Form 8-K CEVA INC For: Aug 09

Exhibit 99.1

CEVA, Inc. Announces Second Quarter 2022 Financial Results

Rockville, MD, August 9, 2022 – CEVA, Inc. (NASDAQ: CEVA), the leading licensor of wireless connectivity and smart sensing technologies and co-creation solutions, today announced its financial results for the second quarter ended June 30, 2022.

Total revenue for the second quarter of 2022 was $33.2 million, a 9% increase compared to $30.5 million reported for the second quarter of 2021. Second quarter 2022 licensing, non-recurring engineering (NRE) and related revenue was $22.1 million, an increase of 42% when compared to $15.5 million reported for the same quarter a year ago. Royalty revenue for the second quarter of 2022 was $11.1 million, a decrease of 26% when compared to $14.9 million reported for the second quarter a year ago. Second quarter 2021 royalty revenue included revenue of approximately $3.3 million following the resolution of a disagreement on royalty rates with a customer. Carving out the $3.3 million amount, royalty revenue for the second quarter of 2022 was down 4% when compared to the second quarter of 2021.

During the quarter, twenty-two IP license and NRE agreements were concluded, targeting a wide variety of smart and connected markets, including Wi-Fi 6 enabled-IoT devices, AI-driven sensors, wireless audio and satellite communications. Five of the agreements were with first-time customers. Geographically, eleven of the deals signed were in China, five in the U.S., three in APAC, and three in Europe.

Gideon Wertheizer, CEO of CEVA, stated: “We delivered solid second quarter results against a challenging macroeconomic backdrop. Our wireless connectivity IP continues to drive our licensing business, as it is a cornerstone of the IoT market. We continue to capitalize on our strength in wireless to make inroads to a new customer base and add value via our co-creation business proposition. In royalties, our base station & IoT category was $7 million, highlighting our resilience, as 5G RAN rollout in China and the rest of the world moves forward and our Bluetooth, Wi-Fi and cellular IoT customers leverage our IP to gain market share.”

GAAP operating loss for the second quarter of 2022 was $0.3 million, as compared to a GAAP operating income of $1.6 million for the same period in 2021. GAAP net loss for the second quarter of 2022 was $1.1 million, as compared to GAAP net income of $0.3 million reported for the same period in 2021. GAAP diluted loss per share for the second quarter of 2022 was $0.05, as compared to a GAAP diluted income per share of $0.01 for the same period in 2021.

Non-GAAP operating income for the second quarter of 2022 was $4.6 million compared to $6.3 million reported for the second quarter of 2021. Non-GAAP net income and diluted earnings per share for the second quarter of 2022 were $4.3 million and $0.18, respectively, and $5.1 million and $0.22 reported for the second quarter of 2021.

Non-GAAP operating income for the second quarter of 2022 excluded: (a) equity-based compensation expenses of $3.3 million, (b) the impact of the amortization of acquired intangibles of $1.3 million associated with the acquisition of the Intrinsix and Hillcrest Labs businesses and investments in NB-IoT and Immervision technologies, and (c) $0.3 million of costs associated with the Intrinsix acquisition. Non-GAAP operating income for the second quarter of 2021 excluded: (a) equity-based compensation expenses of $2.9 million, (b) the impact of the amortization of acquired intangibles of $0.9 million associated with the acquisition of the Intrinsix and Hillcrest Labs businesses and investments in NB-IoT and Immervision technologies, and (c) $1.0 million of costs associated with the Intrinsix acquisition.

