CEVA, Inc. Announces Third Quarter 2018 Financial Results
MOUNTAIN VIEW, Calif., Nov. 8, 2018 /PRNewswire/ -- CEVA, Inc. (NASDAQ: CEVA), the leading licensor of signal processing platforms and artificial intelligence processors for smarter, connected devices, announced today its financial results for the third quarter ended September 30, 2018.
Total revenue for the third quarter of 2018 was $21.4 million, an 11% decrease compared to $24.0 million reported for the third quarter of 2017. Third quarter 2018 and 2017 licensing and related revenue were $9.8 million and $14.0 million, respectively. Royalty revenue for the third quarter of 2018 was $11.6 million, an increase of 16% when compared to $10.0 million reported for the third quarter of 2017.
Gideon Wertheizer, CEO of CEVA, stated: "We are pleased to report a solid third quarter, reflecting a healthy licensing environment, in particular in China, and strong royalty revenue recovery. In licensing, the demand for our short range connectivity and cellular technologies result from our leadership and comprehensive offerings for Bluetooth, Wi-Fi, 5G and NB-IoT. We are strategically positioned to exploit all market segments and usage models, as wireless IP is complex, scarce and mandatory for all IoT-related products. On royalties, the wide deployment of our advanced DSP technologies within the latest generation of the world's most successful smartphone, and the continued growth of shipments from our non-handset baseband customers were the main catalysts for 56% sequential growth."
GAAP net income and diluted earnings per share for the third quarter of 2018 was $2.5 million and $0.11, respectively, compared to $5.9 million and $0.26 reported for the same period in 2017.
Non-GAAP net income and diluted earnings per share for the third quarter of 2018 were $5.2 million and $0.23, respectively, compared to $8.3 million non-GAAP net income and $0.36 diluted earnings per share reported for the third quarter of 2017. Non-GAAP net income and diluted earnings per share for the third quarter of 2018 excluded: (a) equity-based compensation expense, net of taxes, of $2.5 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. Net income and diluted earnings per share for the third quarter of 2017 excluded: (a) equity-based compensation expense, net of taxes, of $2.1 million, and (b) the impact of the amortization of acquired intangibles of $0.3 million associated with the acquisition of RivieraWaves.
During the quarter, CEVA completed thirteen license agreements. Four of the agreements were for CEVA DSP and AI platforms, and nine were for CEVA connectivity IPs. All agreements were for non-handset baseband applications and four were with first-time customers of CEVA. Customers' target markets for the licenses include ADAS, consumer and industrial IoT connectivity, and wireless audio.
Geographically, nine of the deals signed were in China, one was in the U.S. and three were in the APAC region, including Japan.
Yaniv Arieli, Chief Financial Officer of CEVA, stated: "We saw a strong recovery in the third quarter in shipments from our customers, including a record 98 million non-handset baseband units, of which 83 million were Bluetooth devices. On buyback, we purchased approximately 216,000 shares of our common stock during the third quarter for an aggregate consideration of approximately $6.3 million. Moreover, CEVA's cash and cash equivalent balances, marketable securities and bank deposits were approximately $167 million at the end of the quarter."
CEVA Conference Call
On November 8, 2018 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/984/27722. 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: 10124765) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on November 15, 2018. The replay will also be available at CEVA's web site www.ceva-dsp.com.
About CEVA, Inc.
CEVA is the leading licensor of signal processing platforms and artificial intelligence processors 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, industrial and IoT. Our ultra-low-power IPs for vision, audio, communications and connectivity include comprehensive DSP-based platforms for LTE/LTE-A/5G baseband processing in handsets, infrastructure and cellular IoT (NB-IoT and Cat-M1) enabled devices, 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 artificial intelligence, we offer a family of AI processors capable of handling the complete gamut of neural network workloads, on-device. For connectivity, we offer the industry's most widely adopted IPs for Bluetooth (low energy and dual mode) and Wi-Fi (Wi-Fi 4 (802.11n), Wi-Fi 5 (802.11ac) and Wi-Fi 6 (802.11ax) up to 4x4). Visit us at www.ceva-dsp.com and follow us on Twitter, YouTube, Facebook and LinkedIn.
