Market Overview

CEVA, Inc. Announces Third Quarter 2020 Financial Results

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MOUNTAIN VIEW, Calif., Nov. 5, 2020 /PRNewswire/ -- CEVA, Inc. (NASDAQ:CEVA), the leading licensor of wireless connectivity and smart sensing technologies, today announced its financial results for the third quarter ended September 30, 2020.

The quarterly royalty contribution from base station & IoT product category was a record $7.9 million.

Total revenue for the third quarter of 2020 was $25.0 million, a 6% increase compared to $23.5 million reported for the third quarter of 2019. Third quarter 2020 licensing and related revenue was $12.4 million, an increase of 10% when compared to $11.3 million reported for the same quarter a year ago. Royalty revenue for the third quarter of 2020 was $12.5 million, an increase of 3% when compared to $12.2 million reported for the third quarter of 2019.

Thirteen license agreements were concluded during the quarter, of which eight were for smart sensing products and five were for connectivity products. Six of the agreements were with first-time customers. Customers' target applications include ADAS, digital imaging, true wireless stereo earbuds, digital conferencing systems for home office upgrades and a range of other smart IoT devices. Geographically, six of the deals signed were in APAC, four in the U.S, and three were in China.

Gideon Wertheizer, CEO of CEVA, stated: "Our third quarter results are a firm endorsement of our technology strengths and the hard work of our employees. We have made tremendous progress in our base station and IoT product category, whose royalty revenues grew 86% sequentially and 105% year-over-year, reflecting the fast deployment of 5G base stations in China and record contributions from our Bluetooth, Wi-Fi and sensor fusion technologies. We continue to capitalize on our broad portfolio and industry reach to expand our customer base and future royalty potential. Of note, we signed a strategic agreement with a leading automotive semiconductor player for driver assistance capabilities in new cars, further reinforcing our leadership position in this highly lucrative market."

GAAP net loss for the third quarter of 2020 was $0.7 million, as compared to a GAAP net income of $0.8 million reported for the same period in 2019. GAAP diluted loss per share for the third quarter of 2020 was $0.03, as compared to a GAAP diluted earnings per share of $0.03 for the same period in 2019. Third quarter 2020 financials included a $1 million tax expense due to withholding tax which cannot be utilized in future years. Third quarter 2019 financials included a tax benefit of approximately $1 million as a result of the successful conclusion of a tax audit.

Non-GAAP net income and diluted earnings per share for the third quarter of 2020 decreased 29% and 27%, respectively, to $3.6 million and $0.16, respectively, from $5.1 million and $0.22 reported for the third quarter of 2019.  Non-GAAP net income and diluted earnings per share for the third quarter of 2020 excluded: (a) equity-based compensation expenses, net of taxes, of $3.7 million, (b) the impact of the amortization of acquired intangibles, net of taxes, of $0.7 million associated with the acquisition of the Hillcrest Labs business and investments in NB-IoT and Immervision technologies. 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.

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "We are pleased with our strong financial performance in the third quarter, the highest third quarter revenue on record. The royalty contribution from base station & IoT product category was a record $7.9 million, derived from an all-time quarterly high 200 million units shipped in this product category. At the end of the quarter, our cash and cash equivalent balances, marketable securities and bank deposits were approximately $153 million, with no debt."

CEVA Conference Call

On November 5, 2020 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/984/37971. 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: 10148556) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on November 12, 2020. 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 about (i) optimism associated with CEVA's base station and IoT product category that capitalizes on the fast deployment of 5G base stations in China and record contributions from its Bluetooth, Wi-Fi and sensor fusion technologies, (ii) capitalizing on CEVA's broad portfolio and industry reach to expand its customer base and future royalty potential, and (iii) reinforcing CEVA's leadership position in the highly lucrative automotive semiconductor market.  The risks, uncertainties and assumptions that could cause differing CEVA results include: the scope and duration of the COVID-19 pandemic; the extent and length of the restrictions associated with the COVID-19 pandemic and the impact on customers, consumer demand and the global economy generally; the ability of the CEVA DSP cores and other technologies to continue to be strong growth drivers for us; our continued success in penetrating new 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 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.

