false 0001173489 0001173489 2024-05-09 2024-05-09


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 

 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported): May 9, 2024

 
CEVA, INC.
(Exact Name of Registrant as Specified in Charter)
 

 
Delaware
 
000-49842
 
77-0556376
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
15245 Shady Grove Road, Suite 400, Rockville, MD 20850
(Address of Principal Executive Offices, and Zip Code)
 
(240) 308-8328
Registrant’s Telephone Number, Including Area Code
 
Not applicable 
(Former Name or Former Address, if Changed Since Last Report)

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 
Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which
registered
Common Stock, $0.001 par value
 
CEVA
 
The NASDAQ Stock Market LLC
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2 of this chapter).
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 


 
 

 
 
Item 2.02. Results of Operations and Financial Condition.
 
On May 9, 2024, Ceva, Inc. (the “Company”) announced its financial results for the quarter ended March 31, 2024. A copy of the press release, dated May 9, 2024, is attached and filed herewith as Exhibit 99.1. On the same day, the Company will hold a conference call to discuss its financial results for the first quarter of 2024. A copy of the script of the conference call is attached hereto as Exhibit 99.2. This information, including Exhibits 99.1 and 99.2 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing.
 
In addition to the disclosure of financial results for the quarter and year ended March 31, 2024 and 2023 in accordance with generally accepted accounting principles in the United States (“GAAP”), the press release and script also included non-GAAP gross margin, operating income, net income and diluted earnings per share (“EPS”) for the referenced periods.
 
Non-GAAP gross margin for the first quarter of 2024 and 2023 each excluded: (a) equity-based compensation expenses and (b) amortization of acquired intangibles.
 
Non-GAAP operating loss for  the first quarter of 2024 excluded (a) equity-based compensation expenses, (b) the impact of the amortization of acquired intangibles, and (c) costs associated with business acquisitions. Non-GAAP operating income for the first quarter of 2023 excluded (a) equity-based compensation expenses and (b) the impact of the amortization of acquired intangibles.
 
Non-GAAP net loss and diluted loss per share for the first quarter of 2024 excluded (a) equity-based compensation expenses, (b) the impact of the amortization of acquired intangibles, (c) costs associated with business acquisitions and (d) loss associated with the remeasurement of marketable equity securities. Non-GAAP net income and diluted EPS for the first quarter of 2023 excluded (a) equity-based compensation expenses, (b) the impact of the amortization of acquired intangibles, and (c) loss associated with the remeasurement of marketable equity securities.
 
Non-GAAP net loss and diluted EPS including the discontinued operations for the first quarter of 2023 excluded (a) equity-based compensation expenses, (b) the impact of the amortization of acquired intangibles, (c) loss associated with the remeasurement of marketable equity securities and (d) loss associated with discontinued operations.
 
The Company believes that the reconciliation of financial measures in the press release and script is useful to investors in analyzing the results for the quarters ended March 31, 2024 and 2023 because the exclusion of the applicable expenses may provide a more meaningful analysis of the Company’s core operating results and comparison of quarterly results. Further, the Company believes it is useful for investors to understand how the expenses associated with the application of FASB ASC No. 718 are reflected on its statements of income. The reconciliation of financial measures should be reviewed in addition to and in conjunction with results presented in accordance with GAAP, and are intended to provide additional insight into the Company’s operations that, when viewed with its GAAP results and the accompanying reconciliation, offer a more complete understanding of factors and trends affecting the Company’s business. The reconciliation of financial measures should not be viewed as a substitute for the Company’s reported GAAP results.
 
 

 
 
Item 9.01. Financial Statements and Exhibits.
 
(d) Exhibits:
 
Exhibit
Number
 
Description
     
99.1
   
99.2
   
104
   
Cover Page Interactive Data File (embedded within the Inline XBRL document).
 
Signature
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
CEVA, INC.
   
Date: May 9, 2024
By:
/s/ Yaniv Arieli
 
Name:
Yaniv Arieli
 
Title:
Chief Financial Officer
 
 
 

Exhibit 99.1

 

 

logo01.jpg

 

Ceva, Inc. Announces First Quarter 2024 Financial Results

 

 

Royalty revenue of $10.7 million, up 33% year-over-year, generated from 371 million shipped units, up 25% year-over-year

 

11 license agreements concluded in the quarter, across all key target markets, including strategic deals for next-generation Wi-Fi 7 and Bluetooth 6 IPs

 

ROCKVILLE, MD., May 9, 2024 Ceva, Inc. (NASDAQ: CEVA), the leading licensor of silicon and software IP that enables Smart Edge devices to connect, sense and infer data more reliably and efficiently, today announced its financial results for the first quarter ended March 31, 2024. Financial results for the first quarter ended March 31, 2023, reflect Ceva’s continuing operations only, with the Intrinsix business reflected as a discontinued operation, unless otherwise noted.