Non-GAAP net income and diluted EPS for the second quarter of 2022 excluded: (a) equity-based compensation expenses of $3.3 million, (b) the impact of the amortization of acquired intangibles of $1.3 million associated with the acquisition of the Intrinsix and Hillcrest Labs businesses and investments in NB-IoT and Immervision technologies, (c) $0.3 million of costs associated with the Intrinsix acquisition and (d) $0.5 million loss, net of taxes, associated with the remeasurement of marketable equity securities. Net income and diluted EPS for the second quarter of 2021 excluded: (a) equity-based compensation expenses of $2.9 million, (b) the impact of the amortization of acquired intangibles of $0.9 million associated with the acquisition of the Intrinsix and Hillcrest Labs businesses and investments in NB-IoT and Immervision technologies, and (c) $1.0 million of costs associated with the Intrinsix acquisition.

Yaniv Arieli, Chief Financial Officer of CEVA, stated: “Forty-two percent year-over-year growth in licensing, NRE and related revenues in the second quarter reflects our strength in the wireless space and the potential for further royalty revenue growth, as these new customers reach production. During the quarter, the company repurchased approximately $4.5 million of its common stock under its existing share repurchase program and ended the quarter with cash and cash equivalent balances, marketable securities and bank deposits of approximately $146 million.”

CEVA Conference Call

On August 9, 2022, 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:

The conference call will also be available live via webcast at the following link: https://app.webinar.net/Wq3Dd84dpw6. 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: 6812163) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on August 16, 2022. 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 regarding the Company’s wireless connectivity IP driving its licensing business and the Company’s ability to capitalize on strength in wireless to make inroads to a new customer base and add value via the Company’s co-creation business proposition and Mr. Arieli’s statements regarding the potential for future royalty revenue growth. 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 the base station and IoT 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, including supply chain issues as a result of COVID-19 and other factors, 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; our ability to successfully integrate Intrinsix into our business; 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 and co-creation solutions for a smarter, safer, connected world. We provide Digital Signal Processors, AI engines, wireless platforms, cryptography cores and complementary software for sensor fusion, image enhancement, computer vision, voice input and artificial intelligence. These technologies are offered in combination with our Intrinsix IP integration services, helping our customers address their most complex and time-critical integrated circuit design projects. Leveraging our technologies and chip design skills, many of the world’s leading semiconductors, system companies and OEMs create power-efficient, intelligent, secure and connected devices for a range of end markets, including mobile, consumer, automotive, robotics, industrial, aerospace & defense and IoT.

Our DSP-based solutions include platforms for 5G baseband processing in mobile, IoT and infrastructure, 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 sensor fusion, our Hillcrest Labs sensor processing technologies provide a broad range of sensor fusion software and inertial measurement unit (“IMU”) solutions for markets including hearables, wearables, AR/VR, PC, robotics, remote controls and IoT. For wireless IoT, our platforms for Bluetooth (low energy and dual mode), Wi-Fi 4/5/6 (802.11n/ac/ax), Ultra-wideband (UWB), NB-IoT and GNSS are the most broadly licensed connectivity platforms in the industry.

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

For More Information Contact:

CEVA, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) – U.S. GAAP

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

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

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

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

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

CEVA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

(*) Derived from audited financial statements

Exhibit 99.2

CEVA, Inc. Q2 2022 Financial Results Conference Call - Prepared Remarks:: August 9, 2022

CEVA, INC.

Second Quarter 2022 Financial Results Conference Call

Prepared Remarks of Gideon Wertheizer, Chief Executive Officer and
Yaniv Arieli, Chief Financial Officer

August 9, 2022

8:30 A.M. Eastern

Good morning everyone and welcome to CEVA’s second quarter 2022 earnings conference call. I’m joined today by Gideon Wertheizer, Chief Executive Officer, and Yaniv Arieli, Chief Financial Officer of CEVA. Gideon will cover the business aspects and highlights from the second quarter and provide general qualitative data. Yaniv will then cover the financial results for the second quarter and also provide guidance for the third quarter and full year 2022.

I will start with the forward-looking statements.          

