CEVA, Inc. Announces Second Quarter 2018 Financial Results

Dienstag, 07.08.2018 13:05 von PR Newswire

PR Newswire

MOUNTAIN VIEW, Calif., Aug. 7, 2018 /PRNewswire/ -- CEVA, Inc. (NASDAQ: CEVA), the leading licensor of signal processing platforms and artificial intelligence processors for smarter, connected devices, announced today its financial results for the second quarter ended June 30, 2018.

CEVA, Inc. reported Q2 2018 earnings of $17.5 million and non-GAAP EPS of $0.04. Nine new agreements were signed, including a third customer for the NeuPro AI processor and four new Bluetooth 5 licensees. Royalty revenue came in below expectations at $7.5 million, due to continued unexpected weakness at a large Chinese baseband customer. Non-handset baseband shipments reached a record 88 million units. For more information and highlights, view the infographic.

Total revenue for the second quarter of 2018 was $17.5 million, a 15% decrease compared to $20.6 million reported for the second quarter of 2017. Second quarter 2018 licensing and related revenue was $10.0 million, a decrease of 3% when compared to $10.3 million reported for the same quarter a year ago. Royalty revenue for the second quarter of 2018 was $7.5 million, a decrease of 27% when compared to $10.2 million reported for the second quarter of 2017.

Gideon Wertheizer, CEO of CEVA, stated: "Our licensing business continued on track in the second quarter, with healthy demand for our AI, computer vision and connectivity products. Our second quarter royalty revenue came in below expectations due to continued unexpected weakness with one of our large Chinese handset baseband customers. We now expect the weakness with this Chinese customer to continue for the rest of the year and have reduced our annual royalty expectations accordingly. With that said, we are encouraged by a new production ramp and share gain of a flagship smartphone and the continued expansion of our non-handset baseband products. As a result, we expect royalties for the second half of the year to be both substantially stronger than the first half and deliver year-over-year growth with respect to the second half of 2018."

GAAP net loss for the second quarter of 2018 was $2.1 million, compared to $3.9 million net income reported for the same period in 2017. GAAP diluted loss per share for the second quarter of 2018 was $0.09, compared to diluted earnings per share of $0.17 a year ago. GAAP net income and diluted earnings per share for the second quarter of 2017 included a tax benefit of approximately $1.8 million as a result of the successful conclusion of a tax audit.

Non-GAAP net income and diluted earnings per share for the second quarter of 2018 were $0.9 million and $0.04, respectively, compared to $6.3 million non-GAAP net income and $0.28 diluted earnings per share reported for the second quarter of 2017. 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. Net income and diluted earnings per share for the second quarter of 2017 excluded: (a) equity-based compensation expense, net of taxes, of $2.1 million, and (b) the impact of the amortization of acquired intangibles of $0.3 million associated with the acquisition of RivieraWaves.

During the quarter, CEVA completed nine license agreements. Four of the agreements were for CEVA DSP and AI platforms, including a third NeuPro AI license agreement, and five were for CEVA connectivity IPs. Eight of the agreements were for non-handset baseband applications and three were with first-time customers of CEVA. Customers' target markets for the licenses include advanced cameras, drones, smart speakers, smartphones, wireless headphones and IoT devices. Geographically, five of the deals signed were in China, one was in Europe and three were in the APAC region, including Japan.

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "Despite lower-than-expected royalty revenue for the second quarter, we were pleased to see continued progress in our non-handset baseband customers, who shipped a new record level of 88 million CEVA-powered devices. On buyback, we purchased approximately 270,000 shares of our common stock in the second quarter for an aggregate consideration of approximately $9 million. In addition, our Board of Directors approved the expansion of this plan during the quarter, and as of June 30th, we have a total of 700,000 shares of common stock available for repurchase. Moreover, CEVA's cash and cash equivalent balances, marketable securities and bank deposits were approximately $173 million at the end of the quarter."

Full Year 2018 Revenue Guidance and Commentary
As a result of the lower royalty revenue for the first half of 2018, the expectation of continued weakness with the Chinese handset baseband customer for the remainder of 2018, and the lack of visibility and uncertainty for the timing of resumption of royalties with the well-publicized ban of a Chinese base station customer, the company is lowering 2018 annual royalty guidance to a level representing a 10% decrease from 2017 royalty revenue. While it is encouraging that the base station customer has resumed operations, it's assumed, that it will take them a few months to rebuild their supply chain and to get back to full production and shipments. In light of the above and to be prudent, the company now projects total annual revenue to be approximately $80 million.

CEVA Conference Call
On August 07, 2018 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/984/26513. 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: 10122115) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on August 14, 2018. The replay will also be available at CEVA's web site www.ceva-dsp.com.

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 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 (802.11 a/b/g/n/ac/ax up to 4x4). Visit us at www.ceva-dsp.com and follow us on Twitter, YouTube, Facebook and LinkedIn.

