, (e) $1.7 million of income tax benefit associated with the purchase price allocation related to the Intrinsix acquisition and (f) an addition of $0.2 million in licensing, NRE and related revenues associated with purchase price allocation for the Intrinsix acquisition. Non-GAAP net income and diluted earnings per share for the fourth quarter of 2020 excluded: (a) equity-based compensation expense, net of taxes, of $3.4 million, and (b) the impact of the amortization of acquired intangible and other assets, net of taxes, of $0.7 million associated with the acquisition of the Hillcrest Labs business and investments in NB-IoT and Immervision technologies.

Full Year 2021 Review

Total revenue for 2021 was $122.7 million, an increase of 22%, when compared to $100.3 million reported for 2020. Licensing, NRE and related revenue for 2021 was a record $72.8 million, an increase of 39%, when compared to $52.5 million reported for 2020. Royalty revenue for 2021 was a record $49.9 million, representing an increase of 4%, as compared to $47.8 million reported for 2020.

GAAP operating income for 2021 was $3.5 million, as compared to a GAAP operating loss of $0.8 million reported for 2020. GAAP net income and diluted earnings per share for 2021 were $0.4 million and $0.02, respectively, compared to U.S GAAP net loss and diluted loss per share of $2.4 million and $0.11, respectively, reported for 2020.

Non-GAAP operating income for 2021 increased 43% to $22.7 million from $15.9 million reported for 2020. Non-GAAP net income and diluted earnings per share for 2021 were $15.3 million and $0.65, respectively, representing an increase of 11% and 8%, respectively, over $13.7 million and $0.60 reported for 2020.

Non-GAAP operating income for 2021 excluded (a) equity-based compensation expenses of $13.1 million,  (b) the impact of the amortization of acquired intangibles of $4.3 million associated with the acquisition of the Intrinsix and Hillcrest Labs businesses and investments in NB-IoT and Immervision technologies, (c) $1.7 million of costs associated with the Intrinsix acquisition and (d) an addition of $0.2 million in licensing, NRE and related revenues associated with purchase price allocation for the Intrinsix acquisition. Non-GAAP operating income for 2020 excluded: (a) equity-based compensation expenses of $13.6 million and (b) the impact of the amortization of acquired intangibles of $3.0 million associated with the acquisition of the Hillcrest Labs business and investments in NB-IoT and Immervision technologies.

Non-GAAP net income and diluted earnings per share for 2021 excluded (a) equity-based compensation expenses, net of taxes, of $12.2 million, (b) the impact of the amortization of acquired intangibles, net of taxes, of $4.0 million associated with the acquisition of the Intrinsix and Hillcrest Labs businesses and investments in NB-IoT and Immervision technologies, (c) $1.7 million of costs associated with the Intrinsix acquisition, (d) $1.5 million of income, net of taxes associated with the reevaluation of an investment in another company (e) $1.7 million of income tax benefit associated with the purchase price allocation related to the Intrinsix acquisition and (f) an addition of $0.2 million in licensing, NRE and related revenues associated with purchase price allocation for the Intrinsix acquisition. Non-GAAP net income and diluted earnings per share for 2020 excluded (a) equity-based compensation expense, net of taxes, of $13.4 million, and (b) the impact of the amortization of acquired intangible assets, net of taxes, of $2.7 million associated with the acquisition of the Hillcrest Labs business, and investments in NB-IoT and Immervision technologies.

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "2021 was a remarkable year for CEVA as our business continues to benefit from accelerated digitalization of everything. To expedite our growth and further exploit the opportunities for a broader offering of IP and chip design, we acquired Intrinsix Corp. With this acquisition, we also strengthened our presence in the U.S., gained access to the lucrative aerospace & defense markets and diversified our revenue streams geographically. At the end of the year, our balance sheet remains very strong, with our cash and cash equivalent balances, marketable securities and bank deposits of approximately $155 million, and no debt."

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/984/44317. 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: 1887136) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on February 22, 2022. The replay will also be available at CEVA's web site 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 demand for CEVA's IP and chip design portfolio, growth in the base station and IoT product category, and expectations for 2022, and Mr. Arieli's guidance regarding the potential benefits of CEVA's acquisition of Intrinsix.  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 integrated IP 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 4/5/6/6E (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 ceva-dsp.com and follow us on Twitter, YouTube, Facebook, LinkedIn and Instagram.

CEVA, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) – U.S. GAAP

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

Three months ended

Year ended

December 31,

December 31,

2021

2020

2021

2020

Unaudited

Unaudited

Unaudited

Unaudited

Revenues:

Licensing, NRE and related revenues

$   21,327

$   12,068

$   72,827

$   52,513

Royalties

12,730

16,077

49,879

47,813

Total revenues

34,057

28,145

122,706

100,326

Cost of revenues

5,923

2,490

16,827

10,749

Gross profit

28,134

25,655

105,879

89,577

Operating expenses:

Research and development, net

18,694

16,315

72,504

62,010

Sales and marketing

3,504

3,135

12,861

11,907

General and administrative

3,762

3,223

14,296

14,116

Amortization of intangible assets

618

575

2,710

2,307

Total operating expenses

26,578

23,248

102,371

90,340

Operating income (loss)

1,556

2,407

3,508

(763)

Financial income (loss), net

(149)

595

196

3,284

Reevaluation of investment in other company

1,984

1,984

Income before taxes on income

3,391

3,002

5,688

2,521

Income tax expense (benefit)

(487)

