Total revenue for the first quarter of 2023 was $28.7 million, a 16% decrease compared to $34.4 million reported for the first quarter of 2022. First quarter 2023 licensing, non-recurring engineering (NRE) and related revenue was $20.7 million, a decrease of 7% when compared to $22.4 million reported for the same quarter a year ago. Royalty revenue for the first quarter of 2023 was $8.0 million, a decrease of 33% when compared to $12.0 million reported for the first quarter of 2022.
Amir Panush, Chief Executive Officer of CEVA, stated: "Our licensing business continued to show resilience in the first quarter, underpinned by strategic agreements for our 5G DSPs with a leading Android smartphone OEM and a wireless semiconductor company, and for our Wi-Fi 6 platform with a global leader of Wi-Fi access points. Royalties were impacted by customer inventory adjustments and prolonged weak demand for smartphones and PCs. Beyond these verticals, we are excited by record high royalty revenue contributions from our cellular IoT and Wi-Fi customers in the quarter."
Mr. Panush added, "With the acquisition of the VisiSonics 3D spatial audio business announced today, we have taken an additional step in building our future strategy, bolstering our OEM application software licensing business with a best-in-class solution that expands our offerings in the high-volume hearable and consumer IoT markets including earbuds, headphones, gaming headsets and beyond."
During the quarter, thirteen IP license and NRE agreements were concluded, targeting a wide variety of end markets and applications, including 5G for smartphones and broadband IoT, Wi-Fi 6 for access points and mesh networks, Bluetooth connectivity for TWS earbuds, consumer IoT and industrial devices, sensor fusion for robot vacuum cleaners and AI for automotive ADAS. Five agreements were with first-time customers.
GAAP gross margin for the first quarter of 2023 was 82%, as compared to GAAP gross margin of 81% for the same period in 2022. GAAP operating loss for the first quarter of 2023 was $4.8 million, as compared to a GAAP operating income of $0.5 million for the same period in 2022. GAAP net loss for the first quarter of 2023 was $4.9 million, as compared to a GAAP net loss of $1.7 million reported for the same period in 2022. GAAP diluted losses per share for the first quarter of 2023 was $0.21, as compared to a GAAP diluted losses per share of $0.07 for the same period in 2022.
Non-GAAP gross margin for the first quarters of 2023 and 2022 was both 84%. Non-GAAP operating income for the first quarter of 2023 was $0.07 million, as compared to $5.5 million reported for the first quarter of 2022. Non-GAAP net income and diluted earnings per share for the first quarter of 2023 were $0.1 million and $0.0, respectively, compared with $4.2 million and $0.18, respectively, reported for the first quarter of 2022.
Non-GAAP gross margin for the first quarter of 2023 excluded: (a) equity-based compensation expenses of $0.4 million and, (b) amortization of acquired intangibles of $0.3 million. Non-GAAP gross margin for the first quarter of 2022 excluded: (a) equity-based compensation expenses of $0.3 million and (b) amortization of acquired intangibles of $0.5 million.
Non-GAAP operating income for the first quarter of 2023 excluded: (a) equity-based compensation expenses of $3.9 million, (b) the impact of the amortization of acquired intangibles of $0.7 million associated with the acquisition of the Intrinsix and Hillcrest Labs businesses and investments in NB-IoT technologies and (c) $0.3 million of costs associated with the Intrinsix acquisition. Non-GAAP operating income for the first quarter of 2022 excluded: (a) equity-based compensation expenses of $3.4 million, (b) the impact of the amortization of acquired intangibles of $1.3 million associated with the acquisition of the Intrinsix and Hillcrest Labs business and investments in NB-IoT and Immervision technologies and (c) $0.3 million of costs associated with the Intrinsix acquisition.
Non-GAAP net income and diluted earnings per share for the first quarter of 2023 excluded: (a) equity-based compensation expenses of $3.9 million, (b) the impact of the amortization of acquired intangibles of $0.7 million associated with the acquisition of the Intrinsix and Hillcrest Labs businesses and investments in NB-IoT technologies, (c) $0.3 million of costs associated with the Intrinsix acquisition and (d) $0.1 million associated with the reevaluation of an investment in another company. Non-GAAP net income and diluted earnings per share for the first quarter of 2022 excluded: (a) equity-based compensation expenses of $3.4 million, (b) the impact of the amortization of acquired intangibles of $1.3 million associated with the acquisition of the Intrinsix and Hillcrest Labs businesses and investments in NB-IoT and Immervision technologies, (c) $0.3 million of costs associated with the Intrinsix acquisition and (d) $0.9 million loss, net of taxes, associated with the reevaluation of an investment in another company.
