Ceva, Inc. Announces Fourth Quarter and Full Year 2023 Financial Results
- Royalty revenue growth of 13% year-over-year in Q4
- Record cellular IoT royalty revenues and shipments in full year
- Successful strategic license agreements for Wi-Fi 6 and AI-enabling software
- Strong demand for IP with 53 license agreements signed in the full year
- Total revenue decreased by 20% in Q4 compared to the previous year
- Licensing and related revenue decreased by 39% in Q4 compared to the previous year
- GAAP net loss for Q4 was $8.1 million
- Non-GAAP net income and diluted income per share decreased in Q4 compared to the previous year
- Total revenue for 2023 decreased by 19% compared to 2022
- Licensing and related revenue for 2023 decreased by 23% compared to 2022
Insights
The reported quarterly revenue of $24.2 million, which aligns with expectations and a GAAP loss per share of 34c contrasted with a non-GAAP diluted EPS of 10c, indicates a mixed financial performance for Ceva, Inc. The 13% year-over-year increase in royalty revenue suggests resilience in the company's royalty streams, particularly noteworthy given the broader market challenges. The growth in royalty revenue for the third consecutive quarter underscores a steady demand for Ceva's IP in smart edge devices.
The strategic license agreements with a U.S. based MCU leader and a global automotive semiconductor leader may signal a diversification of revenue sources and a potential for future earnings stability. However, the 20% year-over-year decrease in total revenue and the 23% decrease in licensing and related revenue raise concerns about the company's licensing business. Investors should closely monitor the company's ability to convert its technology portfolio into consistent licensing revenue.
The non-GAAP metrics, which exclude certain expenses, paint a more favorable picture of profitability than GAAP metrics. This discrepancy highlights the importance of understanding the nature of these adjustments and their implications for assessing the company's true financial health.
The emphasis on Ceva's diversified technology portfolio and the significant number of devices shipped powered by Ceva's technology (1.6 billion units) reflect the company's strong positioning in the smart edge market. The record shipments in cellular IoT devices and the growth in royalty revenue from these segments suggest a robust demand for IoT applications, which is a rapidly growing market segment. The expansion of the Wi-Fi 6 customer base and the introduction of new products, such as the NPU family for edge AI, indicate that Ceva is innovating and adapting to market trends.
However, the decrease in total revenue and licensing revenue year-over-year needs to be contextualized within broader industry trends, such as the potential saturation in certain markets or increased competition. The company's strategic focus on automotive, consumer, industrial and infrastructure markets could be a response to these challenges, aiming to capture emerging opportunities in these sectors.
The strategic license agreements for Wi-Fi 6 and AI-enabling software in automotive semiconductors reflect Ceva's commitment to staying at the forefront of technology trends. Wi-Fi 6 is the latest generation of Wi-Fi, offering improved speed, efficiency and performance, especially in crowded networks. Ceva's expansion into this area, particularly with a U.S. based MCU leader, suggests an alignment with current technological advancements and an opportunity to capture market share in the industrial and consumer IoT spaces.
The focus on enabling smart edge devices to connect, sense and infer data is indicative of the growing importance of AI and IoT in daily operations and consumer products. The acquisition of spatial audio software from VisiSonics could enhance Ceva's offerings in the audio market, particularly for hearables and wearables, which is a growing consumer segment. The success of these initiatives will depend on the continued relevance and competitiveness of Ceva's IP in a rapidly evolving tech landscape.
- Q4 – Total revenue of
- Q4 – Royalty revenue of
- Q4 – Strategic license agreements signed with a
- Full year – 1.6 billion Ceva-powered smart edge devices shipped, equivalent to 50 devices sold every second, worldwide
- Full year – record cellular IoT royalty revenues and shipments, up
- Full year – Strong demand for diverse portfolio of IP for connect, sense and infer use cases, with 53 license agreements signed, including 16 first time customers, 10 OEMs and continued expansion of Wi-Fi 6 customer base for industrial and consumer markets
Amir Panush, Chief Executive Officer of Ceva, commented: "Our fourth quarter revenues were in line with our expectations, despite the challenges in the markets we served. I am proud of how we managed to significantly improve our profitability and earnings power through our focus on operating efficiency. Our royalty business grew for the third consecutive quarter and returned to year-over-year growth, driven by a recovery in mobile and strength across consumer IoT and industrial IoT end markets. Although our licensing revenue fell short of our expectations in the quarter, we continue to see myriad licensing opportunities for our diversified technology portfolio and expect to enhance our range of products as we push forward in developing new AI-related offerings."