 

Operational Highlights:

Introduced new Wi-Fi 7 platform for high-end consumer and industrial IoT

Introduced new low power Ultra-Wideband (UWB) IP for consumer and industrial IoT

Expanded Ceva-NeuPro-M NPU AI ecosystem with new partnerships for automotive and edge AI

Announced strategic partnership with India's No. 1 audio and wearable brand, boAt for wireless audio

Partnered with THX to bring premium spatial audio to hearables, consumer and mobile products

Collaborated with Arm through Arm Total Design to accelerate development of end-to-end 5G SoCs for Infrastructure and NTN Satellites

 

Total revenue for the first quarter of 2024 was $22.1 million, compared to $26.3 million reported for the first quarter of 2023. Licensing and related revenue for the first quarter of 2024 was $11.4 million, compared to $18.2 million reported for the same quarter a year ago. Royalty revenue for the first quarter of 2024 was $10.7 million, compared to $8.0 million reported for the first quarter of 2023.

 

Amir Panush, Chief Executive Officer of Ceva, commented: “Our first quarter results reflect solid trends across our business. We achieved year-over-year growth of 33% in royalty revenue and 25% in volume shipments, which increased across every end market we serve. Licensing revenue for the first quarter included strategic early-adopter deals with lead customers for our Bluetooth 6 and Wi-Fi 7 IPs, but overall was lower than anticipated as some deals expected to close in the first quarter were delayed. We have already concluded one of these deals early in the second quarter, a significant agreement with a strategic customer for a next-generation IP in development, and expect others to be executed in the remainder of the year. Overall, I am very encouraged by our diversified licensing pipeline and demand for our next-generation IPs, and I am confident we can reach our total revenue target for the year.”

 

 

 

During the quarter, eleven IP licensing agreements were concluded, targeting a wide range of end markets and applications, including Bluetooth 5 connectivity for wearables and industrial IoT, Bluetooth 6 for wireless audio, Wi-Fi 6, Wi-Fi 7 and UWB for smart edge consumer devices, 5G RedCap for consumer and industrial devices, 5G V2X modems for automotive, and audio for smartphones. Two of the deals signed were with first-time customers.

 

GAAP gross margin for the first quarter of 2024 was 89%, as compared to 87% in the first quarter of 2023. GAAP operating loss for the first quarter of 2024 was $5.0 million, as compared to a GAAP operating loss of $2.6 million for the same period in 2023. GAAP net loss for the first quarter of 2024 was $5.4 million, as compared to a GAAP net loss of $2.7 million reported for the same period in 2023. GAAP diluted loss per share for the first quarter of 2024 was $0.23, as compared to GAAP diluted loss per share of $0.12 for the same period in 2023.

 

GAAP net loss with the discontinued operation for the first quarter of 2023 was $4.9 million. GAAP diluted loss per share with the discontinued operation for the first quarter of 2023 was $0.21.

 

Non-GAAP gross margin for the first quarter of 2024 was 90%, as compared to 88% for the same period in 2023. Non-GAAP operating loss for the first quarter of 2024 was $0.8 million, as compared to non-GAAP operating income of $1.2 million reported for the first quarter of 2023. Non-GAAP net loss and diluted loss per share for the first quarter of 2024 were $1.3 million and $0.05, respectively, compared with non-GAAP net income and diluted income per share of $1.2 million and $0.05, respectively, reported for the first quarter of 2023.

 

Non-GAAP net income including the discontinued operation for the first quarter of 2023 was $0.1 million. Non-GAAP diluted income per share including the discontinued operation for the first quarter of 2023 was $0.00.

 

Yaniv Arieli, Chief Financial Officer of Ceva, stated: “While we saw a shortfall in licensing revenue in the first quarter, we have managed to build a healthy backlog which will benefit us in the second quarter. We continue to monitor our expenses closely and look for ways to further improve our operating efficiency. At the end of the quarter, our cash and cash equivalent balances, marketable securities and bank deposits were approximately $159 million, and we remain well positioned to pursue opportunities to enhance our product offerings, expand our addressable markets and accelerate our growth.”

 

Ceva Conference Call

On May 9, 2024, 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/L8QP0XRjm5A. Please go to the web site at least fifteen minutes prior to the call to register.

