CEVA, Inc. Announces Fourth Quarter and Year End 2020 Financial Results

ROCKVILLE, Md., Feb. 16, 2021 /PRNewswire/ -- CEVA, Inc. (NASDAQ: CEVA), the leading licensor of wireless connectivity and smart sensing technologies, today announced its financial results for the fourth quarter and year ended December 31, 2020.

Total revenue for the fourth quarter of 2020 was $28.1 million, a slight decrease of 1%, when compared to $28.3 million reported for the fourth quarter of 2019. Fourth quarter 2020 licensing and related revenue was $12.1 million, a decrease of 18%, when compared to $14.8 million reported for the same quarter a year ago. Royalty revenue for the fourth quarter of 2020 was a record high of $16.1 million, an increase of 19%, when compared to $13.5 million reported for the fourth quarter of 2019.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "We are very pleased to end the year with another excellent quarter, in both licensing and royalties. We concluded 21 licensing agreements, including a strategic and comprehensive agreement with a top tier smartphone OEM who will develop a range of CEVA-based connectivity chips to serve its smartphone and wireless accessories product lines. Our record high royalty revenue reflects a particularly strong quarter in smartphone shipments and continued traction in our base station and IoT product category, which grew 50% year over year."

Mr. Wertheizer continued: "Our organization worldwide showed tremendous resilience and determination to cope with the challenges the COVID-19 pandemic presented. Our licensing business had another record year as we grew our customer base in Wi-Fi, Bluetooth, 5G and automotive. Our annual royalty business also reached an all-time high, driven by 72% year-over-year growth in base station and IoT royalty revenues, to contribute $22.3 million. We continue to benefit from the expedited deployment of 5G base station and growing use of smart TV, laptops and other IoT devices. We entered 2021 with strong momentum in both our licensing and royalty businesses as our primary markets are expected to continue to expand the adoption of wireless connectivity and smart sensing technologies."

During the quarter, CEVA completed 21 license agreements. Five of the agreements were for smart sensing products and 16 for connectivity products with seven first-time customers of CEVA. Customers' target products include 5G smartphones, TWS earbuds, cellular IoT devices and a wide variety of other IoT devices. Geographically, eight of the deals signed were in China, six were in the U.S., four in APAC and three were in Europe.

GAAP net income for the fourth quarter of 2020 decreased to $0.6 million, compared to $3.1 million reported for the same period in 2019. GAAP diluted earnings per share for the fourth quarter of 2020 decreased to $0.03 from $0.14 a year ago. The fourth quarter 2020 financials included a $2 million tax expense due to withholding taxes which cannot be utilized in future years.

Non-GAAP net income and diluted earnings per share for the fourth quarter of 2020 were $4.7 million and $0.20, respectively, comparing the $6.8 million and $0.30 reported for the fourth quarter of 2019. Non-GAAP net income and diluted earnings per share for the fourth quarter of 2020 excluded: (a) equity-based compensation expense, net of taxes, of $3.4 million, and (b) the impact of the amortization of acquired intangible and other assets, net of taxes, of $0.7 million associated with the acquisition of the Hillcrest Labs business and investments in NB-IoT and Immervision technologies. Net income and diluted earnings per share for the fourth quarter of 2019 excluded: (a) equity-based compensation expense, net of taxes, of $2.8 million, and (b) the impact of the amortization of acquired intangible assets of $0.9 million associated with the acquisition of RivieraWaves and the Hillcrest Labs business, and investments in NB-IoT and Immervision technologies.

Full Year 2020 Review

Total revenue for 2020 was $100.3 million, an increase of 15%, when compared to $87.2 million reported for 2019. Licensing and related revenue for 2020 was a record $52.5 million, an increase of 10%, when compared to $47.9 million reported for 2019. Royalty revenue for 2020 was a record $47.8 million, representing an increase of 22%, as compared to $39.3 million reported for 2019.

U.S. GAAP net loss and diluted loss per share for 2020 were $2.4 million and $0.11, respectively, compared to U.S GAAP net income and diluted earnings per share of $0.0 million and $0.00, respectively reported for 2019.