Mr. Panush continued: "Looking back on my first year as CEO of Ceva, we have made significant progress in returning the Company to a pure IP licensing and royalty business model, where we see the greatest potential for success. We have established Ceva as the trusted partner for semiconductor companies and OEMs who need our IP to enable three fundamental use cases required by smart edge devices – the ability to connect, sense and infer data, more reliably and efficiently. Our wireless communications market leadership continues to go from strength to strength as illustrated by the 1.2 billion smart edge IoT devices and more than 280 million smartphones wirelessly connected by our IP in 2023 alone. In sense and inference, we have bolstered our product offerings during the year with the introduction of our NPU family for edge AI and through the acquisition of spatial audio software from VisiSonics. Overall, our leading-edge IP portfolio, combined with our focus on execution and delivering profitable growth, will position Ceva well to help our customers succeed and drive shareholder value."
Fourth Quarter 2023 Review
Total revenue for the fourth quarter of 2023 was
During the quarter, seventeen IP licensing agreements were concluded, targeting a wide range of end markets and applications, including Wi-Fi 6 for industrial IoT, consumer devices and access points, Bluetooth for IoT and medical-grade hearables, 5G RedCap and cellular IoT modems, audio for hearables and wearables, and AI for automotive ADAS. Two of the deals signed were with OEMs and three were first-time customers.
GAAP gross margin for the fourth quarter of 2023 was
GAAP net profit including the discontinued operation for the fourth quarter of 2023 was
Non-GAAP gross margin for the fourth quarter of 2023 was
Non-GAAP net income including the discontinued operation for the fourth quarter of 2023 was
Full Year 2023 Review
Total revenue for 2023 was
Yaniv Arieli, Chief Financial Officer of Ceva, added: "We are pleased to finish 2023 with our highest royalty revenue quarter of the year and non-GAAP earnings per share that exceeded our expectations. 2023 overall was a transformational year for Ceva, as we realigned our resources to focus on the key growth markets of automotive, consumer, industrial, and infrastructure. As we enter 2024, we are laser-focused on profitable growth and remaining agile to deal with any challenges. In addition, following the divestment of the non-core Intrinsix design services business, our balance sheet has been significantly bolstered, which ensures we are well positioned to pursue non-organic investments that can accelerate the company's growth in the coming years."
In 2023, 53 licensing deals were concluded, including 10 with OEMs and 13 for Wi-Fi 6 and Wi-Fi 7 IP. More than 1.6 billion Ceva-powered smart edge devices were shipped, including record cellular IoT device shipments of 130 million units, more than 950 million Bluetooth devices, of which more than 100 million were Wi-Fi + Bluetooth combo devices.
GAAP operating loss for 2023 was
GAAP net loss including the discontinued operation for 2023 was
Non-GAAP operating income for 2023 was
Ceva Conference Call
On February 14, 2024, Ceva management will conduct a conference call at 8:30 a.m. Eastern Time to discuss the operating performance for the quarter and review the full year.
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/6MBXkYD5bVD. Please go to the web site at least fifteen minutes prior to the call to register.