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



Three months ended

Nine months ended


September 30,

September 30,


2020

2019

2020

2019


Unaudited

Unaudited

Unaudited

Unaudited

Revenues:





Licensing and related revenues

$   12,420

$  11,269

$   40,445

$33,084

Royalties

12,540

12,202

31,736

25,756






Total revenues

24,960

23,471

72,181

58,840






Cost of revenues

2,503

2,767

8,259

7,283






Gross profit

22,457

20,704

63,922

51,557






Operating expenses:





Research and development, net

15,603

13,873

45,695

38,593

Sales and marketing

2,711

2,832

8,772

8,809

General and administrative

3,566

3,509

10,893

8,360

Amortization of intangible assets

575

757

1,732

1,177






Total operating expenses

22,455

20,971

67,092

56,939






Operating  income (loss)

2

(267)

(3,170)

(5,382)

Financial income, net

1,020

603

2,689

2,299






 Income (loss) before taxes on income

1,022

336

(481)

(3,083)

Income tax expense (benefit) 

1,761

(439)

2,533

(49)






Net income (loss)

$  (739)

$  775

$  (3,014)

$  (3,034)






Basic net income (loss) per share

$ (0.03)

$0.04

$  (0.14)

$  (0.14)

Diluted net income (loss) per share

$ (0.03)

$0.03

$  (0.14)

$  (0.14)

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





Basic

22,163

21,953

22,059

21,936

Diluted

22,163

22,404

22,059

21,936

 

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,


2020

2019

2020

2019


Unaudited

Unaudited

Unaudited

Unaudited

GAAP net income (loss)

$  (739)

$775

$  (3,014)

$  (3,034)

Equity-based compensation expense included in cost of revenues

159

168

473

464

Equity-based compensation expense included in research and development
expenses

1,770

 

1,494

5,115

 

4,314

Equity-based compensation expense included in sales and marketing
expenses

533

 

362

1,496

 

1,112

Equity-based compensation expense included in general and administrative
expenses

1,084

 

728

2,986

 

1,957

Income tax (benefit) expense related to equity-based compensation
expenses

124

(129)

(60)

(473)

Amortization of intangible assets, net of taxes, 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
 


 
 
684


 
 
1,680




2,061


 
 
2,258

Non-GAAP net income

$  3,615

$5,078

$  9,057

$6,598





















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

22,163

22,404

22,059

21,936

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

1,004

489

 

983

850











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

  23,167

 

  22,893

 

  23,042

  

22,786











GAAP diluted income (loss) earnings per share

$  (0.03)

0.03

$ (0.14)

$ (0.14)

Equity-based compensation expense, net of taxes

$  0.16

$0.12

$  0.44

$  0.32

Amortization of intangible assets, net of taxes, 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

$  0.03

$0.07

$  0.09

$  0.11 











Non-GAAP diluted earnings per share

$  0.16

$0.22

$  0.39

$  0.29





 

CEVA, INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. Dollars in thousands)



September 30,

December 31,


2020

2019 (*)


Unaudited

Unaudited 

ASSETS



Current assets:



Cash and cash equivalents

$        22,067

$           22,803

Marketable securities and short-term bank deposits

119,664

121,782

Trade receivables, net

15,538

11,066

Unbilled receivables

13,441

17,241

Prepaid expenses and other current assets

6,888

5,660

Total current assets

177,598

178,552

Long-term assets:



Bank deposits

11,376

5,368

Severance pay fund

9,624

9,881

Deferred tax assets, net

12,317

10,605

Property and equipment, net

8,084

7,879

Operating lease right-of-use assets

10,824

11,066

Goodwill

51,070

51,070

Intangible assets, net

11,481

13,424

Other long-term assets

9,190

9,176

Total assets

$        301,564

$        297,021




LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:



Trade payables

$           862

$           701

Deferred revenues

2,777

3,642

Accrued expenses and other payables

3,421

3,660

Accrued payroll and related benefits

15,991

15,894

Taxes payable

335

88

Operating lease liabilities

2,505

2,393

Total current liabilities

25,891

26,378




Long-term liabilities:



Accrued severance pay

10,328

10,551

Operating lease liabilities

7,960

8,273

Other accrued liabilities

814

662

Total liabilities

44,993

45,864




Stockholders' equity:



Common stock

22

22

Additional paid in-capital

230,032

228,005

Treasury stock

(30,754)

(39,390)

Accumulated other comprehensive income

361

94

Retained earnings

56,910

62,426

Total stockholders' equity

256,571

251,157

Total liabilities and stockholders' equity

$   301,564

$   297,021


(*) Derived from audited financial statements

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/ceva-inc-announces-third-quarter-2020-financial-results-301166956.html

SOURCE CEVA, Inc.

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