CEVA, Inc. Announces Third Quarter 2019 Financial Results

- Strategic licensing agreements with customers targeting ADAS, hearing aids and cellular IoT

- Royalty revenue of $12.2 million, up 61% sequentially

- Record all-time high quarterly non-baseband shipments of 123 million units

MOUNTAIN VIEW, Calif., Nov. 7, 2019 /PRNewswire/ -- CEVA, Inc. (NASDAQ: CEVA), the leading licensor of wireless connectivity and smart sensing technologies, announced today its financial results for the third quarter ended September 30, 2019.

CEVA, Inc. reported Q3 2019 earnings of $23.5 million and non-GAAP EPS of $0.22. 14 new agreements were signed, including 5 first-time customers. Licensing and related revenue grew 15% year-over-year to reach $11.3 million. Royalties grew 61% sequentially and 5% year-over-year to reach $12.2 million. Non-handset shipments reached a record 123 million units in the quarter. For more information and highlights, view the infographic.

Total revenue for the third quarter of 2019 was $23.5 million, a 10% increase compared to $21.4 million reported for the third quarter of 2018. Third quarter 2019 licensing and related revenue was $11.3 million, a 15% increase compared to $9.8 million reported for the third quarter of 2018. Royalty revenue for the third quarter of 2019 was $12.2 million, an increase of 5% when compared to $11.6 million reported for the third quarter of 2018.

Gideon Wertheizer, CEO of CEVA, stated: "We are very pleased to report strong third quarter results, driven by excellent performance in licensing and a substantial step up in our royalty revenue. We continue to make progress in growing our customer base, including comprehensive agreements with industry leaders in strategic markets such as ADAS, hearing aids and cellular IoT. Our royalty revenue growth reflects good momentum in both the handset baseband and non-handset aspects of our business. Our handset baseband customers benefitted from the launch of premium smartphones and share gain in the low-cost smartphone market. Our non-handset business continues to grow with record high quarterly revenues and unit shipments of 123 million, including first-time contribution from our newly acquired Hillcrest Labs sensor fusion business."

Of the fourteen license agreements completed during the quarter, one was for a smart sensing product and thirteen were for connectivity products. All of the licensing agreements signed during the quarter were for non-handset baseband applications and five were with first-time customers of CEVA. Customers' target markets include automotive ADAS, hearing aids, smart meters, true wireless stereo earbuds and a wide variety of IoT devices. Geographically, six of the deals signed were in China, five were in the U.S., two were in Europe and one was in APAC (excluding China).

GAAP net income and diluted earnings per share for the third quarter of 2019 was $0.8 million and $0.03, respectively, compared to $2.5 million and $0.11 reported for the same period in 2018. GAAP and non-GAAP net income and diluted earnings per share for the third quarter of 2019 included a tax benefit of approximately $1 million as a result of the conclusion of a tax audit.

Non-GAAP net income and diluted earnings per share for the third quarter of 2019 were $5.1 million and $0.22, respectively, compared to $5.2 million non-GAAP net income and $0.23 diluted earnings per share reported for the third quarter of 2018. Non-GAAP net income and diluted earnings per share for the third quarter of 2019 excluded: (a) equity-based compensation expense, net of taxes, of $2.6 million (b) the impact of the amortization of acquired intangibles of $0.8 million associated with the acquisitions of RivieraWaves and the Hillcrest Labs business, and 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 the third quarter of 2018 excluded: (a) equity-based compensation expense, net of taxes, of $2.3 million, and (b) the impact of the amortization of acquired intangibles of $0.3 million associated with the acquisition of RivieraWaves and investment in NB-IoT technologies.   

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "Our portfolio of IP for wireless connectivity and smart sensing applications continues to attract strong customer interest worldwide. This is clearly evident in our third quarter results, for both licensing and royalty revenues, where we recorded 15% and 5% year-over-year growth, respectively. At the end of the third quarter, our cash and cash equivalent balances, marketable securities and bank deposits were approximately $148 million, following the acquisition of the Hillcrest Labs sensor fusion business and the technology investment in Immervision's wide-angle imaging IP during the quarter."

