- Sequential royalty revenue growth of 27%, attributable to recovery in handset baseband
MOUNTAIN VIEW, Calif., Aug. 8, 2019 — (PRNewswire) — CEVA, Inc. (NASDAQ: CEVA), the leading licensor of wireless connectivity and smart sensing technologies, today announced its financial results for the second quarter ended June 30, 2019.
Total revenue for the second quarter of 2019 was $18.4 million, a 5% increase compared to $17.5 million reported for the second quarter of 2018. Second quarter 2019 licensing and related revenue was $10.8 million, an increase of 8% when compared to $10.0 million reported for the same quarter a year ago. Royalty revenue for the second quarter of 2019 was $7.6 million, a 2% increase compared to $7.5 million reported for the second quarter of 2018.
Gideon Wertheizer, CEO of CEVA, stated: "I am very pleased with our performance in the second quarter. We continued to expand our licensee base and diversify our revenue sources, capitalizing on our excellence in wireless connectivity and smart sensing technologies. In royalties, our handset baseband shipments showed pronounced sequential growth following a period of market softness and excess inventories. Our non-handset baseband royalties continue to show solid growth, driven by base station RAN and Bluetooth."
Mr. Wertheizer continued: "Our recent acquisition of the Hillcrest Labs business and the technology investment we made in Immervision, Inc. will enable us to further expand our product offerings and customer reach. These investments are important landmarks in our strategic plan to broaden our technology portfolio, while also allowing us to move up the value chain and create tighter relationships with semiconductor companies and OEMs."
Of the nine license agreements completed during the quarter, three were for smart sensing products and six were for connectivity products. All of the licensing agreements signed during the quarter were for non-handset baseband applications and four were with first-time customers of CEVA. Customers' target markets include cellular IoT, sound and Bluetooth for wireless earbuds, AI and computer vision for consumer and surveillance products, and Wi-Fi access points. Geographically, three of the deals signed were in China, two were in the U.S. and four were in the APAC region, including Japan.
GAAP net loss for the second quarter of 2019 was $1.5 million, 28% lower than net loss of $2.1 million reported for the same period in 2018. GAAP diluted loss per share for the second quarter of 2019 was $0.07, compared to diluted loss per share of $0.09 a year ago.
Non-GAAP net income and diluted earnings per share for the second quarter of 2019 were $1.2 million and $0.05, respectively, up 42% and 25%, respectively, from the $0.9 million and $0.04 reported for both income and diluted earnings per share for the second quarter of 2018. Non-GAAP net income and diluted earnings per share for the second quarter of 2019 excluded: (a) equity-based compensation expense, net of taxes, of $2.5 million, (b) the impact of the amortization of acquired intangibles of $0.3 million associated with the acquisition of RivieraWaves and an investment in NB-IoT technologies. Non-GAAP net income and diluted earnings per share for the second quarter of 2018 excluded: (a) equity-based compensation expense, net of taxes, of $2.7 million, and (b) the impact of the amortization of acquired intangibles of $0.3 million associated with the acquisition of RivieraWaves and NB-IoT technologies.
Yaniv Arieli, Chief Financial Officer of CEVA, stated: "We are encouraged by the sequential increase of 27% in our royalty revenue, reflecting an uptick in handset inventory build up in advance of the high season. Also, second quarter non-GAAP net income and non-GAAP fully diluted earnings per share showed year-over-year growth for the first time in five quarters. We continued our buyback plan, repurchasing approximately $2.3 million of our common stock under our existing share repurchase program. At the end of the quarter, our cash balance, marketable securities and bank deposits totaled $166 million, with no debt."
CEVA Conference Call
On August 8, 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/984/31019. 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: 10133150) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on August 15, 2019. The replay will also be available at CEVA's web site www.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 that CEVA's licensee base and revenue sources continue to expand, handset baseband shipments showed pronounced sequential growth, non-handset baseband royalties continue to show solid growth and the recent acquisition of the Hillcrest Labs business and the technology investment in Immervision will enable the company to further expand its product offerings and customer reach, thereby allowing the company to move up the value chain and create tighter relationships with semiconductor companies and OEMs. 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; CEVA's ability to successfully integrate Hillcrest Labs' operations and realize the expected synergies; CEVA's ability to successfully leverage Immervision's technology to increase CEVA's customer base and product offerings, as well as other expectations with respect to the strategic partnership, our continued success in penetrating new markets, including in non-baseband 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 autonomous driving and IoT markets, the effect of trade tariffs and political tensions, the effect of intense industry competition and consolidation, including the effect of Apple's announced acquisition of a majority of Intel's smartphone modem business, 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. 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
www.ceva-dsp.com and follow us on
Twitter,
YouTube,
Facebook,
LinkedIn and
Instagram.
