CEVA, Inc. Announces Second Quarter 2019 Financial Results

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




                                                                              Three months ended                Six months ended


                                                                              June 30,                    June 30,


                                                                2019           2018          2019                    2018

                                                                                                                   ---

                                                                            
            
              Unaudited




     Revenues:


      Licensing and related
       revenues                                              $10,804        $10,038       $21,815                 $20,121



     Royalties                                                7,596          7,456        13,554                  14,942

                                                                                                                   ---




     Total revenues                                          18,400         17,494        35,369                  35,063

                                                                                                                   ---



      Cost of revenues                                         2,493          1,988         4,516                   3,960

                                                                                                                   ---




     Gross profit                                            15,907         15,506        30,853                  31,103

                                                                                                                   ---




     Operating expenses:


      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





      Total operating expenses                                18,090         18,167        35,968                  36,672

                                                                                                                   ---




     Operating loss                                         (2,183)       (2,661)      (5,115)                (5,569)


      Financial income, net                                      896            777         1,696                   1,704





      Loss before taxes on
       income                                                (1,287)       (1,884)      (3,419)                (3,865)



     Taxes on income                                            225            206           390                     407

                                                                                                                   ---




     Net loss                                              $(1,512)      $(2,090)     $(3,809)               $(4,272)





      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):


      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




                                                                                     Three months ended                  Six months ended


                                                                                     June 30,                    June 30,


                                                                   2019          2018          2019                2018

                                                                                                                 ---

                                                                          
              
                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





         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






                      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


                                  
              
                CEVA, INC. AND ITS SUBSIDIARIES


                                      
              CONDENSED CONSOLIDATED BALANCE SHEETS


                                    
              
                (U.S. Dollars in thousands)




                                                      
              
                June 30,    
        
        December 31,


                                                                                    2019     
        
        2018 (*)



                                                      
              
                Unaudited     
        
        Unaudited

                                                                                                              ---


     
                ASSETS





     Current assets:



     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:



     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

                                                                                                              ===






     
                LIABILITIES AND STOC
                KHOLDERS' EQUITY





     Current liabilities:



     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





     Long-term liabilities:



     Accrued severance pay                                                       10,592                     9,632



     Operating lease liabilities                                                  7,621                         -



     Other accrued liabilities                                                      575                         -




     Total liabilities                                                           40,120                    31,384






     Stockholders' equity:



     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

                                                                                                              ===



               (*) Derived from audited
                financial statements

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SOURCE CEVA, Inc.