Forward Looking Statements

Please note that today’s discussion 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 market trends and dynamics, including anticipated growth in the wireless component of the global semiconductor market, our and our customers’ gains in market share and the future of 5G and Wi-Fi; our market position and strategy, including the strength of our technology offerings and efforts with respect to our co-creation business proposition; impacts of global economic uncertainty and COVID on our business, including royalties; demand for and benefits of our technologies; and expectations and financial guidance regarding future performance, including for the full year and third quarter of 2022. For information on the factors that could cause a difference in our results, please refer to our filings with the Securities and Exchange Commission. These include: the scope and duration of the pandemic, including continued restrictions in China; the extent and length of the restrictions associated with the pandemic and the impact on customers, consumer demand and the global economy generally; the ability of CEVA’s IPs for smarter, connected devices to continue to be strong growth drivers for us; our success in penetrating new markets and maintaining our market position in existing markets; the ability of new products incorporating our technologies to achieve market acceptance; the speed and extent of the expansion of the 5G and IoT markets; our ability to execute more base station & IoT license agreements; the effect of intense industry competition and consolidation; global chip market trends, including supply chain issues as a result of COVID-19 and other factors; and our ability to successfully integrate Intrinsix into our business. CEVA assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. With that said, I will now hand the call over to Gideon.

CEVA, Inc. Q2 2022 Financial Results Conference Call - Prepared Remarks:: August 9, 2022

Gideon

Thank you, Richard. Good morning everyone and thank you for joining us today. CEVA produced solid second quarter financial results despite the challenging macroeconomic backdrop and disruptions in production schedules because of the lockdown in major cities in China. Our strength in wireless, a space that according to a recent study from McKinsey will be responsible for 25% of growth in the global semiconductor market over the next eight years, continues to drive our business and enables us to expand our footprint in the growing markets of 5G, wearables, hearables, automotive, aerospace and defense and more.

Revenue for the second quarter came at $33.2 million, up 9% on a year-over-year basis. The licensing environment continues to be strong, delivering $22.1 million in quarterly revenue at the back of 22 licensing agreements, with customers targeting a multitude of wirelessly connected devices, AI driven sensors, satellite communications and more. We also signed a strategic agreement for our Bluebud wireless audio technology in the wearables space, which I will touch on later. Asia continues to be a major driver for our business, but our activities and the scope of engagements with U.S.-based customers is picking up.

Royalty revenue came in at $11.1 million, down 26% on a year-over year basis. Second quarter 2021 royalty revenue included revenue of approximately $3.3 million following the resolution of a disagreement on royalty rates with a customer. Carving out the $3.3 million amount, royalty revenue for the second quarter of 2022 was down only 4% versus the second quarter of 2021. In handsets, global economic uncertainty, and the impact of COVID measures in China, are causing consumers to adopt a cautionary approach with their disposable income which adversely impacts handset shipments, particularly in the low and mid tiers.

Our base station & IoT royalty category showed resilience as 5G RAN rollouts continue in China and into countries with low 5G penetration rate to date. Our cellular IoT and Bluetooth customers continued to gain market share, with both categories delivering year-over-year unit growth.

CEVA, Inc. Q2 2022 Financial Results Conference Call - Prepared Remarks:: August 9, 2022

Let me spend the next few minutes to highlight recent dynamics in the wireless space and how we are addressing them. Unarguably, wireless continues to be a cornerstone in the proliferation of intelligent IoT products that bring together wireless connectivity, sensors and AI into highly efficient SoCs. At the back of this trend, CEVA has become the wireless anchor to more than 300 semiconductor companies as they shape the Intelligent IoT eco system. By being at the forefront of wireless standards and offering it under the IP business model, CEVA lowers the entry barriers for embedding wireless connectivity in SoCs and enabling many semi’s to come out with more cost-effective and power-efficient chips than the repurposed smartphone connectivity chips that Qualcomm, Broadcom and Mediatek are selling into these markets. In that sense, our leading wireless IP, along with the critical role wireless technologies play in IoT SoCs, opens up opportunities for us to elevate our business engagements from a delivery of just the “IP core” toward a proposition where we co-create with the customer its own wireless system. We are already experiencing very good interest with this business proposition and see this as a vehicle to grow our revenue base.