Non-GAAP net income and diluted earnings per share for 2020 were $13.7 million and $0.60, respectively, representing an increase of 3% and 2%, respectively, over $13.4 million and $0.59 reported for 2019, respectively. Non-GAAP net income and diluted earnings per share for 2020 excluded (a) equity-based compensation expense, net of taxes, of $13.4 million, and (b) the impact of the amortization of acquired intangible assets, net of taxes, of $2.7 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 2019 excluded (a) equity-based compensation expense, net of taxes, of $10.1 million, (b) the impact of the amortization of acquired intangible assets of $2.3 million associated with the acquisitions of RivieraWaves and the Hillcrest Labs business, and the 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 extremely proud of our performance in 2020, highlighted by the numerous records achieved in the fourth quarter and the full year. These include record royalty revenue for the fourth quarter and the full year 2020 of $16.1 million and $47.8 million, respectively, generated from a record 484 million and 1.3 billion CEVA-powered devices, respectively. We also managed to deliver non-GAAP EPS of $0.60 for the full year, despite recent foreign exchange headwinds. At the end of the year, our cash and cash equivalent balances, marketable securities and bank deposits were approximately $160 million, with no debt."

CEVA Conference Call

On February 16, 2021, 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/984/39449. 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: 10151090) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on February 23, 2021. The replay will also be available at CEVA's web site www.ceva-dsp.com.

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.

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 https://www.ceva-dsp.com/ and follow us on Twitter, YouTube, Facebook, LinkedIn and Instagram.

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 optimism regarding the continued traction in CEVA's base station and IoT product category, benefits derived from the expedited deployment of 5G base station and growing use of smart TV, laptops and other IoT devices, as well as the strong momentum in CEVA's licensing and royalty businesses in 2021 as its primary markets are expected to continue to expand the adoption of wireless connectivity and smart sensing technologies. 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 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 maturation of the connectivity, IoT and 5G markets, 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

                                               
         CONSOLIDATED STATEMENTS OF INCOME - U.S. GAAP

                                        
            
           U.S. dollars in thousands, except per share data


                                                                                                                     Three months ended                 Year ended


                                                                                                                     December 31,                 December 31,


                                                                                                             2020    2019           2020     2019

                                                                                                                                           ---

                                                                                                                
      
              Unaudited




            Revenues:



            Licensing and related revenues                                                               $12,068 $14,806        $52,513  $47,890



            Royalties                                                                                     16,077  13,506         47,813   39,262






            Total revenues                                                                                28,145  28,312        100,326   87,152

                                                                                                                                           ---




            Cost of revenues                                                                               2,490   2,823         10,749   10,106

                                                                                                                                           ---




            Gross profit                                                                                  25,655  25,489         89,577   77,046

                                                                                                                                           ---




            Operating expenses:



            Research and development, net                                                                 16,315  14,250         62,010   52,843



            Sales and marketing                                                                            3,135   3,554         11,907   12,363



            General and administrative                                                                     3,223   3,481         14,116   11,841



            Amortization of intangible assets                                                                575     746          2,307    1,923





            Total operating expenses                                                                      23,248  22,031         90,340   78,970

                                                                                                                                           ---




            Operating income (loss)                                                                        2,407   3,458          (763) (1,924)



            Financial  income , net                                                                          595     992          3,284    3,291







            Income before taxes on income                                                                  3,002   4,450          2,521    1,367



             Income taxes                                                                                  2,367   1,388          4,900    1,339

                                                                                                                                           ---




            Net income (loss)                                                                               $635  $3,062       ($2,379)     $28

                                                                                                                                           ===




            Basic net income (loss) per share



                                                                                                            $0.03   $0.14        ($0.11)   $0.00



            Diluted net income (loss) per share                                                            $0.03   $0.14        ($0.11)   $0.00



            Weighted-average number of Common Stock
    used in computation of net income (loss)  per
    share (in thousands):



            Basic                                                                                         22,249  21,920         22,107   21,932



            Diluted                                                                                       22,911  22,373         22,107   22,323

                                                                                                                                           ===


                                   
              
                Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

                                  
              
                 
                U.S. Dollars in thousands, except per share amounts




                                                                                                                                        Three months ended                   Year ended


                                                                                                                                        December 31                 December 31,


                                                                                                                              2020      2019            2020              2019

                                                                                                                                                                        ---

                                                                                                                                    
          
                Unaudited






              
                GAAP net income (loss)                                                                            $635    $3,062        ($2,379)              $28




              Equity-based compensation expense included in                                                                   166       166             639               630
      cost of revenue



              Equity-based compensation expense included in                                                                 1,759     1,543           6,874             5,857
      research and development expenses



              Equity-based compensation expense included in                                                                   542       383           2,038             1,495
      sales and marketing expenses



              Equity-based compensation expense included in                                                                 1,099       779           4,085             2,736
      general and administrative expenses



              Income tax benefit related to equity-based                                                                    (196)    (101)          (256)            (574)
      compensation expenses



              Amortization of intangible assets, net of taxes,                                                                685       945           2,746             3,203
      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


                                                                                                                      
              ? 
          ?   
              ?        
           ?