 

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: 9691632) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on May 16, 2024. The replay will also be available at Ceva's web site www.ceva-ip.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. Forward-looking statements include statements regarding the benefits of Ceva’s deal backlog for the second quarter and potential execution of license deals later in the year, Ceva’s ability to reach total revenue target for the remainder of the year, and Ceva’s positioning to pursue opportunities to enhance our product offerings, expand our addressable markets and accelerate our growth. The risks, uncertainties and assumptions that could cause differing Ceva results include: the effect of intense industry competition; the ability of Ceva's technologies and products incorporating Ceva's technologies to achieve market acceptance; Ceva's ability to meet changing needs of end-users and evolving market demands; the cyclical nature of and general economic conditions in the semiconductor industry; Ceva's ability to diversify its royalty streams and license revenues; Ceva's ability to continue to generate significant revenues from the handset baseband market and to penetrate new markets; instability and disruptions related to the ongoing Israel-Gaza conflict; 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 our SEC filings. Ceva assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

 

Non-GAAP Financial Measures

Non-GAAP gross margin for the first quarter of 2024 excluded: (a) equity-based compensation expenses of $0.2 million and (b) amortization of acquired intangibles of $0.1 million. Non-GAAP gross margin for the first quarter of 2023 excluded: (a) equity-based compensation expenses of $0.2 million and (b) amortization of acquired intangibles of $0.1 million.

 

Non-GAAP operating loss for the first quarter of 2024 excluded: (a) equity-based compensation expenses of $3.6 million, (b) the impact of the amortization of acquired intangibles of $0.3 million, and (c) $0.3 million of costs associated with business acquisitions. Non-GAAP operating income for the first quarter of 2023 excluded: (a) equity-based compensation expenses of $3.6 million and (b) the impact of the amortization of acquired intangibles of $0.2 million.

 

Non-GAAP net loss and diluted loss per share for the first quarter of 2024 excluded: (a) equity-based compensation expenses of $3.6 million, (b) the impact of the amortization of acquired intangibles of $0.3 million, (c) $0.3 million of costs associated with business acquisitions and (d) $0.1 million loss associated with the remeasurement of marketable equity securities. Non-GAAP net income and diluted earnings per share for the first quarter of 2023 excluded: (a) equity-based compensation expenses of $3.6 million, (b) the impact of the amortization of acquired intangibles of $0.2 million, and (c) $0.1 million loss associated with the remeasurement of marketable equity securities.

 

 

 

Non-GAAP net loss including the discontinued operation and diluted earnings per share including the discontinued operation for the first quarter of 2023 excluded: (a) equity-based compensation expenses of $3.6 million, (b) the impact of the amortization of acquired intangibles of $0.2 million, (c) $0.1 million loss associated with the remeasurement of marketable equity securities and (d) $1.1 million loss associated with discontinued operations.

 

About Ceva, Inc.

At Ceva, we are passionate about bringing new levels of innovation to the smart edge. Our wireless communications, sensing and Edge AI technologies are at the heart of some of today’s most advanced smart edge products. From Bluetooth connectivity, Wi-Fi, UWB and 5G platform IP for ubiquitous, robust communications, to scalable Edge AI NPU IPs, sensor fusion processors and embedded application software that make devices smarter, we have the broadest portfolio of IP to connect, sense and infer data more reliably and efficiently. We deliver differentiated solutions that combine outstanding performance at ultra-low power within a very small silicon footprint. Our goal is simple – to deliver the silicon and software IP to enable a smarter, safer, and more interconnected world. This philosophy is in practice today, with Ceva powering more than 17 billion of the world’s most innovative smart edge products from AI-infused smartwatches, IoT devices and wearables to autonomous vehicles and 5G mobile networks.

 

Our headquarters are in Rockville, Maryland with a global customer base supported by operations worldwide. Our employees are among the leading experts in their areas of specialty, consistently solving the most complex design challenges, enabling our customers to bring innovative smart edge products to market.

 

Ceva is a sustainability- 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.

 

Ceva: Powering the Smart Edge™

 

Visit us at www.ceva-ip.com and follow us on LinkedIn, X, YouTube, Facebook, and Instagram.

 

For more information, contact:                  

Yaniv Arieli

Ceva, Inc.

CFO

+1.650.417.7941

yaniv.arieli@ceva-ip.com

Richard Kingston

Ceva, Inc.

VP Market Intelligence, Investor & Public Relations

+1.650.417.7976

richard.kingston@ceva-ip.com

 

 

 

Ceva, Inc. AND ITS SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF LOSS – U.S. GAAP

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

 

   

Three months ended

 
   

March 31,

 
   

2024

   

2023

 
   

Unaudited

   

Unaudited

 

Revenues:

               

Licensing and related revenues

  $ 11,414     $ 18,248  

Royalties

    10,658       8,014  
                 

Total revenues

    22,072       26,262  
                 

Cost of revenues

    2,503       3,508  
                 

Gross profit

    19,569       22,754  
                 

Operating expenses:

               