Yaniv Arieli, Chief Financial Officer of CEVA, stated: "Despite challenging market conditions this quarter, we remain well positioned to benefit from the long-term global megatrends of 5G, IoT and AI. Connectivity is at the forefront of these trends, and we continue to build upon our unrivalled position as the leading licensor of 5G, Bluetooth, Wi-Fi and cellular IoT platforms. Of note, in the quarter three new Wi-Fi 6 customers reported royalties for the first time, marking the next phase of royalty growth for our connectivity products. Our balance sheet remains strong to support our goals in building our future strategy."
CEVA Conference Call
On May 10, 2023, 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/mZq5jdVx2Y1. 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 (conference replay code: 4990940) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on May 17, 2023. The replay will also be available at CEVA's web site www.ceva-dsp.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 impact of the ViviSonics 3D acquisition, CEVA's ability to benefit from long term trends, CEVA's ability to fund its future strategy, and CEVA's growth prospects and potential. 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 CEVA DSP cores and other technologies to continue to be strong growth drivers for us; our success in penetrating new markets, including in the base station and IoT 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 maturation of the connectivity, IoT and 5G markets, the effect of intense industry competition and consolidation, global chip market trends, including supply chain issues as a result of COVID-19 and other factors, 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; our ability to successfully integrate Intrinsix into our business; 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 and custom SoC solutions for a smarter, safer, connected world. We provide Digital Signal Processors, AI engines, wireless platforms, cryptography cores and complementary embedded software for sensor fusion, image enhancement, computer vision, spatial audio, voice input and artificial intelligence. These technologies are offered in combination with our Intrinsix IP integration services, helping our customers address their most complex and time-critical integrated circuit design projects. Leveraging our technologies and chip design skills, many of the world's leading semiconductors, system companies and OEMs create power-efficient, intelligent, secure and connected devices for a range of end markets, including mobile, consumer, automotive, robotics, industrial, aerospace & defense and IoT.
Our DSP-based solutions include platforms for 5G baseband processing in mobile, IoT and infrastructure, advanced imaging and computer vision for any camera-enabled device, audio/voice/speech and ultra-low-power always-on/sensing applications for multiple IoT markets. For motion sensing solutions, our Hillcrest Labs sensor processing technologies provide a broad range of sensor fusion software and inertial measurement unit ("IMU") solutions for markets including hearables, wearables, AR/VR, PC, robotics, remote controls and IoT. For wireless IoT, our platforms for Bluetooth connectivity (low energy and dual mode), Wi-Fi 4/5/6 (802.11n/ac/ax), Ultra-wideband (UWB), NB-IoT and GNSS are the most broadly licensed connectivity platforms in the industry.
CEVA is a sustainable 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.
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 LOSS – U.S. GAAP U.S. dollars in thousands, except per share data | ||
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| ||
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| Three months ended | |
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| March 31, | |
|
| 2023 | 2022 |
|
| Unaudited | Unaudited |
Revenues: |
|
|
Licensing, NRE and related revenues | $ 20,721 | $ 22,393 |
Royalties | 8,014 | 11,998 |
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|
|
|
Total revenues | 28,735 | 34,391 |
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|
|
|
Cost of revenues | 5,315 | 6,404 |
|
|
|
|
Gross profit | 23,420 | 27,987 |
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|
|
|
Operating expenses: |
|
|
Research and development, net | 20,791 | 20,210 |
Sales and marketing | 3,045 | 2,923 |
General and administrative | 4,048 | 3,636 |
Amortization of intangible assets | 329 | 750 |
Total operating expenses | 28,213 | 27,519 |
|
|
|
|
Operating income (loss) | (4,793) | 468 |
Financial income, net | 1,455 | 282 |
Remeasurement of marketable equity securities | (117) | (1,131) |
|
|
|
|
Loss before taxes on income | (3,455) | (381) |
Income tax expense | 1,417 | 1,315 |
|
|
|
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Net loss | $ (4,872) | $ (1,696) |
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|
|
|
Basic net loss per share | $ (0.21) | $ (0.07) |
Diluted Net loss per share | $ (0.21) | $ (0.07) |
Weighted-average shares used to compute net loss
|
|
|
Basic | 23,334 | 23,103 |
Diluted | 23,334 | 23,103 |
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 | |
|
| March 31, | |
|
| 2023 | 2022 |
|
| Unaudited | Unaudited |
GAAP net loss | $ (4,872) | $ (1,696) |
Equity-based compensation expense included in cost of revenues | 404 | 339 |
Equity-based compensation expense included in research and development
| 2,173 | 1,995 |
Equity-based compensation expense included in sales and marketing expenses | 393 | 333 |
Equity-based compensation expense included in general and administrative