              
                Non-GAAP net income                                                                             $4,690    $6,777         $13,747           $13,375

                                                                                                                                                                        ===






              GAAP weighted-average number of Common                                                                       22,911    22,373          22,107            22,323
      Stock used in computation of diluted net income
      per share (in thousands)





              Weighted-average number of shares related to                                                                    305       462             979               475
      outstanding stock-based awards (in thousands)

                                                                                                                                                                        ---


              Weighted-average number of Common Stock used                                                                 23,216    22,835          23,086            22,798
      in computation of diluted earnings per share,
      excluding the above (in thousands )





              
                GAAP diluted net income (loss) per share                                                         $0.03     $0.14         ($0.11)            $0.00



              Equity-based compensation expense, net of taxes                                                               $0.14     $0.12           $0.59             $0.45



              Amortization of intangible assets, net of taxes,                                                              $0.03     $0.04           $0.12             $0.14
      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


                                                                                                                      
              ? 
          ?   
              ?        
           ?




              
                Non-GAAP diluted net income per share                                                            $0.20     $0.30           $0.60             $0.59

                                                                                                                                                                        ===


                                                                 
         
                CEVA, INC. AND ITS SUBSIDIARIES

                                                                     
         CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                   
         
                (U.S. Dollars in thousands)


                                                                                                            
           
       December 31,  
        
        December 31,


                                                                                                                                 2020    
        
        2019 (*)



                                                                                                              
           
       Unaudited     
        
        Unaudited

                                                                                                                                                          ---


     
                ASSETS



     Current assets:



     Cash and cash equivalents                                                                                               $21,143                  $22,803



     Marketable securities and short term bank deposits                                                                      108,987                  121,782



     Trade receivables, net                                                                                                   14,765                   11,066



     Unbilled receivables                                                                                                     16,459                   17,241



     Prepaid expenses and other current assets                                                                                 6,205                    5,660




     Total current assets                                                                                                    167,559                  178,552




     Long-term assets:



     Bank deposits                                                                                                            29,529                    5,368



     Severance pay fund                                                                                                       10,535                    9,881



     Deferred tax assets                                                                                                      10,826                   10,605



     Property and equipment, net                                                                                               7,586                    7,879



     Operating lease right-of-use assets                                                                                       9,052                   11,066



     Goodwill                                                                                                                 51,070                   51,070



     Intangible assets, net                                                                                                   10,836                   13,424



     Other long term assets                                                                                                    9,959                    9,176




     Total assets                                                                                                           $306,952                 $297,021

                                                                                                                                                          ===




     
                LIABILITIES AND STOC
                KHOLDERS' EQUITY





     Current liabilities:



     Trade payables                                                                                                             $894                     $701



     Deferred revenues                                                                                                         2,434                    3,642



     Accrued expenses and other payables                                                                                      21,883                   19,642



     Operating lease liabilities                                                                                               2,969                    2,393



     Total current liabilities                                                                                                28,180                   26,378





     Long-term liabilities:



     Accrued severance pay                                                                                                    11,226                   10,551



     Operating lease liabilities                                                                                               5,772                    8,273



     Other accrued liabilities                                                                                                   885                      662




     Total liabilities                                                                                                        46,063                   45,864






     Stockholders' equity:



     Common stock:                                                                                                                22                       22



     Additional paid in-capital                                                                                              233,172                  228,005



     Treasury stock                                                                                                         (30,133)                (39,390)



     Accumulated other comprehensive income                                                                                      478                       94



     Retained earnings                                                                                                        57,350                   62,426




     Total stockholders' equity                                                                                              260,889                  251,157




     Total liabilities and stockholders' equity                                                                             $306,952                 $297,021

                                                                                                                                                          ===




     (*) Derived from audited financial statements

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SOURCE CEVA, Inc.