Research and development, net

    17,991       18,674  

Sales and marketing

    2,816       2,719  

General and administrative

    3,572       3,827  

Amortization of intangible assets

    150       154  

Total operating expenses

    24,529       25,374  
                 

Operating loss

    (4,960 )     (2,620 )

Financial income, net

    1,257       1,455  

Remeasurement of marketable equity securities

    (60 )     (117 )
                 

Loss before taxes on income

    (3,763 )     (1,282 )

Taxes on Income

    1,685       1,417  
                 

Net loss from continuing operation

    (5,448 )     (2,699 )

Discontinued operation

    -       (2,173 )

Net loss

  $ (5,448 )   $ (4,872 )
                 

Basic and diluted net loss per share:

               

Continuing operation

    (0.23 )     (0.12 )

Discontinued operation

    -       (0.09 )

Basic and diluted net loss per share

  $ (0.23 )   $ (0.21 )
                 

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

               

Basic

    23,508       23,334  

Diluted

    23,508       23,334  

 

 

 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

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

 

   

Three months ended

 
   

March 31,

 
   

2024

   

2023

 
   

Unaudited

   

Unaudited

 

GAAP net loss

  $ (5,448 )   $ (4,872 )

Equity-based compensation expense included in cost of revenues

    203       206  

Equity-based compensation expense included in research and development expenses

    2,007       2,102  

Equity-based compensation expense included in sales and marketing expenses

    365       378  

Equity-based compensation expense included in general and administrative expenses

    996       866  

Amortization of intangible assets

    278       224  

Costs associated with business acquisition

    280       -  

loss associated with the remeasurement of marketable equity securities.

    60       117  

Non-GAAP from discontinued operation

    -       1,086  

Non-GAAP net income (loss)

  $ (1,259 )   $ 107  

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

    23,508       23,334  

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

    -       1,021  

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

    23,508       24,355  
                 

GAAP diluted loss per share

  $ (0.23 )   $ (0.21 )

Equity-based compensation expense

  $ 0.15     $ 0.15  

Amortization of intangible assets

  $ 0.01     $ 0.01  

Costs associated with business acquisition

  $ 0.01       -  

Income associated with the remeasurement of marketable equity securities.

  $ 0.01     $ 0.01  

Non-GAAP from discontinued operation

    -     $ 0.04  

Non-GAAP diluted income (loss) per share

  $ (0.05 )   $ 0.00  

 

 

 

   

Three months ended

 
   

March 31,

 
   

2024

   

2023

 
   

Unaudited

   

Unaudited

 

GAAP Operating loss

  $ (4,960 )   $ (2,620 )

Equity-based compensation expense included in cost of revenues

    203       206  

Equity-based compensation expense included in research and development expenses

    2,007       2,102  

Equity-based compensation expense included in sales and marketing expenses

    365       378  

Equity-based compensation expense included in general and administrative expenses

    996       866  

Amortization of intangible assets

    278       224  

Costs associated with business acquisition

    280       -  

Total non-GAAP Operating Income (loss)

  $ (831 )   $ 1,156  

 

   

Three months ended

 
   

March 31,

 
   

2024

   

2023

 
   

Unaudited

   

Unaudited

 
                 

GAAP Gross Profit

  $ 19,569     $ 22,754  

GAAP Gross Margin

    89 %     87 %
                 

Equity-based compensation expense included in cost of revenues

    203       206  

Amortization of intangible assets

    128       70  

Total Non-GAAP Gross profit

    19,900       23,030  

Non-GAAP Gross Margin

    90 %     88 %

 

 

 

Ceva, Inc. AND ITS SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

 

   

March 31,

   

December 31,

 
   

2024

   

2023 (*)

 
   

Unaudited

   

Unaudited

 

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 21,222     $ 23,287  

Marketable securities and short-term bank deposits

    137,532       143,251  

Trade receivables, net

    14,052       8,433  

Unbilled receivables

    19,583       21,874  

Prepaid expenses and other current assets

    13,378       12,526  

Total current assets

    205,767       209,371  

Long-term assets:

               

Severance pay fund

    6,897       7,070  

Deferred tax assets, net

    1,239       1,609  

Property and equipment, net

    7,157       6,732  

Operating lease right-of-use assets

    6,704       6,978  

Investment in marketable equity securities

    346       406  

Goodwill

    58,308       58,308  

Intangible assets, net

    2,689       2,967  

Other long-term assets

    12,332       10,644  

Total assets

  $ 301,439     $ 304,085  
                 

LIABILITIES AND STOCKHOLDERS EQUITY

               

Current liabilities:

               

Trade payables

  $ 1,804     $ 1,154  

Deferred revenues

    2,479       3,018  

Accrued expenses and other payables

    19,838       20,202  

Operating lease liabilities

    2,634       2,513  

Total current liabilities

    26,755       26,887  

Long-term liabilities:

               

Accrued severance pay

    7,339       7,524  

Operating lease liabilities

    3,525       3,943  

Other accrued liabilities

    1,471       1,390  

Total liabilities

    39,090       39,744  

Stockholders’ equity:

               

Common stock

    24       23  

Additional paid in-capital

    252,927       252,100  

Treasury stock

    (2,528 )     (5,620 )

Accumulated other comprehensive loss

    (2,720 )     (2,329 )

Retained earnings

    14,646       20,167  

Total stockholders’ equity

    262,349       264,341  

Total liabilities and stockholders’ equity

  $ 301,439     $ 304,085  

(*) Derived from audited financial statements.

 

 

Exhibit 99.2

 

Ceva, Inc. Q1 2024 Financial Results Conference Call - Prepared Remarks :: May 9, 2024
logo02.jpg

 

 

Ceva, Inc.

First Quarter 2024 Financial Results Conference Call

Prepared Remarks of Amir Panush, Chief Executive Officer and
Yaniv Arieli, Chief Financial Officer

May 9, 2024

8:30 A.M. Eastern

 

 

Richard

Good morning everyone and welcome to Ceva’s first quarter 2024 earnings conference call. Joining me today on the call are Amir Panush, Chief Executive Officer, and Yaniv Arieli, Chief Financial Officer of Ceva.

 

Forward Looking Statements and Non-GAAP Financial Measures

Before handing over to Amir, I would like to remind everyone that today’s discussion 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 our market positioning, strategy and growth opportunities, market trends and dynamics, Ceva’s ability to execute on backlogged deals in the second quarter and to reach total revenue target for the year, expectations regarding demand for and benefits of our technologies, and our expectations and financial goals and guidance regarding future performance. Ceva assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

 

In addition, following the divestment of the Intrinsix business, financial results from Intrinsix were transitioned to a discontinued operation beginning in the third quarter of 2023, and all prior period financial results have been recast accordingly. We will also be discussing certain non-GAAP financial measures which we believe provide a more meaningful analysis of our core operating results and comparison of quarterly results. A reconciliation of non-GAAP financial measures is included in the earnings release we issued this morning and in the SEC filings section of our investors relations website at investors.ceva-ip.com.

 

1

 

Ceva, Inc. Q1 2024 Financial Results Conference Call - Prepared Remarks :: May 9, 2024
logo02.jpg

 

With that said, I’d like to turn the call over to Amir who will review our business performance for the quarter, review the year and provide some insight into our ongoing business. Amir;

 

Amir

 

Thank you, Richard. Good morning everyone and thank you for joining us today. Ceva delivered first quarter results that reflected solid royalty trends with good year-over-year growth, while licensing was lower than we anticipated, as some deals we expected to close in the first quarter were delayed. I continue to be very encouraged by our diversified licensing pipeline and stronger backlog. We closed a significant, multi-million dollar deal, with a strategic customer, in the beginning of the second quarter and there is strong demand for our next-generation IPs that are currently in development and are being licensed by early adopters who are looking to gain an advantage in the market. I will elaborate more on our expectations for our licensing business for the rest of the year shortly.

 

First, looking at the licensing business we concluded in the quarter in more detail, we continued to expand our leadership in smart edge IP, completing 11 licensing deals across all of our key target markets, namely consumer, automotive, industrial, and infrastructure. These deals range from Bluetooth connectivity for wearables and IoT, 5G for RedCap and cellular V2X, Wi-Fi for access points, UWB for consumer devices and audio for smartphones. Most significantly in the quarter, I am very pleased to report that we signed deals for our next-generation Bluetooth 6 and Wi-Fi 7 IPs. Design activity around our Wi-Fi 7 IP is experiencing strong traction with both new and established wireless players and represents a positive catalyst for our licensing activities in 2024 and beyond. In the quarter, we concluded a Wi-Fi 7 deal with a strategic customer who is already in mass production with a combo chip based on our Wi-Fi 6 and Bluetooth 5 IPs. This customer has managed to successfully compete with the largest incumbents in the wireless combo chip space for consumer, enterprise and automotive and is now beginning to design their next-generation Wi-Fi 7 chips to gain further market traction for the broad consumer devices that will require Wi-Fi 7 connectivity, including smartphones, tablets, laptops, wearables, and smart home devices.