2,367

5,292

4,900

Net Income (loss)

$  3,878

$  635

$  396

$ (2,379)

Basic net income (loss) per share

$ 0.17

$ 0.03

$  0.02

$  (0.11)

Diluted net income (loss) per share

$ 0.17

$ 0.03

$  0.02

$  (0.11)

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

Basic

22,977

22,249

22,819

22,107

Diluted

23,359

22,911

23,251

22,107

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 31,

2021

2020

2021

2020

Unaudited

Unaudited

Unaudited

Unaudited

GAAP net income (loss)

$  3,878

$  635

$  396

$  (2,379)

Equity-based compensation expense included in cost of revenues

309

166

818

639

Equity-based compensation expense included in research and development expenses

1,852

1,759

7,287

6,874

Equity-based compensation expense included in sales and marketing expenses

441

542

1,626

2,038

Equity-based compensation expense included in general and administrative expenses

946

1,099

3,324

4,085

Income tax benefit related to equity-based compensation expenses

(842)

(196)

(842)

(256)

Amortization of intangible assets, net of taxes, related to acquisition of Intrinsix in 2021 and Hillcrest Labs business, investments in NB-IoT and Immervision technologies

1,388

685

3,959

2,746

Costs associated with the Intrinsix acquisition

342

-

1,730

-

Income associated with the reevaluation of investment in other company, net of taxes.

(1,528)

-

(1,528)

-

Income tax benefit and additional NRE revenues associated with the purchase price allocation (PPA) related to Intrinsix acquisition

(1,481)

-

(1,481)

-

Non-GAAP net income

$  5,305

$  4,690

$  15,289

$  13,747

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

23,359

22,911

23,251

22,107

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

375

305

314

979

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

23,734

23,216

23,565

23,086

GAAP diluted earnings (loss) per share

$  0.17

$0.03

$    0.02

$ (0.11)

Equity-based compensation expense, net of taxes

$  0.10

$0.14

$    0.51

$   0.59

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

$  0.06

$0.03

$    0.17

$   0.12

Costs associated with the Intrinsix acquisition

$  0.01

-

$    0.07

-

Income associated with the reevaluation of investment in other company, net of taxes.

$(0.06)

-

$ (0.06)

-

Income tax benefit and additional NRE revenues associated with the purchase price allocation (PPA) related to Intrinsix acquisition

$(0.06)

-

$ (0.06)

-

Non-GAAP diluted earnings per share

$  0.22

$0.20

$    0.65

$  0.60

GAAP revenues - Licensing, NRE and related revenues

$21,327

$12,068

$72,827

$52,513

   Purchase price allocation (PPA) for the Intrinsix acquisition

180

180

   Non-GAAP Licensing, NRE and related revenues

21,507

12,068

73,007

52,513

   Royalties

12,730

16,077

49,879

47,813

Total non-GAAP revenues

$34,237

$28,145

$122,886

$100,326

Three months ended

    Year ended

December 31,

December 31,

2021

2020

2021

2020

Unaudited

Unaudited

Unaudited

Unaudited

GAAP Operating Income (loss)

$1,556

$2,407

$3,508

$(763)

Equity-based compensation expense included in cost of revenues

309

166

818

639

Equity-based compensation expense included in research and development expenses

1,852

1,759

7,287

6,874

Equity-based compensation expense included in sales and marketing expenses

441

542

1,626

2,038

Equity-based compensation expense included in general and administrative expenses

946

1,099

3,324

4,085

Amortization of intangible assets related to acquisition of Intrinsix in 2021
and Hillcrest Labs business, investments in NB-IoT and Immervision technologies

1,614

760

4,260

3,047

Costs associated with the Intrinsix acquisition

342

-

1,730

-

Purchase price allocation (PPA) for the Intrinsix acquisition

180

180

Total non-GAAP Operating Income

$7,240

$6,733

$22,733

$15,920

CEVA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

December 31,

December 31,

2021

2020 (*)

Unaudited

Unaudited 

ASSETS

Current assets:

Cash and cash equivalents

$        33,153

$           21,143

Marketable securities and short-term bank deposits

121,708

108,987

Trade receivables, net

14,644

14,765

Unbilled receivables

12,805

16,459

Prepaid expenses and other current assets

6,670

6,205

Total current assets

188,980

167,559

Long-term assets:

Bank deposits

-

29,529

Severance pay fund

10,175

10,535

Deferred tax assets, net

15,850

10,826

Property and equipment, net

6,765

7,586

Operating lease right-of-use assets

8,827

9,052

Goodwill

74,777

51,070

Intangible assets, net

14,607

10,836

Other long-term assets

8,678

9,959

Total assets

$        328,659

$        306,952

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Trade payables

$           1,464

$           894

Deferred revenues

8,661

2,434

Accrued expenses and other payables

22,041

21,883

Operating lease liabilities

3,274

2,969

Total current liabilities

35,440

28,180

Long-term liabilities:

Accrued severance pay

10,551

11,226

Operating lease liabilities

5,130

5,772

Other accrued liabilities

806

885

Total liabilities

51,927

46,063

Stockholders' equity:

Common stock

23

22

Additional paid in-capital

235,386

233,172

Treasury stock

(13,790)

(30,133)

Accumulated other comprehensive income (loss)

(372)

478

Retained earnings

55,485

57,350

Total stockholders' equity

276,732

260,889

Total liabilities and stockholders' equity

$   328,659

$   306,952

(*) Derived from audited financial statements

SOURCE CEVA, Inc.