CEVA, INC. AND ITS SUBSIDIARIES | ||||
CONSOLIDATED STATEMENTS OF INCOME – U.S. GAAP | ||||
U.S. dollars in thousands, except per share data | ||||
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| Three months ended | Six months ended | ||
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| June 30, | June 30, | ||
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| 2019 | 2018 | 2019 | 2018 |
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| Unaudited | |||
Revenues: |
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Licensing and related revenues | $ 10,804 | $ 10,038 | $ 21,815 | $ 20,121 |
Royalties | 7,596 | 7,456 | 13,554 | 14,942 |
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Total revenues | 18,400 | 17,494 | 35,369 | 35,063 |
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Cost of revenues | 2,493 | 1,988 | 4,516 | 3,960 |
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Gross profit | 15,907 | 15,506 | 30,853 | 31,103 |
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Operating expenses: |
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Research and development, net | 12,390 | 11,843 | 24,720 | 23,859 |
Sales and marketing | 2,956 | 3,399 | 5,977 | 6,575 |
General and administrative | 2,534 | 2,833 | 4,851 | 5,787 |
Amortization of intangible assets | 210 | 92 | 420 | 451 |
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Total operating expenses | 18,090 | 18,167 | 35,968 | 36,672 |
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Operating loss | (2,183) | (2,661) | (5,115) | (5,569) |
Financial income, net | 896 | 777 | 1,696 | 1,704 |
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Loss before taxes on income | (1,287) | (1,884) | (3,419) | (3,865) |
Taxes on income | 225 | 206 | 390 | 407 |
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Net loss | $ (1,512) | $ (2,090) | $ (3,809) | $ (4,272) |
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Basic and diluted net loss per share | ($0.07) | (0.09) | ($0.17) | ($0.19) |
Weighted-average shares used to compute net loss per share (in thousands): |
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Basic and diluted | 21,936 | 22,129 | 21,927 | 22,139 |
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures | ||||
U.S. Dollars in thousands, except per share amounts | ||||
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| Three months ended | Six months ended | ||
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| June 30, | June 30, | ||
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| 2019 | 2018 | 2019 | 2018 |
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| Unaudited | |||
GAAP net loss | $ (1,512) | $ (2,090) | $ (3,809) | $ (4,272) |
Equity-based compensation expense included in cost of revenues | 160 | 168 | 296 | 325 |
Equity-based compensation expense included in research and development expenses | 1,458 | 1,359 | 2,820 | 2,628 |
Equity-based compensation expense included in sales and marketing expenses | 394 | 423 | 750 | 877 |
Equity-based compensation expense included in general and administrative expenses | 667 | 895 | 1,229 | 1,786 |
Income tax benefit related to equity-based compensation expenses | (207) | (153) | (344) | (282) |
Amortization of intangible assets related to RivieraWaves transaction and NB-IoT technologies | 289 | 275 | 578 | 634 |
Non-GAAP net income | $ 1,249 | $ 877 | $ 1,520 | $ 1,696 |
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GAAP weighted-average number of Common Stock used in computation of diluted net loss per share (in thousands) | 21,936 | 22,129 | 21,927 | 22,139 |
Weighted-average number of shares related to outstanding stock-based awards (in thousands) | 837 | 903 | 805 | 935 |
Weighted-average number of Common Stock used in computation of diluted earnings per share, excluding the above (in thousands) | 22,773 | 23,032 | 22,732 | 23,074 |
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GAAP diluted loss per share | ($ 0.07) | ($ 0.09) | ($ 0.17) | ($ 0.19) |
Equity-based compensation expense, net of taxes | $ 0.11 | $ 0.12 | $ 0.21 | $ 0.23 |
Amortization of intangible assets related to RivieraWaves transaction and NB-IoT technologies | $ 0.01 | $ 0.01 | $ 0.03 | $ 0.03 |
Non-GAAP diluted earnings per share | $ 0.05 | $ 0.04 | $ 0.07 | $ 0.07 |
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CEVA, INC. AND ITS SUBSIDIARIES | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
(U.S. Dollars in thousands) | ||
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| June 30, | December 31, |
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| 2019 | 2018 (*) |
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| Unaudited | Unaudited |
ASSETS |
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Current assets: |
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Cash and cash equivalents | $ 24,527 | $ 22,260 |
Marketable securities and short-term bank deposits | 126,508 | 123,608 |
Trade receivables, net | 10,461 | 9,971 |
Unbilled receivables | 11,558 | 16,185 |
Prepaid expenses and other current assets | 7,432 | 5,264 |
Total current assets | 180,486 | 177,288 |
Long-term assets: |
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Bank deposits | 14,652 | 21,864 |
Severance pay fund | 9,866 | 9,026 |
Deferred tax assets, net | 6,446 | 5,924 |
Property and equipment, net | 7,416 | 7,344 |
Operating lease right-of-use assets | 9,736 | — |
Goodwill | 46,612 | 46,612 |
Intangible assets, net | 2,122 | 2,700 |
Other long-term assets | 7,429 | 6,505 |
Total assets | $ 284,765 | $ 277,263 |
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LIABILITIES AND STOCKHOLDERS' EQUITY | ||
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Current liabilities: |
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Trade payables | $ 542 | $ 632 |
Deferred revenues | 2,395 | 3,593 |
Accrued expenses and other payables | 16,571 | 17,527 |
Operating lease liabilities | 1,824 | — |
Total current liabilities | 21,332 | 21,752 |
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Long-term liabilities: |
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Accrued severance pay | 10,592 | 9,632 |
Operating lease liabilities | 7,621 | — |
Other accrued liabilities | 575 | — |
Total liabilities | 40,120 | 31,384 |
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Stockholders' equity: |
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Common stock | 22 | 22 |
Additional paid in-capital | 223,306 | 223,250 |
Treasury stock | (37,498) | (39,132) |
Accumulated other comprehensive income (loss) | 64 | (1,114) |
Retained earnings | 58,751 | 62,853 |
Total stockholders' equity | 244,645 | 245,879 |
Total liabilities and stockholders' equity | $ 284,765 | $ 277,263 |
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(*) Derived from audited financial statements |
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SOURCE CEVA, Inc.
| Contact: |
| Company Name: CEVA, Inc.
Yaniv Arieli, CEVA, Inc., CFO Phone: +1.650.417.7941, yaniv.arieli@ceva-dsp.com Richard Kingston, CEVA, Inc., VP Market Intelligence, Investor & Public Relations Phone: +1.650.417.7976, richard.kingston@ceva-dsp.com Web: https://www.ceva-dsp.com Financial data for CEVA, Inc. |