 

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Ceva, Inc. Q1 2024 Financial Results Conference Call - Prepared Remarks :: May 9, 2024
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In terms of market size, ABI Research forecasts that Wi-Fi 7 chipset shipments will exceed 1.7 billion units annually by 2028. As we have stated previously, due to its technical complexity, our Wi-Fi 7 IP commands a higher license fee and royalty rate than previous generations of Wi-Fi, which in turn drives ASP growth and enables us to drive more value per customer. Moreover, the large market size entices new entrants to the Wi-Fi market, while the complexity of the technology poses challenges to many of the existing wireless players to develop this technology internally. As the only IP company in the market today offering licensable Wi-Fi 7 technology, and the ability to license it together with our Bluetooth and UWB technologies, we are in an excellent position to repeat our success in the Wi-Fi 6 market for Wi-Fi 7.

 

In Bluetooth, we have added a new Bluetooth 6 customer in the quarter, who is a first-time customer for Ceva, and a world leader in wireless audio. This customer decided to take advantage of our IP to accelerate their product development for the next generation of Bluetooth Audio. Although the Bluetooth 6.0 standard is not yet ratified, we are among a small number of leaders, and the sole IP licensing company, that has the expertise and skills to develop next-generation wireless technologies ahead of the market and ahead of the standard itself. We have successfully achieved this for a number of generations of both Bluetooth and Wi-Fi standards and have built an unrivalled position as the industry’s leader and trusted partner for wireless IP over many years, with more than 100 customers and billions of devices shipped.

 

Finally on licensing, in relation to the licensing pipeline for the remainder of the year and our ability to extract more revenue per deal, I would like to share a few thoughts and datapoints. Ceva is one of a few select companies that have the technical capabilities, talent and unique know-how to develop wireless, sensing and edge AI IP to the level required by most demanding customers. I firmly believe that we can command higher licensing fees and royalties for our leading-edge products, and many of our ongoing customer discussions reinforce this belief. While a few deals that we had anticipated closing in the first quarter were delayed to later quarters, those deals remain in our sales pipeline, and some have already been signed since the first quarter close. Our value proposition around the three major smart edge use cases - connect, sense and infer - is clear and well understood by our customers and partners. In addition, we have already closed a meaningful, multi-million dollar deal in the second quarter, with a strategic customer for a next-generation IP that we are currently developing. I will update you more on this deal in the next earnings call, but wanted to share that this deal reinforces our strategy to extract higher value for our technology due to our unrivalled technical leadership and the ROI gains that can be achieved when partnering with us. We believe this in turn will serve to increase shareholder value through higher revenues, margins and profits over time. We are laser-focused on this value-add strategy leveraging our strong broad portfolio of smart edge IP offering.

 

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Ceva, Inc. Q1 2024 Financial Results Conference Call - Prepared Remarks :: May 9, 2024
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Turning to royalties, we are pleased with our start to the year with a robust quarter, showing an impressive 33% revenue growth year-over-year and just a 14% seasonal sequential decline, compared to a 28% sequential decline a year ago. We saw shipment volumes up 25% year-over-year, and increase in every end market we serve, as restocking continued across the broad IoT markets. Smartphone units, while up year-over-year, were down quite sharply from the fourth quarter, a similar trend to what we saw last year. Also, the infrastructure market remains soft, reflecting low CapEx for 5G networks globally. From conversations with our customers, we expect smartphones to improve in the second quarter and throughout the year. Overall, the first quarter shipments increase our confidence that we are well positioned to grow our royalty business in 2024, augmented during the year by new customer ramps deploying our portfolio of wireless IPs for consumer and industrial devices, and our embedded application software for spatial audio in headphones and sensor fusion software for intelligent robots.

 

Now some commentary regarding developments in the quarter. In the first quarter, we also invested further in cementing our market leadership, expanding our product offerings and strengthening our ecosystem. We announced a new UWB wireless IP for consumer devices, one that builds on our success in UWB solution for automotive, and which we already licensed successfully to a customer this quarter. UWB is primed for take-off in the consumer market, as the majority of smartphone OEMs are now integrating this technology into their latest devices, which is a precursor to mass market deployment in endpoint devices. ABI Research forecasts that the global market of UWB-enabled device shipments will grow at a compound annual growth rate of 14% over the next five years – from 435 million units in 2023 to nearly 1.3 billion units by 2028. We’re ideally positioned to leverage this market opportunity as it develops, already having a mature IP available for licensing and the ability to license it integrated with our Bluetooth Low Energy IP.

 

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Ceva, Inc. Q1 2024 Financial Results Conference Call - Prepared Remarks :: May 9, 2024
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In terms of our ecosystem, we announced a new partnership with Arm targeting 5G Advanced infrastructure and non-terrestrial networks (NTN), aimed at lowering the barriers to entry for developing products targeting these two large markets. NTN or satellite communications is a hotbed of innovation these days, and together with Arm, we can deliver the processing power required by satellite companies and new entrants to bring 5G Advanced networks to Orbit, enabling the promise of global broadband connectivity and a host of new use cases on earth that can leverage truly ubiquitous connectivity.