| 889 | 722 |
Amortization of intangible assets related to acquisition of Intrinsix and Hillcrest
| 677 | 1,282 |
Costs associated with the Intrinsix acquisition | 326 | 326 |
Loss associated with the remeasurement of marketable equity securities, net of
| 117 | 871 |
NRE revenues associated with the purchase price allocation (PPA) related to
| 0 | 42 |
Non-GAAP net income | $ 107 | $ 4,214 |
GAAP weighted-average number of Common Stock used in computation of
| 23,334 | 23,103 |
Weighted-average number of shares related to outstanding stock-based awards (in
| 1,021 | 772 |
Weighted-average number of Common Stock used in computation of diluted
| 24,355 | 23,875 |
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|
|
|
GAAP diluted loss per share | $ (0.21) | $ (0.07) |
Equity-based compensation expense | $ 0.17 | $ 0.14 |
Amortization of intangible assets related to acquisition of Intrinsix and Hillcrest
| $ 0.03 | $ 0.06 |
Costs associated with the Intrinsix acquisition | $ 0.01 | $ 0.01 |
Loss associated with the remeasurement of marketable equity securities, net of
| $ 0.00 | $ 0.04 |
Non-GAAP diluted earnings per share | $ 0.00 | $ 0.18 |
|
| Three months ended | |
|
| March 31, | |
|
| 2023 | 2022 |
|
| Unaudited | Unaudited |
GAAP Operating Income (loss) | $ (4,793) | $ 468 |
Equity-based compensation expense included in cost of revenues | 404 | 339 |
Equity-based compensation expense included in research and development
| 2,173 | 1,995 |
Equity-based compensation expense included in sales and marketing expenses | 393 | 333 |
Equity-based compensation expense included in general and administrative
| 889 | 722 |
Amortization of intangible assets related to acquisition of Intrinsix and Hillcrest
| 677 | 1,282 |
Costs associated with the Intrinsix acquisition | 326 | 326 |
Purchase price allocation (PPA) for the Intrinsix acquisition | 0 | 42 |
Total non-GAAP Operating Income | $ 69 | $ 5,507 |
|
| Three months ended | |
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| March 31, | |
|
| 2023 | 2022 |
|
| Unaudited | Unaudited |
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|
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GAAP Gross Profit | $ 23,420 | $ 27,987 |
GAAP Gross Margin | 82 % | 81 % |
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|
|
Additional NRE revenues associated with the purchase price allocation (PPA)
| 0 | 42 |
Equity-based compensation expense included in cost of revenues | 404 | 339 |
Amortization of intangible assets related to acquisition of Intrinsix and
| 348 | 532 |
Total Non-GAAP Gross profit | 24,172 | 28,900 |
Non-GAAP Gross Margin | 84 % | 84 % |
CEVA, INC. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (U.S. Dollars in thousands) | |||
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| |||
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| March 31, | December 31, |
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| 2023 | 2022 (*) |
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| Unaudited | Unaudited |
ASSETS |
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Current assets: |
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Cash and cash equivalents |
| $ 24,483 | $ 21,285 |
Marketable securities and short-term bank deposits |
| 112,306 | 118,194 |
Trade receivables, net |
| 17,430 | 12,297 |
Unbilled receivables |
| 17,577 | 18,953 |
Prepaid expenses and other current assets |
| 8,766 | 6,896 |
Total current assets |
| 180,562 | 177,625 |
Long-term assets: |
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|
|
Bank deposits |
| 8,280 | 8,205 |
Severance pay fund |
| 8,183 | 8,475 |
Deferred tax assets, net |
| 9,434 | 8,599 |
Property and equipment, net |
| 6,696 | 7,099 |
Operating lease right-of-use assets |
| 10,034 | 10,283 |
Investment in marketable equity securities |
| 291 | 408 |
Goodwill |
| 74,777 | 74,777 |
Intangible assets, net |
| 6,003 | 6,680 |
Other long-term assets |
| 6,874 | 6,291 |
Total assets |
| $ 311,134 | $ 308,442 |
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|
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
|
|
|
Trade payables |
| $ 1,820 | $ 1,995 |
Deferred revenues |
| 4,006 | 3,168 |
Accrued expenses and other payables |
| 26,353 | 25,133 |
Operating lease liabilities |
| 2,858 | 2,982 |
Total current liabilities |
| 35,037 | 33,278 |
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Long-term liabilities: |
|
|
|
Accrued severance pay |
| 9,064 | 9,064 |
Operating lease liabilities |
| 6,530 | 6,703 |
Other accrued liabilities |
| 633 | 526 |
Total liabilities |
| 51,264 | 49,571 |
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|
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|
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Stockholders' equity: |
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|
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Common stock |
| 23 | 23 |
Additional paid in-capital |
| 243,141 | 242,841 |
Treasury stock |
| (4,672) | (9,904) |
Accumulated other comprehensive loss |
| (5,910) | (6,249) |
Retained earnings |
| 27,288 | 32,160 |
Total stockholders' equity |
| 259,870 | 258,871 |
Total liabilities and stockholders' equity |
| $ 311,134 | $ 308,442 |
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(*) Derived from audited financial statements |
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SOURCE CEVA, Inc.
| Contact: |
| Company Name: CEVA, Inc.
For More Information Contact: 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 Financial data for CEVA, Inc. |
