CEVA, Inc. Announces Third Quarter 2016 Financial Results
MOUNTAIN VIEW, Calif., Nov. 2, 2016 /PRNewswire/ -- CEVA, Inc. (NASDAQ: CEVA), the leading licensor of signal processing IP for smarter, connected devices, today announced its financial results for the third quarter ended September 30, 2016.
Total revenue for the third quarter of 2016 was $17.8 million, a 10% increase compared to $16.2 million reported for the third quarter of 2015. Third quarter 2016 licensing and related revenue was $7.5 million, a decrease of 13% when compared to $8.6 million reported for the same quarter a year ago. Royalty revenue for the third quarter of 2016 was $10.4 million, an increase of 36% when compared to $7.6 million reported for the third quarter of 2015.
Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "CEVA delivered another exceptional quarter of growth and profitability, resulting in all-time record high total revenues. In the quarter, we solidified partnerships with key customers, including the signing of our first portfolio license agreement and a new DSP agreement with a tier one handset OEM customer for its 5G New Radio platform. This, together with our recent 5G base station design win, positions us as the only end-to-end DSP provider for 5G."
U.S. GAAP net income for the third quarter of 2016 was $3.4 million, compared to $3.3 million reported for the same period in 2015. U.S. GAAP diluted earnings per share for the third quarter of 2016 and 2015 were $0.15 and $0.16, respectively.
Non-GAAP net income and diluted earnings per share for the third quarter of 2016 were $5.2 million and $0.24, respectively, representing a 10% and 9% increase, respectively over the $4.7 million and $0.22 reported for the third quarter of 2015. Non-GAAP net income and diluted earnings per share for the third quarter of 2016 excluded: (a) equity-based compensation expense, net of taxes, of $1.5 million, and (b) the impact of the amortization of acquired intangibles, net of taxes, of $0.3 million associated with the acquisition of RivieraWaves. Non-GAAP net income and diluted earnings per share for the third quarter of 2015 excluded: (a) equity-based compensation expense, net of taxes, of $1.2 million, and (b) the impact of the amortization of acquired intangibles, net of taxes, of $0.2 million associated with the acquisition of RivieraWaves.
During the quarter, CEVA completed thirteen license agreements. Four of the agreements were for CEVA DSP cores, platforms and software, eight were for CEVA connectivity IPs and one was a portfolio license agreement. Ten of the licensing agreements signed during the quarter were for non-handset baseband applications and two were for handset baseband applications. Six were with first-time customers for CEVA. Target applications for customer deployment are 5G basebands, vision processing surveillance cameras and 3D consumer products, and Bluetooth including the upcoming new standard BT5 and Wi-Fi connectivity for various IoT devices. Geographically, four of the deals signed were in the U.S., seven were in the APAC region and two were in Europe.
Yaniv Arieli, Chief Financial Officer of CEVA, stated: "Shipments from both our baseband and non-baseband licensees showed impressive growth in the quarter, contributing to the highest royalty revenue in the Company's history and the highest non-GAAP earnings per share for more than four years. We continued to strengthen our balance sheet with our cash balance, marketable securities and bank deposits totaling $145 million at the end of the quarter with no debt."
CEVA Conference Call
On November 2nd, 2016 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 1-866-364-3869 (Access Code: CEVA)
- International Participants : Dial +1-412-902-4215 (Access Code: CEVA)
The conference call will also be available live via webcast at the following link: https://www.webcaster4.com/Webcast/Page/984/17667. 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: 10094357) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on November 9, 2016. The replay will also be available at CEVA's web site ceva-dsp.com.
About CEVA, Inc.
CEVA is the leading licensor of signal processing IP 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 machine-to-machine devices, computer vision and computational photography for any camera-enabled device, audio/voice/speech and ultra-low power always-on/sensing applications for multiple IoT markets. For connectivity, we offer the industry's most widely adopted IPs for Bluetooth (BLE and Dual Mode), Wi-Fi (802.11a/b/g/n/ac up to 4x4) and serial storage (SATA and SAS). Visit us at ceva-dsp.com and follow us on Twitter, YouTube and LinkedIn.