 

We continue to gain market share in wireless connectivity, with an unrivalled portfolio of wireless IP, spanning the most common standards like Bluetooth, Wi-Fi and 5G, through to emerging standards like UWB and Matter. Connectivity is no longer considered a feature for electronic devices. Moreover, it’s the very foundation of innovation that allows AI to be deployed and accessed by edge devices. Without connectivity, there is no AI. We are incredibly proud of our central role in the industry, enabling the connectivity in more than 1 billion devices annually that allows them to interact with AI and improve our daily lives.

 

On sensing and inference, we continue to experience strong demand for our software and hardware products targeting these use cases. Our Generative AI NPU scalable IP portfolio with market leading performance is undergoing intense evaluation with a number of customers that we have identified as strategic design partners for this technology and we will update you as these deals come to fruition. Our embedded application software, particularly around spatial audio is also experiencing significant traction, and we reached an important milestone in the quarter, with the first headset integrating our RealSpace spatial audio and headtracking software going on sale to the public. The Nirvana Eutopia headphones from India’s #1 wearable and hearable OEM, boAt, also features our Bluetooth and Audio/AI DSP, making this product a perfect illustration of our “connect, sense and infer” strategy, where we can provide multiple IPs to a single product and work directly with the OEM to bring the product to market.

 

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Ceva, Inc. Q1 2024 Financial Results Conference Call - Prepared Remarks :: May 9, 2024
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Overall, we are very excited about our product lineup targeting smart edge devices. Our dialogue with customers is very open, and we understand the recurring pain points that our customers share with us when discussing their smart edge roadmaps. With AI set to transform every industry and technology, semiconductors and OEMs need to define their strategies, not just to deal with the inference workload, but also how to connect their devices and enable them with the ability to use sensors for voice, sound, vision and motion. Without these three use cases being addressed in every smart edge device, from smart MCUs all the way to autonomous vehicles and 6G virtual RAN equipment, companies will not be able to compete in the smart edge era. We are ideally positioned to fill the knowledge and R&D gaps at companies that lack the ability to excel in all of these areas. Our portfolio of IP for connect, sense and infer use cases is highly synergistic with a broad range of semi and OEM customers across multiple industries, including the high volume MCU players, where we already have significant traction for our connectivity IPs, and the TWS and wireless headphone markets, where we estimate our Bluetooth customers to have 45%-50% market share today, excluding Apple products. We intend to fully exploit our leadership in wireless connectivity to offer additional IP for sense and infer as the use cases for smart edge devices grow, driving larger licensing deals and higher royalty fees per unit.

 

In summary, we have begun 2024 with royalty-bearing shipments up across all the end markets we serve and we have a solid pipeline of new customers set to reach production as the year progresses. In licensing, the first quarter was challenged with a few licensing agreements delayed until later in the year, but overall the quality of the licensing deals signed and the overall demand for our next generation IPs is very encouraging. We have the portfolio of technologies that meets some of the critical pain points of semiconductors and OEMs for their smart edge roadmaps and I am confident that we can meet our total revenue target for the year and we have built a healthy backlog which reinforces my belief on this. Overall, I remain very positive that 2024 will be a growth year for Ceva and will set us up to reach our longer-term revenue, margin and profitability targets. I look forward to meeting with many of you at conferences and roadshows during the quarter.

 

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Ceva, Inc. Q1 2024 Financial Results Conference Call - Prepared Remarks :: May 9, 2024
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Now I will turn the call over to Yaniv for the financials.

 

Yaniv

 

Thank you, Amir. I’ll now start by reviewing the results of our operations for the first quarter of 2024.

 

Revenue for the first quarter was $22.1 million, as compared to $26.3 million for the same quarter last year. The revenue breakdown is as follows:

 

Licensing and related revenue was $11.4 million, reflecting 52% of total revenues, as compared to $18.2 million for the same quarter last year.

 

Royalty revenue was $10.7 million, reflecting 48% of total revenues, as compared to $8.0 million for the same quarter last year. This represents an impressive 33% revenue growth year-over-year and just a 14% seasonal sequential decline, compared to a 28% sequential decline a year ago.

 

Gross margin was 89% on a GAAP basis and 90% on a non-GAAP basis compared to 87% and 88% on GAAP and non-GAAP, respectively a year ago.

 

Total GAAP operating expenses for the first quarter were $24.5 million, at the lower end of the range of our guidance.

 

Total non-GAAP operating expenses for the first quarter, excluding equity-based compensation expenses, amortization of intangibles and deal costs, were $20.7 million, below the mid-range of our guidance, due to specific cost monitoring and controls, as we talked about in the prior earnings call.