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 the second half of the year being substantially stronger in royalty revenue due to a new flagship smartphone and continued expansion of CEVA's non-handset baseband products, the revised annual revenue and annual royalty revenue guidance and the rationale for such revised guidance in the section entitled, "Full Year 2018 Revenue Guidance and Commentary," as well as any potential prospects of share buybacks. 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; 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 speed and extent of the expansion of the 4G, 5G and LTE networks, the maturation of the IoT market, 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


CONDENSED 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,


2018

2017

2018

2017


Unaudited

Revenues:





Licensing and related revenues

$  10,038

$  10,337

$    20,121

$    19,872

Royalties

7,456

10,238

14,942

21,990






Total  revenues

17,494

20,575

35,063

41,862






Cost of revenues

1,988

1,608

3,960

3,304






Gross profit

15,506

18,967

31,103

38,558






Operating expenses:





Research and development, net

11,843

10,509

23,859

20,382

Sales and marketing

3,399

3,427

6,575

6,365

General and administrative

2,833

2,552

5,787

4,677

Amortization of intangible assets

92

309

451

618






Total operating expenses

18,167

16,797

36,672

32,042






Operating income (loss)

(2,661)

2,170

(5,569)

6,516

Financial income, net

777

755

1,704

1,326






Income (loss) before taxes on income

(1,884)

2,925

(3,865)

7,842

Income taxes expense (benefit)

206

(983)

407

(173)






Net income (loss)

$   (2,090)

$   3,908

$   (4,272)

$   8,015






Basic net income (loss) per share

 

 

($0.09)

 

 

$0.18

 

 

($0.19)

 

 

$0.37

Diluted net income (loss) per share

($0.09)

$0.17

($0.19)

$0.36

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





Basic

22,129

21,712

22,139

21,556

Diluted

22,129

22,563

22,139

22,376










 

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


2018

2017

2018

2017


Unaudited






GAAP net income (loss)

($2,090)

$3,908

($4,272)

$8,015

Equity-based compensation expense included in cost of revenue

 

168

 

114

 

325

 

205

Equity-based compensation expense included in research and development expenses

 

1,359

 

972

 

2,628

 

1,843

Equity-based compensation expense included in sales and marketing expenses

 

423

 

370

 

877

 

659

Equity-based compensation expense included in general and administrative expenses

 

895

 

722

 

1,786

 

1,420

Income tax benefit related to equity-based compensation expenses

(153)

(69)

(282)

(184)

Amortization of intangible assets related to RivieraWaves transaction and in 2018 NB-Iot technologies

275

309

634

618

Non-GAAP net income

$877

$6,326

$1,696

$12,576







GAAP weighted-average number of Common Stock used in computation of diluted net income (loss) per share (in thousands)

22,129

 

22,563

 

22,139

22,376






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

903

269

935

315

Weighted-average number of Common Stock used in computation of diluted earnings per share, excluding the above (in thousands )

23,032

22,832

23,074

22,691






GAAP diluted earnings (loss) per share

($0.09)

$0.17

($0.19)

$0.36

Equity-based compensation expense, net of taxes

$0.12

$0.10

$0.23

$0.16

Amortization of intangible assets related to RivieraWaves transaction and in 2018 NB-IoT technologies

$0.01

$0.01

$0.03

$0.03

Non-GAAP diluted earnings per share

$0.04

$0.28

$0.07

$0.55

 

CEVA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


(U.S. Dollars in thousands)





June 30,

December 31,


2018

2017 (*)


Unaudited

Unaudited

ASSETS



Current assets:



Cash and cash equivalents

$           10,700

$        21,739

Marketable securities and short term bank deposits

114,995

117,096

Trade receivables

9,246

14,480

Accrued revenues

8,753

2,014

Prepaid expenses and other current assets

6,244

3,747

Total current assets

149,938

159,076

Long-term assets:



Bank deposits

47,134

44,518

Severance pay fund

9,022

8,910

Deferred tax assets

4,454

3,643

Property and equipment, net

8,100

6,926

Goodwill

46,612

46,612

Intangible assets, net

3,307

1,742

Other long term assets

6,250

5,385

Total assets

$        274,817

$        276,812


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:



Trade payables

$           1,034

$           392

Deferred revenues

2,717

4,399

Accrued expenses and other payables

17,099

18,004

Total current liabilities

20,850

22,795




Long-term liabilities:



Accrued severance pay

9,601

9,347

Total liabilities

30,451

32,142




Stockholders' equity:



Common stock:

22

22

Additional paid in-capital

219,333

217,417

Treasury stock

(31,640)

(26,056)

Accumulated other comprehensive loss

(1,417)

(586)

Retained earnings

58,068

53,873

Total stockholders' equity

244,366

244,670

Total liabilities and stockholders' equity

$   274,817

$   276,812


(*) Derived from audited financial statements

 

CEVA - a global leader in signal processing IP for everything smart and connected. (PRNewsFoto/CEVA, Inc.)

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SOURCE CEVA, Inc.

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