In the quarter, we concluded a comprehensive agreement along the co-creation business model with a U.S.-based customer. This agreement was driven by a top tier OEM, who will deploy our Bluebud integrated wireless & audio IP platform across multiple SKUs for smartwatches, hearables and other wearables devices. The wearables market is the second largest market after mobile in terms of volume, and recent devices offer high-quality 3D audio, AI-based noise cancellation, voice recognition and IMU-based contextual awareness. These are technologies that CEVA offers to customers in addition to our processors and hardware IP technologies.

Another discussion that we are having with our wireless customers these days is about the co-existence of 5G and Wi-Fi and whether one will eclipse the other. Our view is that they will continue to co-exist, and in many use cases they are in fact complementary to each other. 5G offers robustness in the form of security and low latency with its Ultra Reliable Low Latency (URRLC) standard. Deploying Wi-Fi networks on the other hand is simpler as the IT departments are more familiar with it than with 5G. At the Mobile World Congress (MWC) event earlier this year, an event that is historically dedicated to cellular, there were a number of major Wi-Fi 7 announcements, indicating that the cellular industry understands that 5G and Wi-Fi co-existence will continue to play an important role. CISCO, a long-term and dominant Wi-Fi player, commented at MWC that 5G and Wi-Fi must co-exist in private networks. These market dynamics and our strength in both 5G and Wi-Fi IPs, provide us with significant potential to expand our relationships with new customers by offering them a one stop shop for both technologies.

CEVA, Inc. Q2 2022 Financial Results Conference Call - Prepared Remarks:: August 9, 2022

In summary, we are satisfied with our financial performance in the second quarter at a back of a challenging and uncertain macro environment. Our IP portfolio is primed to address the most exciting and crucial technology trends. Our ability to step up and partner with customers for their wirelessly connected SoC designs through our co-creation business model is compelling. We will continue to focus on driving our strategic vision of enabling semis to make their products smart and wirelessly connected.

With that said, let me handover the call to Yaniv for the financials.

Yaniv

CEVA, Inc. Q2 2022 Financial Results Conference Call - Prepared Remarks:: August 9, 2022

CEVA, Inc. Q2 2022 Financial Results Conference Call - Prepared Remarks:: August 9, 2022

Other related data

As for the balance sheet items

As for the guidance

As evidenced from the first half of the year our licensing, NRE and related revenues were strong. Also, as Gideon explained, our technology offerings and co-creation business proposition resonate well with customers, and present new opportunities to grow our revenues. On royalties, despite the challenges in the macro environment, we continue to expand in the base station and IoT segment through the gradual rollout of 5G base stations enabled by our technologies and see continued share gains in wearable, hearable and IoT products at large. With that said, we are monitoring the implications of the economic uncertainty that we experienced in the second quarter associated with our handset royalties as we get closer to the holiday season and as COVID restrictions in China are being lifted.

CEVA, Inc. Q2 2022 Financial Results Conference Call - Prepared Remarks:: August 9, 2022

Specifically for the third quarter of 2022

-         Share count for the third quarter of 2022 is expected to be 24.2 million shares for non-GAAP EPS calculations.

Operator: You can now open the Q&A session

Wrap Up: Richard

Thank you for joining us today and for your continued interest in CEVA. As a reminder, the prepared remarks for this conference call are filed as an exhibit to the Current Report on Form 8-K and accessible through the investor section of our website at https://investors.ceva-dsp.com.

CEVA, Inc. Q2 2022 Financial Results Conference Call - Prepared Remarks:: August 9, 2022

With regards to upcoming events, we will be participating in the following conferences:

Further information on these events and all events we will be participating in can be found on the investors section of our website.

Thank you and goodbye

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