PR Newswire | Aug 10, 2020 07:01AM EDT

08/10 06:00 CDT

CEVA, Inc. Announces Second Quarter 2020 Financial Results- Total revenue of $23.6 million, up 28% year-over-year, record high for second quarter revenue- Royalty revenue of $10.1 million, up 33% year-over-year, with base station & IoT royalty contribution of $4.3 million, comparable to prior all-time record high MOUNTAIN VIEW, Calif., Aug. 10, 2020

MOUNTAIN VIEW, Calif., Aug. 10, 2020 /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, 2020.

Total revenue for the second quarter of 2020 was $23.6 million, a 28% increase compared to $18.4 million reported for the second quarter of 2019. Second quarter 2020 licensing and related revenue was $13.5 million, an increase of 25% when compared to $10.8 million reported for the same quarter a year ago. Royalty revenue for the second quarter of 2020 was $10.1 million, an increase of 33% when compared to $7.6 million reported for the second quarter of 2019.

Eight license agreements were concluded during the quarter, of which three were for smart sensing products and five were for connectivity products. One of the agreements was with a first-time customer. Customers' target markets include automotive powertrain, wearables, true wireless stereo earbuds and a range of IoT devices. Geographically, seven of the deals signed were in China, and one was in the U.S.

Gideon Wertheizer, CEO of CEVA, stated: "We produced our highest second quarter revenue on record despite the uncertain environment created by the COVID-19 pandemic. We are consistently growing our licensee base and expanding our market reach into new lucrative areas such as automotive powertrain where we concluded a key design win this quarter. Royalty revenues came in ahead of our expectations, driven by revenues from our base station and IoT product line that is up 77% year-over-year to $4.3 million. We continuously monitor developments relating to the spread of the pandemic and U.S. tensions with China, and remain focused on serving our customers and executing on our growth strategy. The dedication and efficiency of our employees, combined with our diverse portfolio of technology, continue to provide us with the foundation to go from strength to strength as a leader in our industry."

GAAP net loss for the second quarter of 2020 was $1.1 million, as compared to a GAAP net loss of $1.5 million reported for the same period in 2019. GAAP diluted loss per share for the second quarter of 2020 was ($0.05), as compared to a GAAP diluted loss per share of ($0.07) for the same period in 2019.

Non-GAAP net income and diluted earnings per share for the second quarter of 2020 increased 130% and 140% respectively, to $2.9 million and $0.12, respectively, from $1.2 million and $0.05 reported for the second quarter of 2019. Non-GAAP net income and diluted earnings per share for the second quarter of 2020 excluded: (a) equity-based compensation expenses, net of taxes, of $3.3 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 second quarter of 2019 excluded: (a) equity-based compensation expenses, 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 an investment in NB-IoT technologies.

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "Our business continued to show strength in the second quarter, as we managed to exceed all key financial metrics for the quarter and post 28% revenue growth year-over-year. Of note, our Bluetooth and Wi-Fi royalties reached all-time record highs as a result of many new IoT production ramp-ups. With economic uncertainty still persisting, we remain prudent with regards to expenses and maintain a strong balance sheet. Our business generated $12.6 million of cash from operations in the first half of 2020, taking our cash and cash equivalent balances, marketable securities and bank deposits to approximately $157 million at the end of the quarter, with no debt."

CEVA Conference CallOn August 10, 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/984/35676. 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: 10146084) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on August 24, 2020. The replay will also be available at CEVA's web site www.ceva-dsp.com.

Forward Looking StatementThis 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 (i) we are consistently growing our licensee base and expanding our market reach into new lucrative areas; (ii) notwithstanding the pandemic and U.S. tensions with China, the company is focused on serving customers and executing on its growth strategy ; and (iii) the dedication and efficiency of CEVA's employees and diverse portfolio of technology provide the foundation to go from strength to strength as a leader in the industry. 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 shelter-in-place and other 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 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-M) 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, 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,

2020 2019 2020 2019

Unaudited Unaudited Unaudited Unaudited

Revenues:

Licensing and related revenues $ $ 10,804 $ $ 21,815 13,530 28,025

Royalties 10,076 7,596 19,196 13,554

Total revenues 23,606 18,400 47,221 35,369

Cost of revenues 3,005 2,493 5,756 4,516

Gross profit 20,601 15,907 41,465 30,853

Operating expenses:

Research and development, net 14,979 12,390 30,092 24,720

Sales and marketing 2,893 2,956 6,061 5,977

General and administrative 3,663 2,534 7,327 4,851

Amortization of intangible assets 575 210 1,157 420

Total operating expenses 22,110 18,090 44,637 35,968

Operating loss (1,509) (2,183) (3,172) (5,115)

Financial income, net 838 896 1,669 1,696

Loss before taxes on income (671) (1,287) (1,503) (3,419)

Taxes on income 419 225 772 390

Net loss $ $ $ $ (1,090) (1,512) (2,275) (3,809)

Basic and diluted net loss per share ($0.05) ($0.07) ($0.10) ($0.17)

Weighted-average shares used to computenet loss per share (in thousands):

Basic 22,017 21,936 22,006 21,927

Diluted 22,017 21,936 22,006 21,927

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,

2020 2019 2020 2019

Unaudited Unaudited Unaudited Unaudited

GAAP net loss $ $ (1,512) $ $ (3,809) (1,090) (2,275)

Equity-based compensation expense 156 160 314 296included in cost of revenues

Equity-based compensation expenseincluded in research and development 1,722 1,458 3,345 2,820expenses

Equity-based compensation expenseincluded in sales and marketing 512 394 963 750expenses

Equity-based compensation expenseincluded in general and administrative 1,027 667 1,902 1,229expenses

Income tax benefit related to (135) (207) (184) (344)equity-based compensation expenses

Amortization of intangible assets, netof taxes, related to acquisitions of RivieraWaves and Hillcrest Labsbusiness, investments in NB-IoT and 684 289 1,377 578Immervision technologies

Non-GAAP net income $ 2,876 $ 1,249 $ 5,442 $ 1,520

GAAP weighted-average number of CommonStock used in computation of diluted 22,017 21,936 21,927net loss per share (in thousands) 22,006

Weighted-average number of shares related to outstanding stock-based 1,015 837 805awards (in thousands) 973

Weighted-average number of Common Stock used in computation of diluted earnings per share, excluding the above (in thousands) 23,032 22,773 22,732 22,979

GAAP diluted loss per share ($ 0.05) ($ 0.07) ($ 0.10) ($ 0.17)

Equity-based compensation expense, net $ 0.14 $ 0.11 $ 0.28 $ 0.21of taxes

Amortization of intangible assets, netof taxes, related to acquisitions ofRivieraWaves and Hillcrest Labs business, investments in NB-IoT and Immervision technologies $ 0.03 $ 0.01 $ 0.03 $ 0.06



Non-GAAP diluted earnings per share $ 0.12 $ 0.05 $ 0.24 $ 0.07

CEVA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS



(U.S. Dollars in thousands)

June 30, December 31,

2020 2019 (*)

Unaudited Unaudited

ASSETS

Current assets:

Cash and cash equivalents $ 29,979 $ 22,803

Marketable securities and short-term bank 126,131 121,782deposits

Trade receivables, net 7,055 11,066

Unbilled receivables 12,726 17,241

Prepaid expenses and other current assets 6,585 5,660

Total current assets 182,476 178,552

Long-term assets:

Bank deposits 1,336 5,368

Severance pay fund 9,697 9,881

Deferred tax assets, net 13,068 10,605

Property and equipment, net 7,843 7,879

Operating lease right-of-use assets 10,260 11,066

Goodwill 51,070 51,070

Intangible assets, net 12,126 13,424

Other long-term assets 8,430 9,176

Total assets $ 296,306 $ 297,021

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Trade payables $ $ 701 1,290

Deferred revenues 3,821 3,642

Accrued expenses and other payables 3,227 3,660

Accrued payroll and related benefits 14,405 15,894

Taxes payable 103 88

Operating lease liabilities 2,232 2,393

Total current liabilities 25,078 26,378

Long-term liabilities:

Accrued severance pay 10,541 10,551

Operating lease liabilities 7,547 8,273

Other accrued liabilities 759 662

Total liabilities 43,925 45,864

Stockholders' equity:

Common stock 22 22

Additional paid in-capital 228,494 228,005

Treasury stock (35,197) (39,390)

Accumulated other comprehensive income 433 94

Retained earnings 58,629 62,426

Total stockholders' equity 252,381 251,157

Total liabilities and stockholders' equity $ 296,306 $ 297,021

(*) Derived from audited financial statements

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SOURCE CEVA, Inc.