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 CEVA being strategically positioned to exploit all market segments and usage models, as wireless IP is complex, scarce and mandatory for all IoT-related products. The risks, uncertainties and assumptions that could cause differing CEVA results include: the ability of the CEVA DSP cores and other technologies to continue to be strong growth drivers for us; our success in penetrating new markets, including in non-baseband markets, and maintaining our market position in existing markets; our ability to diversify the company's royalty streams, the ability of products incorporating our technologies to achieve market acceptance, the speed and extent of the expansion of the 4G, 5G and LTE networks, the maturation of the IoT market, the effect of intense industry competition and consolidation, global chip market trends, the possibility that markets for CEVA's technologies may not develop as expected or that products incorporating our technologies do not achieve market acceptance; our ability to timely and successfully develop and introduce new technologies; and general market conditions and other risks relating to our business, including, but not limited to, those that are described from time to time in our SEC filings. CEVA assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
CEVA, INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - U.S. GAAP
U.S. dollars in thousands, except per share data
===
Three months ended Nine months ended
September 30, September 30,
2018 2017 2018 2017
---
Unaudited
Revenues:
Licensing and related
revenues $9,786 $14,021 $29,907 $33,893
Royalties 11,627 10,023 26,569 32,013
---
Total revenues 21,413 24,044 56,476 65,906
---
Cost of revenues 2,006 1,726 5,966 5,030
---
Gross profit 19,407 22,318 50,510 60,876
---
Operating expenses:
Research and
development, net 11,897 10,031 35,756 30,413
Sales and marketing 2,727 3,057 9,302 9,422
General and
administrative 2,406 2,711 8,193 7,388
Amortization of
intangible assets 225 309 676 927
Total operating expenses 17,255 16,108 53,927 48,150
---
Operating income (loss) 2,152 6,210 (3,417) 12,726
Financial income, net 831 821 2,535 2,147
---
Income (loss) before
taxes on income 2,983 7,031 (882) 14,873
Income taxes expense 440 1,181 847 1,008
---
Net income (loss) $2,543 $5,850 $(1,729) $13,865
Basic net income (loss)
per share $0.12 $0.27 ($0.08) $0.64
Diluted net income per
share $0.11 $0.26 ($0.08) $0.62
Weighted-average number of Common Stock used in
computation of net income per share (in thousands):
Basic 21,997 21,946 22,091 21,687
Diluted 22,428 22,683 22,091 22,480
===
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
2018 2017 2018 2017
---
Unaudited
GAAP net income
(loss) $2,543 $5,850 ($1,729) $13,865
Equity-based compensation expense included in
cost of revenue
155 125 480 330
Equity-based compensation expense included in
research and development expenses
1,246 991 3,874 2,834
Equity-based compensation expense included in
sales and marketing expenses
369 381 1,246 1,040
Equity-based compensation expense included in
general and administrative expenses
697 722 2,483 2,142
Income tax benefit
related to equity-
based compensation
expenses (118) (84) (400) (268)
Amortization of
intangible assets
related to
RivieraWaves
transaction and in
2018 NB-Iot
technologies 303 309 937 927
Non-GAAP net income $5,195 $8,294 $6,891 $20,870
===
GAAP weighted-
average number of
Common Stock used in
computation of
diluted net income
(loss) per share (in
thousands) 22,428 22,683 22,091 22,480
Weighted-average
number of shares
related to
outstanding stock-
based awards (in
thousands) 390 273 897 301
---
Weighted-average
number of Common
Stock used in
computation of
diluted earnings per
share, excluding the
above (in thousands
) 22,818 22,956 22,988 22,781
GAAP diluted earnings
(loss) per share $0.11 $0.26 ($0.08) $0.62
Equity-based
compensation
expense, net of
taxes $0.11 $0.09 $0.34 $0.26
Amortization of
intangible assets
related to
RivieraWaves
transaction and in
2018 NB-IoT
technologies $0.01 $0.01 $0.04 $0.04
---
Non-GAAP diluted
earnings per share $0.23 $0.36 $0.30 $0.92
===
CEVA, INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. Dollars in thousands)
September 30,
December 31,
2018
2017 (*)
Unaudited
Unaudited
---
ASSETS
Current assets:
Cash and cash equivalents $9,212 $21,739
Marketable securities and short term
bank deposits 110,344 117,096
Trade receivables 7,577 14,480
Accrued revenues 16,456 2,014
Prepaid expenses and other current
assets 5,904 3,747
Total current assets 149,493 159,076
Long-term assets:
Bank deposits 47,450 44,518
Severance pay fund 9,242 8,910
Deferred tax assets 4,727 3,643
Property and equipment, net 7,979 6,926
Goodwill 46,612 46,612
Intangible assets, net 3,004 1,742
Other long term assets 6,744 5,385
Total assets $275,251 $276,812
===
LIABILITIES AND STOC
KHOLDERS' EQUITY
Current liabilities:
Trade payables $1,000 $392
Deferred revenues 3,614 4,399
Accrued expenses and other payables 16,449 18,004
Total current liabilities 21,063 22,795
Long-term liabilities:
Accrued severance pay 9,800 9,347
Total liabilities 30,863 32,142
Stockholders' equity:
Common stock: 22 22
Additional paid in-capital 221,248 217,417
Treasury stock (36,168) (26,056)
Accumulated other comprehensive loss (1,284) (586)
Retained earnings 60,570 53,873
Total stockholders' equity 244,388 244,670
Total liabilities and stockholders'
equity $275,251 $276,812
===
(*) Derived from audited
financial statements
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SOURCE CEVA, Inc.
