• Total Revenue: $27.2 million, up 13% year over year.

• Licensing Revenue: $15.6 million, up 12% year over year.

• Royalty Revenue: $11.6 million, up 15% year over year.

• Gross Margin: 85% GAAP, 87% non-GAAP, compared to 90% and 92% respectively, a year ago.

• Non-GAAP Operating Margin: 8% of revenue.

• Non-GAAP Net Income: $3.4 million, up 137% year over year.

• GAAP Operating Loss: $2.6 million.

• GAAP Net Loss: $1.3 million, with a diluted loss per share of $0.06.

• Non-GAAP Diluted Income Per Share: $0.14, up 133% year over year.

• Unit Shipments: 522 million units, up 4% year over year.

• Cash and Equivalents: Approximately $158 million.

• Share Repurchase: 186,000 shares purchased for approximately $4.2 million.

• Headcount: 431 employees, with 354 engineers.

• Warning! GuruFocus has detected 3 Warning Sign with CEVA.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CEVA Inc (NASDAQ:CEVA) reported a 13% year-over-year increase in total revenue for the third quarter, reaching $27.2 million.

• Licensing revenue grew by 12% year-over-year, with 10 deals completed across various geographies and OEM customers.

• Royalty revenue increased by 15% year-over-year, marking the fourth consecutive quarter of growth.

• The company achieved significant milestones in licensing, including the first deal for its NeuPro-Nano embedded AI NPU and multiple deals for its PentaG2 5G platform.

• CEVA Inc (NASDAQ:CEVA) raised its full-year 2024 guidance, reflecting confidence in its business momentum and pipeline.

Negative Points

• Gross margin came in below guidance at 85% on a GAAP basis, primarily due to customization work for key 5G advanced deals.

• Total operating expenses were at the higher end of guidance due to increased equity-based compensation expenses.

• The number of licensing deals in the quarter was slightly lower than the typical run rate, raising questions about potential deal slippage.

• Smartphone shipments were down moderately on a sequential and year-over-year basis, reflecting a softer environment for 5G operator OpEx.

• The company experienced a GAAP operating loss of $2.6 million for the third quarter, similar to the loss in the same period last year.

Q & A Highlights

Q: Can you clarify the impact of engineering time on gross margins due to customization for the 5G modem platform? Will this affect future quarters, and will this platform become a standard device for licensing? A: The customization work for the 5G modem platform is strategic and involves reallocating R&D resources, which affects gross margins temporarily. This is not an increase in overall expenses, and margins should stabilize around 89-90% annually. The platform will be expanded and offered to other customers, enhancing long-term licensing and royalty economics. (Unidentified Company Representative)