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: 1753733) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on February 21, 2024. The replay will also be available at Ceva's web site www.ceva-ip.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 interest in and licensing opportunities for Ceva's diversified technology portfolio, expectations regarding enhancing Ceva's range of products and AI-related offerings, Ceva's positioning for driving shareholder value, Ceva's focus on profitable growth and agility to deal with challenges, and positioning to pursue non-organic investments that can accelerate the company's growth in the coming years. The risks, uncertainties and assumptions that could cause differing Ceva results include: the effect of intense industry competition; the ability of Ceva's technologies and products incorporating Ceva's technologies to achieve market acceptance; Ceva's ability to meet changing needs of end-users and evolving market demands; the cyclical nature of and general economic conditions in the semiconductor industry; Ceva's ability to diversify its royalty streams and license revenues; Ceva's ability to continue to generate significant revenues from the handset baseband market and to penetrate new markets; instability and disruptions related to the ongoing
Non-GAAP Financial Measures
Non-GAAP gross margin for the fourth quarter of 2023 excluded: (a) equity-based compensation expenses of
Non-GAAP operating income for the fourth quarter of 2023 excluded: (a) equity-based compensation expenses of
Non-GAAP net income and diluted income per share for the fourth quarter of 2023 excluded: (a) equity-based compensation expenses of
Non-GAAP gross margin 2023 excluded: (a) equity-based compensation expenses of
Non-GAAP operating income for 2023 excluded (a) equity-based compensation expenses of
Non-GAAP net income and diluted earnings per share for 2023 excluded (a) equity-based compensation expenses of
Non-GAAP net income and diluted earnings per share for 2022 excluded (a) equity-based compensation expenses of
Non-GAAP net income with the discontinued operation for 2023 was
Non-GAAP diluted income per share with the disconnected operation for 2023 was
About Ceva, Inc.
At Ceva, we are passionate about bringing new levels of innovation to the smart edge. Our wireless communications, sensing and Edge AI technologies are at the heart of some of today's most advanced smart edge products. From Bluetooth connectivity, Wi-Fi, UWB and 5G platform IP for ubiquitous, robust communications, to scalable Edge AI NPU IPs, sensor fusion processors and embedded application software that make devices smarter, we have the broadest portfolio of IP to connect, sense and infer data more reliably and efficiently. We deliver differentiated solutions that combine outstanding performance at ultra-low power within a very small silicon footprint. Our goal is simple – to deliver the silicon and software IP to enable a smarter, safer, and more interconnected world. This philosophy is in practice today, with Ceva powering more than 17 billion of the world's most innovative smart edge products from AI-infused smartwatches, IoT devices and wearables to autonomous vehicles and 5G mobile networks.
Our headquarters are in
Ceva: Powering the Smart Edge™
Visit us at www.ceva-ip.com and follow us on LinkedIn, X, YouTube, Facebook, and Instagram.
Ceva, Inc. AND ITS SUBSIDIARIES | ||||
Three months ended | Twelve months ended | |||
December 31, | December 31, | |||
2023 | 2022 | 2023 | 2022 | |
Unaudited | Unaudited | Unaudited | Unaudited | |
Revenues: | ||||
Licensing and related revenues | $ 11,816 | $ 19,423 | $ 57,555 | $ 75,194 |
Royalties | 12,346 | 10,927 | 39,864 | 45,389 |
Total revenues | 24,162 | 30,350 | 97,419 | 120,583 |
