CEVA, Inc. Announces Third Quarter 2010 Financial Results
MOUNTAIN VIEW, Calif., Oct. 26 /PRNewswire-FirstCall/ -- CEVA, Inc. (Nasdaq: CEVA); (LSE: CVA), the leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for the mobile handsets, portable and consumer electronics markets, today announced its financial results for the third quarter ended September 30, 2010.
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Total revenue for the third quarter of 2010 was a record $10.7 million, an increase of 11% compared to $9.7 million reported for the third quarter of 2009. Third quarter of 2010 licensing revenue was $4.5 million, a decrease of 15% compared to $5.2 million reported for the third quarter of 2009. Royalty revenue for the third quarter of 2010 was $5.2 million, an increase of 42% over $3.7 million reported for the third quarter of 2009. Revenue from services for the third quarter of 2010 was $1 million, an increase of 35% from $0.7 million reported for the third quarter of 2009.
Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "We are pleased with our solid performance in the third quarter, including a strategic agreement for the CEVA-XC DSP with a leading semiconductor company, a new power house in the wireless space. Our royalty revenue continues to grow, and we reached a new record high market share of 33% for the worldwide handset cellular baseband market."
"Furthermore, due to projections for stronger than expected shipments of products incorporating our technologies by a few of our customers in the third quarter, we currently anticipate significant sequential increase our fourth quarter royalty revenue," continued Mr. Wertheizer.
U.S. GAAP net income for the third quarter of 2010 was $3.0 million, an increase of 71% compared to $1.8 million reported for the same period in 2009. U.S. GAAP diluted earnings per share for the third quarter of 2010 was $0.13, an increase of 44% compared to $0.09 reported for the third quarter of 2009.
Non-GAAP net income and diluted earnings per share for the third quarter of 2010 reached all-time highs of $3.0 million and $0.14, respectively, representing an increase of 24% and 17%, respectively, over the $2.4 million and $0.12 reported for the third quarter of 2009.
Non-GAAP net income and diluted earnings per share for the third quarter of 2010 and 2009, excluded an aggregate equity-based compensation expense of $0.5 million and $0.7 million, respectively.
During the quarter, the Company concluded six new licensing agreements. Five agreements were for CEVA DSP cores, platforms and software, and one agreement was for CEVA Bluetooth technology. Target applications for customer deployment are 3G/4G handset and mobile broadband processors, smart metering systems, and Android-based application processors for smartphones, tablets and ereaders. Geographically, two of the agreements signed were in the U.S., three were in Asia and one was in Europe.
Yaniv Arieli, Chief Financial Officer of CEVA, stated: "Our third quarter financial performance demonstrated continued progress towards our long term profitability milestones. We reached a new record high royalty revenue for the fourth consecutive quarter and also recorded all-time highs for GAAP and non-GAAP operating margins, which was driven by solid top line growth aligned with on-going expense management. In addition, we continued to generate significant positive cash flow during the quarter which further enhances our already strong balance sheet. As of September 30, 2010, CEVA's cash balance, marketable securities and bank deposits were $117.2 million, an increase of 8% from the second quarter of 2010."
CEVA Conference Call
On October 26, 2010, CEVA management will conduct a conference call at 8:30 a.m. Eastern Time / 1:30 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 or 15781514)
- UK/Rest of World: Dial +44-800-051-3806 (Access Code: CEVA or 15781514)
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: 15781514) for US domestic callers and +44-800-917-2646 (passcode: 15781514) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on November 2, 2010. The replay will also be available at CEVA's web site ceva-dsp.com.
About CEVA, Inc.
CEVA is the world's leading licensor of silicon intellectual property (SIP) DSP cores and platform solutions for the mobile handsets, portable and consumer electronics markets. CEVA's IP portfolio includes comprehensive technologies for cellular baseband (2G / 3G / 4G), multimedia, HD video and audio, voice over packet (VoP), Bluetooth, Serial Attached SCSI (SAS) and Serial ATA (SATA). In 2009, CEVA's IP was shipped in over 330 million devices, powering handsets from 7 out of the top 8 handset OEMs, including LG, Motorola, Nokia, Samsung, Sony Ericsson and ZTE. Today, one in every three handsets shipped worldwide is powered by a CEVA DSP core. For more information, visit ceva-dsp.com.