CEVA Conference Call

On November 7, 2019 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/984/31914. 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: 10135680) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on November 14, 2019. The replay will also be available at CEVA's web site 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 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 statements about CEVA's process in growing its customer base, the good momentum in the band set baseband and non-handset segments and CEVA's portfolio of IP for wireless connectivity and smart sensing applications attracting strong customer interest worldwide. 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 and connectivity 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 speed and extent of the expansion of the 4G, 5G and LTE networks, the maturation of the IoT market, 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

CONDENSED CONSOLIDATED STATEMENTS OF INCOME – U.S. GAAP

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

Three months ended

Nine months ended

September 30,

September 30,

2019

2018

2019

2018

Unaudited

Revenues:

Licensing and related revenues

$  11,269

$  9,786

$33,084

$29,907

Royalties

12,202

11,627

25,756

26,569

Total  revenues

23,471

21,413

58,840

56,476

Cost of revenues

2,767

2,006

7,283

5,966

Gross profit

20,704

19,407

51,557

50,510

Operating expenses:

Research and development, net

13,873

11,897

38,593

35,756

Sales and marketing

2,832

2,727

8,809

9,302

General and administrative

3,509

2,406

8,360

8,193

Amortization of intangible assets

757

225

1,177

676

Total operating expenses

20,971

17,255

56,939

53,927

Operating income (loss)

(267)

2,152

(5,382)

(3,417)

Financial income, net

603

831

2,299

2,535

Income (loss) before taxes on income

336

2,983

(3,083)

(882)

 Taxes on income (tax benefit)

(439)

440

(49)

847

Net income (loss)

$  775

$  2,543

($3,034)

($1,729)

Basic net income (loss) per share

$0.04

$0.12

($0.14)

($0.08)

Diluted net income (loss) per share

$0.03

$0.11

($0.14)

($0.08)

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

Basic

21,953

21,997

21,936

22,091

Diluted

22,404

22,428

21,936

22,091

 

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

2019

2018

2019

2018

Unaudited

GAAP net income (loss) 

$775

$2,543

($3,034)

($1,729)

Equity-based compensation expense included in cost of revenue

 

168

 

155

 

464

 

480

Equity-based compensation expense included in research and development expenses

 

1,494

 

1,246

 

4,314

 

3,874

Equity-based compensation expense included in sales and marketing expenses

 

362

 

369

 

1,112

 

1,246

Equity-based compensation expense included in general and administrative expenses

 

728

 

697

 

1,957

 

2,483

Income tax benefit related to equity-based compensation expenses

(129)

(118)

(473)

(400)

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

1,680

303

2,258

937

Non-GAAP net income

$5,078

$5,195

$6,598

$6,891

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

2,404

 

22,428

 

21,936

22,091

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

489

390

850

897

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

22,893

22,818

22,786

22,988

GAAP diluted earnings (loss) per share

0.03

$0.11

($0.14)

($0.08)

Equity-based compensation expense, net of taxes

$0.12

$0.11

$0.32

$0.34

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

$0.07

$0.01

$0.11

$0.04

Non-GAAP diluted earnings per share

$0.22

$0.23

$0.29

$0.30

 

CEVA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

September 30,

December 31,

2019

2018 (*)

Unaudited

Unaudited 

ASSETS

Current assets:

Cash and cash equivalents

$           14,851

$           22,260

Marketable securities and short term bank deposits

127,453

123,608

Trade receivables, net

7,967

9,971

Unbilled receivables

18,846

16,185

Prepaid expenses and other current assets

5,682

5,264

Total current assets

174,799

177,288

Long-term assets:

Bank deposits

5,330

21,864

Severance pay fund

9,732

9,026

Deferred tax assets, net

10,891

5,924

Property and equipment, net

7,891

7,344

Operating lease right-of-use assets

10,688

Goodwill

51,070

46,612

Intangible assets, net

17,353

2,700

Other long term assets

6,171

6,505

Total assets

$        293,925

$        277,263

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Trade payables

$           1,319

$           632

Deferred revenues

4,766

3,593

Accrued expenses and other payables

17,167

17,527

Operating lease liabilities

2,442

Total current liabilities

25,694

21,752

Long-term liabilities:

Accrued severance pay

10,447

9,632

Operating lease liabilities

7,879

Other accrued liabilities

545

Total liabilities

44,565

31,384

Stockholders' equity:

Common stock:

22

22

Additional paid in-capital

225,483

223,250

Treasury stock

(35,492)

(39,132)

Accumulated other comprehensive loss

(22)

(1,114)

Retained earnings

59,369

62,853

Total stockholders' equity

249,360

245,879

Total liabilities and stockholders' equity

$   293,925

$   277,263

(*) Derived from audited financial statements

 

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

SOURCE CEVA, Inc.