Cost of revenues | 2,259 | 3,294 | 11,648 | 15,131 |
Gross profit | 21,903 | 27,056 | 85,771 | 105,452 |
Operating expenses: | ||||
Research and development, net | 18,145 | 18,047 | 72,689 | 70,317 |
Sales and marketing | 2,829 | 3,461 | 11,042 | 11,475 |
General and administrative | 3,567 | 4,240 | 14,913 | 14,183 |
Amortization of intangible assets | 149 | 299 | 594 | 2,025 |
Impairment of assets | - | - | - | 3,556 |
Total operating expenses | 24,690 | 26,047 | 99,238 | 101,556 |
Operating income (loss) | (2,787) | 1,009 | (13,467) | 3,896 |
Financial income, net | 1,767 | 2,009 | 5,264 | 2,812 |
Remeasurement of marketable equity securities | 74 | (240) | (2) | (2,511) |
Income (loss) before taxes on income | (946) | 2,778 | (8,205) | 4,197 |
Taxes on Income | 7,152 | (1,741) | 10,232 | 18,075 |
Net income (loss) from continuing operations | (8,098) | 4,519 | (18,437) | (13,878) |
Net income (loss) from discontinued operation | 11,867 | (2,579) | 6,559 | (9,305) |
Net Income (loss) | $ 3,769 | $ 1,940 | $ (11,878) | $ (23,183) |
Basic and diluted net income (loss) per share: | ||||
Continuing operations | (0.34) | 0.19 | (0.79) | (0.60) |
Discontinued operation | 0.50 | (0.11) | 0.28 | (0.40) |
Basic and diluted net income (loss) per share | $ 0.16 | $ 0.08 | $ (0.51) | $ (1.00) |
Weighted-average shares used to compute net income | ||||
Basic | 23,518 | 23,197 | 23,484 | 23,172 |
Diluted | 23,946 | 23,406 | 23,484 | 23,172 |
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures | ||||
Three months ended | Twelve months ended | |||
December 31, | December 31, | |||
2023 | 2022 | 2023 | 2022 | |
Unaudited | Unaudited | Unaudited | Unaudited | |
GAAP net income (loss) | $ 3,769 | $ 1,940 | $ (11,878) | $ (23,183) |
Equity-based compensation expense included in cost of revenues | 190 | 176 | 826 | 687 |
Equity-based compensation expense included in research and | 2,430 | 2,271 | 9,133 | 8,259 |
Equity-based compensation expense included in sales and | 471 | 473 | 1,776 | 1,503 |
Equity-based compensation expense included in general and | 1,008 | 884 | 3,795 | 2,888 |
Amortization, Impairment and Write-off of intangible assets | 278 | 370 | 1,031 | 8,163 |
Costs associated with business acquisitions | 356 | - | 551 | - |
(Income) loss associated with the remeasurement of marketable | (74) | 240 | 2 | 2,511 |
Impairment cost associated with close of an office | - | 318 | - | 318 |
Retirement expenses of executives | - | 1,271 | - | 1,271 |
Income tax expense as a result of a write off of a deferred tax asset |
- |
- |
- |
15,323 |
Income tax expenses, an impact as a result of the completion of a |
1,302 |
- |
1,302 |
- |
Adjustment related to US tax reform rule 174 | 4,460 | (3,484) | 4,460 | (3,484) |
Non-GAAP from discontinued operation | (11,812) | 1,143 | (8,579) | 4,579 |
Non-GAAP net income | $ 5,602 | $ 2,419 | $ 18,835 | |
GAAP weighted-average number of Common Stock used in | 23,518 | 23,406 | 23,484 | 23,172 |
Weighted-average number of shares related to outstanding stock- | 1,271 | 684 | 1,197 | 839 |
Weighted-average number of Common Stock used in computation | 24,789 | 24,090 | 24,681 | 24,011 |
GAAP diluted income (loss) per share | $ 0.16 | $ 0.08 | $ (0.51) | $ (1.00) |
Equity-based compensation expense | $ 0.17 | $ 0.16 | $ 0.66 | $ 0.57 |
Amortization, Impairment and Write-off of intangible assets | $ 0.01 | $ 0.02 | $ 0.04 | $ 0.35 |
Impairment cost associated with close of an office | - | $ 0.01 | - | $ 0.01 |
Costs associated with business acquisitions | $ 0.02 | - | $ 0.02 | - |
Income associated with the remeasurement of marketable equity | - | $ 0.01 | - | $ 0.09 |
Retirement of executives
| - | $ 0.05 | - | $ 0.05 |
Adjustment related to income tax expenses | $ 0.24 | ($ 0.15) | $ 0.25 | $ 0.51 |