 

GAAP operating loss for the first quarter of 2024 was $5.0 million, as compared to a GAAP operating loss of $2.6 million for the same period in 2023.

 

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Ceva, Inc. Q1 2024 Financial Results Conference Call - Prepared Remarks :: May 9, 2024
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GAAP and non-GAAP taxes were $1.7 million, above our estimates, due to the geographies of deals signed.

 

GAAP net loss for the first of 2024 quarter was $5.4 million and diluted loss per share was 23 cents, as compared to net loss of $2.7 million and diluted loss per share of 12 cents for the same period last year.

 

Non-GAAP net loss and diluted loss per share for the first quarter of 2024 were $1.3 million and 5 cents, respectively, as compared to net income of $1.2 million and diluted income per share of 5 cents reported for the same period last year.

 

With respect to other related data

 

Shipped units by Ceva licensees during the first quarter of 2024 were 371 million units, up 25% from the first quarter 2023 reported shipments.

 

Of the 371 million units reported, 61 million units, or 16%, were for mobile handset modems.

 

283 million units were for consumer IoT products, up from 250 million units in the first quarter of 2023.

 

27 million units were for IIoT products, up from 18 million in the first quarter of 2023.

 

Bluetooth shipments were 202 million units in the quarter, up 6% year-over-year.

 

Cellular IoT shipments were 36 million units, up 24% year-over-year.

 

Wi-Fi shipments were 31 million units, up 50% year-over-year.

 

As Amir mentioned earlier, shipments were up year-over-year across all of our end markets, and total royalty revenues excluding mobile handset modems was the highest quarter since the third quarter of 2022, surpassing $8 million.

 

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Ceva, Inc. Q1 2024 Financial Results Conference Call - Prepared Remarks :: May 9, 2024
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As for the balance sheet items

 

As of March 31, 2024, Ceva’s cash and cash equivalent balances, marketable securities and bank deposits were approximately $159 million. In the first quarter of 2024 we repurchased approximately 57,000 shares for approximately $1.3 million. As of today, around 643,000 shares are available for repurchase under the repurchase program as expanded in November 2023.

 

Our DSO for the first quarter of 2024 is 58 days, back to its more normal levels and higher than our prior quarter’s 32 days.

 

During the first quarter, we used $7.3 million cash from operating activities, on-going depreciation and amortization was $1.0 million, and purchase of fixed assets was $0.9 million.

 

At the end of the first quarter, our headcount was 433 people, of whom 359 are engineers.

 

Now for the Guidance for the second quarter of 2024

 

As Amir stated earlier, we have signed a number of deals at the start of the second quarter, and also have good visibility into the second quarter potential deal flow for our wide range of technologies and markets. On royalties, we expect year-over-year growth in the second quarter and are monitoring the timing of new product introductions from our customers and All in all, we forecast sequential growth in overall revenues for the second quarter of 6%-16%, primarily from licensing.

 

Gross margin is expected to be similar to the first quarter, approximately 88% on a GAAP basis and 90% on a non-GAAP basis, excluding an aggregate of $0.2 million of equity-based compensation expenses and $0.1 million amortization of acquired intangibles.

 

GAAP OPEX for the second quarter of 2024 is expected to be in the range of $24.5 million to $25.5 million, slightly higher than the first quarter and in-line with our annual plans. Of our anticipated total operating expenses for the second quarter, $3.8 million is expected to be attributable to equity-based compensation expenses, and $0.5 million for amortization of acquired intangibles. Non-GAAP OPEX is expected to be in the same level as the first quarter, in the range of $20.2 million to $21.2 million. We’ll continue to monitor our expenses closely and look for ways to further improve our operating efficiency.

 

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Ceva, Inc. Q1 2024 Financial Results Conference Call - Prepared Remarks :: May 9, 2024
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Net interest income is expected to be approximately $1.3 million.

 

Taxes for the second quarter are expected to be approximately $1.7 million.

 

Share count for the second quarter of 2024 is expected to be 25.0 million shares.

 

Operator: You can now open the Q&A session

Wrap Up: Richard

 

Thank you for joining us today and for your continued interest in Ceva. As a reminder, the prepared remarks for this conference call are filed as an exhibit to the Current Report on Form 8-K and accessible through the investor section of our website at https://investors.ceva-ip.com.

 

With regards to upcoming events, we will be participating in the following conferences:

 

Oppenheimer 25th Annual Israeli Conference, May 26 in Tel Aviv, Israel

 

Cowen 52nd Annual TMT Conference, May 29 in New York

 

Mizuho Technology Conference 2024, June 12 in New York

 

Rosenblatt's 4th Annual Virtual Tech Summit 2024, June 12, Virtually

 

Further information on these events and all events we will be participating in can be found on the investors section of our website.

 

Thank you and goodbye

 

10
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