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 CEVA is positioned as the only end-to-end DSP provider for 5G." The risks, uncertainties and assumptions include: the ability of the CEVA DSP cores and other technologies, including 5G DSPs, to continue to be strong growth drivers for us; our success in penetrating new markets and maintaining our market position in existing markets; 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 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 | Nine months ended | |||||||
September 30, | Sepember30, | |||||||
2016 | 2015 | 2016 | 2015 | |||||
Unaudited | ||||||||
Revenues: | ||||||||
Licensing and related revenues | $ 7,456 | $ 8,600 | $ 23,576 | $ 24,108 | ||||
Royalties | 10,390 | 7,635 | 27,881 | 19,320 | ||||
Total revenues | 17,846 | 16,235 | 51,457 | 43,428 | ||||
Cost of revenues | 1,422 | 1,281 | 4,453 | 4,016 | ||||
Gross profit | 16,424 | 14,954 | 47,004 | 39,412 | ||||
Operating expenses: | ||||||||
Research and development, net | 7,346 | 6,571 | 23,071 | 21,175 | ||||
Sales and marketing | 2,763 | 2,384 | 8,463 | 7,358 | ||||
General and administrative | 2,218 | 2,183 | 6,286 | 5,821 | ||||
Amortization of intangible assets | 309 | 325 | 927 | 974 | ||||
Total operating expenses | 12,636 | 11,463 | 38,747 | 35,328 | ||||
Operating income | 3,788 | 3,491 | 8,257 | 4,084 | ||||
Financial and other income , net | 615 | 401 | 1,617 | 643 | ||||
Income before taxes on income | 4,403 | 3,892 | 9,874 | 4,727 | ||||
Income tax expenses | 1,015 | 583 | 1,975 | 764 | ||||
Net income | 3,388 | 3,309 | 7,899 | 3,963 | ||||
Basic net income per share | $0.16 | $0.16 | $0.38 | $0.19 | ||||
Diluted net income per share | $0.15 | $0.16 | $0.37 | $0.19 | ||||
Weighted-average number of Common Stock used in computation of net income per share (in thousands): | ||||||||
Basic | 21,025 | 20,448 | 20,718 | 20,477 | ||||
Diluted | 21,883 | 20,811 | 21,395 | 20,918 | ||||
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 | ||||
2016 | 2015 | 2016 | 2015 | ||
Unaudited | |||||
GAAP net income | $3,388 | $3,309 | $7,899 | $3,963 | |
Equity-based compensation expense included in cost of revenue | 65 | 34 | 179 | 111 | |
Equity-based compensation expense included in research and development expenses | 741 | 438 |
2,162 |
1,323 | |
Equity-based compensation expense included in sales and marketing expenses | 179 | 151 |
681 |
395 | |
Equity-based compensation expense included in general and administrative expenses | 580 | 496 |
1,626 |
966 | |
Income tax expense (benefit) related to equity-based compensation expenses | (51) | 83 | (148) | 83 | |
Costs associated with the RivieraWaves acquisition | 147 | ||||
Amortization of intangible assets related to RivieraWaves transaction | 309 | 325 | 927 | 974 | |
Income tax benefit related to RivieraWaves acquisition | (108) | (329) | |||
Non-GAAP net income | $5,211 | $4,728 | $13,326 | $7,633 | |
GAAP weighted-average number of Common Stock used in computation of diluted net income per share (in thousands) | 21,883 | 20,811 | 21,395 | 20,918 | |
Weighted-average number of shares related to outstanding stock-based awards (in thousands) | 267 | 264 | 354 | 212 | |
Weighted-average number of Common Stock used in computation of diluted earnings per share, excluding the above (in thousands ) | 22,150 | 21,075 | 21,749 | 21,130 | |
GAAP diluted net income per share | $0.15 | $0.16 | $0.3 7 | $0.19 | |
Equity-based compensation expense, net of taxes | $0.07 | $0.05 | $0.2 0 | $0.14 | |
Amortization of intangible assets related to RivieraWaves transaction, net of taxes | $0.02 | $0.01 | $0. 04 | $0.03 | |
Non-GAAP diluted net income per share | $0.24 | $0.22 | $0. 61 | $0.36 | |
CEVA, INC. AND ITS SUBSIDIARIES | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
(U.S. Dollars in thousands) | ||
September 30, | December 31, | |
2016 | 2015 (*) | |
Unaudited | Unaudited | |
ASSETS | ||
Current assets: | ||
Cash and cash equivalents | $ 19,998 | $ 18,909 |
Marketable securities and short term bank deposits | 99,883 | 79,033 |
Trade receivables, net | 17,250 | 4,068 |
Prepaid expenses and other current assets | 2,945 | 4,017 |
Total current assets | 140,076 | 106,027 |
Long-term assets: | ||
Long term bank deposits | 25,135 | 41,334 |
Severance pay fund | 8,072 | 7,297 |
Deferred tax assets | 2,116 | 1,628 |
Property and equipment, net | 4,831 | 3,731 |
Goodwill | 46,612 | 46,612 |
Intangible assets, net | 3,287 | 4,214 |
Other long-term assets | 4,358 | 1,806 |
Total assets | $ 234,487 | $ 212,649 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current liabilities: | ||
Trade payables | $ 1,116 | $ 693 |
Deferred revenues | 4,032 | 2,763 |
Accrued expenses and other payables | 16,131 | 15,527 |
Total current liabilities | 21,279 | 18,983 |
Long-term liabilities: | ||
Accrued severance pay | 8,533 | 7,571 |
Total liabilities | 29,812 | 26,554 |
Stockholders' equity: | ||
Common stock: | 21 | 21 |
Additional paid in-capital | 210,519 | 208,744 |
Treasury stock | (40,390) | (51,798) |
Accumulated other comprehensive income (loss) | 33 | (419) |
Retained earnings | 34,492 | 29,547 |
Total stockholders' equity | 204,675 | 186,095 |
Total liabilities and stockholders' equity | $ 234,487 | $ 212,649 |
(*) Derived from audited financial statements |
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SOURCE CEVA, Inc.