Non-GAAP from discontinued operation | ($ 0.50) | $ 0.05 | ($ 0.36) | $ 0.20 |
Non-GAAP diluted earnings per share | $ 0.10 | $ 0.23 | $ 0.10 | $ 0.78 |
Three months ended | Twelve months ended | |||
December 31, | December 31, | |||
2023 | 2022 | 2023 | 2022 | |
Unaudited | Unaudited | Unaudited | Unaudited | |
GAAP Operating Income (loss) | $ (2,787) | $ 1,009 | $ (13,467) | $ 3,896 |
Equity-based compensation expense included in cost of | 190 | 176 | 826 | 687 |
Equity-based compensation expense included in | 2,430 | 2,271 | 9,133 | 8,259 |
Equity-based compensation expense included in sales | 471 | 473 | 1,776 | 1,503 |
Equity-based compensation expense included in | 1,008 | 884 | 3,795 | 2,888 |
Amortization, Impairment and Write-off of intangible | 278 | 370 | 1,031 | 8,163 |
Costs associated with the Business acquisition | 356 | - | 551 | - |
Retirement of executives | - | 1,271 | - | 1,271 |
Impairment cost associated with close of an office | - | 318 | - | 318 |
Total non-GAAP Operating Income | $ 1,946 | $ 6,772 | $ 3,645 | $ 26,985 |
Three months ended | Twelve months ended | |||
December 31, | December 31, | |||
2023 | 2022 | 2023 | 2022 | |
Unaudited | Unaudited | Unaudited | Unaudited | |
GAAP Gross Profit | $ 21,903 | $ 27,056 | $ 85,771 | $ 105,452 |
GAAP Gross Margin | 91 % | 89 % | 88 % | 87 % |
Equity-based compensation expense included in cost of | 190 | 176 | 826 | 687 |
Amortization, Impairment and Write-off of intangible | 129 | 71 | 437 | 2,582 |
Total Non-GAAP Gross profit | 22,222 | 27,303 | 87,034 | 108,721 |
Non-GAAP Gross Margin | 92 % | 90 % | 89 % | 90 % |
Ceva, Inc. AND ITS SUBSIDIARIES | |||
December 31, | December 31, | ||
2023 | 2022 (*) | ||
Unaudited | Unaudited | ||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 23,287 | $ 20,116 | |
Marketable securities and short-term bank deposits | 143,251 | 118,194 | |
Trade receivables, net | 8,433 | 11,136 | |
Unbilled receivables | 21,874 | 18,694 | |
Prepaid expenses and other current assets | 8,461 | 6,789 | |
Current assets of discontinued operation | - | 2,696 | |
Total current assets | 205,306 | 177,625 | |
Long-term assets: | |||
Bank deposits | - | 8,205 | |
Severance pay fund | 7,070 | 8,475 | |
Deferred tax assets, net | 5,674 | 8,484 | |
Property and equipment, net | 6,732 | 6,624 | |
Operating lease right-of-use assets | 6,978 | 8,485 | |
Investment in marketable equity securities | 406 | 408 | |
Goodwill | 58,308 | 56,794 | |
Intangible assets, net | 2,967 | 2,392 | |
Other long-term assets | 10,644 | 6,291 | |
Long-term assets of discontinued operation | - | 24,659 | |
Total assets | $ 304,085 | $ 308,442 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Trade payables | $ 1,154 | $ 1,859 | |
Deferred revenues | 3,018 | 3,098 | |
Accrued expenses and other payables | 20,937 | 24,049 | |
Operating lease liabilities | 2,513 | 2,680 | |
Current liabilities of discontinued operation | - | 1,592 | |
Total current liabilities | 27,622 | 33,278 | |
Long-term liabilities: | |||
Accrued severance pay | 7,524 | 9,064 | |
Operating lease liabilities | 3,943 | 5,207 | |
Other accrued liabilities | 655 | 526 | |
Long-term liabilities of discontinued operation | - | 1,496 | |
Total liabilities | 39,744 | 49,571 | |
Stockholders' equity: | |||
Common stock | 23 | 23 | |
Additional paid in-capital | 252,100 | 242,841 | |
Treasury stock | (5,620) | (9,904) | |
Accumulated other comprehensive loss | (2,329) | (6,249) | |
Retained earnings | 20,167 | 32,160 | |
Total stockholders' equity | 264,341 | 258,871 | |
Total liabilities and stockholders' equity | $ 304,085 | $ 308,442 | |
(*) Derived from audited financial statements. |
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SOURCE Ceva, Inc.
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