Forward-Looking Statements
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 Mr. Wertheizer's statement about CEVA's ability to achieve significant sequential increase in its fourth quarter 2010 royalty revenue. The risks, uncertainties and assumptions include: the ability of the CEVA DSP cores and other technologies to continue to be strong growth drivers; the ability of products incorporating CEVA's technologies to achieve market acceptance; CEVA's success in penetrating new markets and maintaining its market position in existing markets; the effect of intense industry competition and consolidation; the possibility that the markets for CEVA's technologies may not develop as expected; CEVA's ability to timely and successfully develop and introduce new technologies; and general market conditions and other risks relating to CEVA's business, including, but not limited to, those that are described from time to time in its 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 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, | |||||
2010 | 2009 | 2010 | 2009 | |||
Unaudited | Unaudited | Unaudited | Unaudited | |||
Revenues: | ||||||
Licensing | $ 4,459 | $ 5,242 | $ 13,774 | $ 14,059 | ||
Royalties | 5,238 | 3,694 | 15,372 | 11,403 | ||
Other revenues | 978 | 723 | 2,739 | 2,820 | ||
Total revenues | 10,675 | 9,659 | 31,885 | 28,282 | ||
Cost of revenues | 1,001 | 849 | 2,578 | 3,211 | ||
Gross profit | 9,674 | 8,810 | 29,307 | 25,071 | ||
Operating expenses: | ||||||
Research and development, net | 4,129 | 4,061 | 13,243 | 12,132 | ||
Sales and marketing | 1,664 | 1,628 | 5,248 | 4,914 | ||
General and administrative | 1,593 | 1,525 | 4,709 | 4,555 | ||
Total operating expenses | 7,386 | 7,214 | 23,200 | 21,601 | ||
Operating income | 2,288 | 1,596 | 6,107 | 3,470 | ||
Interest and other income, net | 493 | 551 | 1,591 | 3,402 | ||
Income before income tax | 2,781 | 2,147 | 7,698 | 6,872 | ||
Income tax expense (income) | (208) | 394 | 527 | 1,436 | ||
Net income | 2,989 | 1,753 | 7,171 | 5,436 | ||
Basic net income per share | $0.14 | $0.09 | $0.34 | $0.28 | ||
Diluted net income per share | $0.13 | $0.09 | $0.32 | $0.27 | ||
Weighted-average number of Common Stock | ||||||
Basic | 21,244 | 19,689 | 20,989 | 19,588 | ||
Diluted | 22,356 | 20,492 | 22,114 | 20,087 | ||
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, | ||||
2010 | 2009 | 2010 | 2009 | ||
Unaudited | Unaudited | Unaudited | Unaudited | ||
GAAP net income | 2,989 | 1,753 | 7,171 | 5,436 | |
Equity-based compensation expense included in cost of revenue | 23 | 21 | 56 | 90 | |
Equity-based compensation expense included in research and development expenses | 183 | 197 | 489 | 689 | |
Equity-based compensation expense included in sales and marketing expenses | 92 | 138 | 300 | 442 | |
Equity-based compensation expense included in general and administrative expenses | 239 | 329 | 816 | 989 | |
Other income | - | - | - | (1,901)(1) | |
Income tax expense (income) | (500)(2) | - | (500)(2) | 543(1) | |
Non-GAAP net income | 3,026 | 2,438 | 8,332 | 6,288 | |
GAAP weighted-average number of Common Stock used in computation of diluted net income per share (in thousands) | 22,356 | 20,492 | 22,114 | 20,087 | |
Weighted-average number of shares related to outstanding options | 41 | 96 | 64 | 36 | |
Weighted-average number of Common Stock used in computation of diluted net income per share, excluding equity-based compensation expense; capital gains associated with the divestment of CEVA's equity investment in GloNav Inc., net and tax income (in thousands) | 22,397 | 20,588 | 22,178 | 20,123 | |
GAAP diluted net income per share | $0.13 | $0.09 | $0.32 | $0.27 | |
Equity-based compensation expense | $0.03 | $0.03 | $0.08 | $0.10 | |
Other income | - | - | - | (0.09)(1) | |
Income tax expense (income) | ($0.02)(2) | - | $(0.02)(2) | $0.03(1) | |
Non-GAAP diluted net income per share | $0.14 | $0.12 | $0.38 | $0.31 | |
(1) Results for the nine months ended September 30, 2009 included a capital gain of $1.9 million reported in interest and other income, net, and the applicable tax expense of $0.5 million reported in taxes on income, related to the divestment of CEVA's equity interest in GloNav Inc. to NXP Semiconductors. (2) Results for the three months and the nine months ended September 30, 2010 included $0.5 million of tax income associated with adjustments related to international cost allocations, as well as tax planning strategies to utilize certain deferred tax assets. | |||||
CEVA, INC. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS U.S. Dollars in Thousands | ||||
September 30, | December 31, | |||
2010 | 2009 | |||
Unaudited | Audited | |||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ 23,134 | $ 12,104 | ||
Marketable securities and short term bank deposits | 78,888 | 88,494 | ||
Trade receivables, net | 5,000 | 5,995 | ||
Deferred tax assets | 964 | 1,096 | ||
Prepaid expenses and other accounts receivables | 5,507 | 5,345 | ||
Total current assets | 113,493 | 113,034 | ||
Long-term investments: Long-term bank deposits | 15,153 | - | ||
Severance pay fund | 5,144 | 4,455 | ||
Deferred tax assets | 456 | 309 | ||
Property and equipment, net | 1,462 | 1,148 | ||
Goodwill | 36,498 | 36,498 | ||
Total assets | $ 172,206 | $ 155,444 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Trade payables | $ 526 | $ 530 | ||
Deferred revenues | 766 | 432 | ||
Accrued expenses and other payables | 9,598 | 9,735 | ||
Deferred tax liabilities | 989 | 1,168 | ||
Total current liabilities | 11,879 | 11,865 | ||
Accrued severance pay | 5,253 | 4,483 | ||
Total liabilities | 17,132 | 16,348 | ||
Stockholders' equity: | ||||
Common Stock | 21 | 20 | ||
Additional paid in-capital | 167,549 | 158,325 | ||
Other comprehensive income | 421 | 251 | ||
Accumulated deficit | (12,917) | (19,500) | ||
Total stockholders' equity | 155,074 | 139,096 | ||
Total liabilities and stockholders' equity | $ 172,206 | $ 155,444 | ||
SOURCE CEVA, Inc.
