CEVA, Inc. (CEVA) Q1 2026 Earnings Call Transcript
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Overview
The earnings call summary and Q&A session reveal strong financial performance, with significant growth in royalty revenues and a robust licensing pipeline. The company's strategic focus on AI, IoT, and wireless connectivity is gaining traction, and optimistic guidance for the second half suggests further growth. Despite some management ambiguity, the overall sentiment is positive, supported by strong WiFi performance and expansion plans. The absence of negative indicators and the positive outlook for the second half, driven by IoT and connectivity, suggest a stock price increase of 2% to 8% over the next two weeks.
Key Financial Performance
Revenues Revenues for the first quarter increased 11% year-over-year to $27 million. Licensing and related revenue increased 18% year-over-year to $17.8 million, reflecting 66% of total revenues. Royalty revenues were $9.2 million, in line with last year, reflecting 34% of total revenues.
Gross Margins Gross margins were 86% on GAAP basis and 87% on a non-GAAP basis. No specific reasons for changes were mentioned.
GAAP Operating Loss GAAP operating loss for the first quarter was $5.1 million as compared to GAAP operating loss of $4.4 million in the same quarter last year. The increase in loss was not explicitly explained.
Non-GAAP Operating Margins and Income Non-GAAP operating margins and income were 2% of revenues and $0.5 million. No specific reasons for changes were mentioned.
Net Income Net income was $1.9 million compared to $2.1 million for the first quarter of 2025. The decrease was not explicitly explained.
GAAP Net Loss GAAP net loss for the first quarter was $4.5 million and diluted loss per share was $0.16 as compared to net loss of $3.3 million and diluted loss per share of $0.14 for the first quarter of '25. The increase in loss was not explicitly explained.
Non-GAAP Net Income and EPS Non-GAAP net income and non-GAAP diluted earnings per share for the first quarter of '26 were $1.1 million and $0.04, respectively, as compared to non-GAAP net income of $1.4 million and non-GAAP diluted earnings per share of $0.06 for the first quarter of '25. The decrease was not explicitly explained.
Device Shipments 458 million units of CEVA power devices were shipped, up 9% year-over-year. Of these, 46 million units were for mobile handset modems (down from 49 million units last year), 394 million units were consumer IoT devices (up from 337 million units last year), and 18 million units were for industrial IoT products (down from 34 million units last year). Associated industrial IoT royalty revenues were up 19% year-over-year due to a better mix of higher ASP product shipments, including 5G wireless infrastructure and automotive AI.
Bluetooth Shipments Bluetooth shipments were 206 million units in the quarter, down from 233 million units in the first quarter of last year. No specific reasons for the decrease were mentioned.
Cellular IoT Shipments Cellular IoT shipments were 66 million units, up 38% year-over-year. No specific reasons for the increase were mentioned.
Wi-Fi Shipments Wi-Fi shipments were a record 91 million units, up 158% year-over-year. No specific reasons for the increase were mentioned.
Cash and Financial Flexibility Cash equivalent balances, marketable securities, and bank deposits were approximately $216 million, providing strong financial flexibility. No specific reasons for changes were mentioned.
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Operating Highlights
Ceva-Waves Links200 platform: Secured a major licensing win for a complete Bluetooth High Data Throughput (HDT) solution, foundational for Bluetooth 7 standard. Licensed to a leading U.S.-based semiconductor company.
PentaG-NTN 5G advanced modem platform: Extended cellular portfolio into satellite communications, targeting emerging markets like remote coverage and industrial IoT.
Next-generation UWB platform: Secured a new customer win with a major U.S.-based MCU provider, focusing on industrial, automotive, and enterprise applications.
Spatial audio solutions: Lenovo launched ThinkPad headset powered by RealSpace spatial audio with head tracking.
AI DSP and accelerator: Integrated into Renesas R-Car V4H platform, now in production in the 2026 Toyota RAV4, marking first mass volume automotive AI deployment.
Intelligent connected devices: Shipments expected to exceed 40 billion units annually by 2030, driven by Edge AI and wireless connectivity.
Non-terrestrial networks (NTN): Emerging market expected to scale to billions of devices, driven by satellite connectivity for remote and underserved areas.
Wi-Fi and Bluetooth: Durable multi-year growth drivers with record Wi-Fi 6 volumes and development of next-gen platforms like Wi-Fi 7 and Bluetooth 7.
Licensing agreements: Signed 14 agreements in the quarter, including 2 with OEMs, covering technologies like Wi-Fi 7, Bluetooth, and Edge AI.
Royalty revenues: Non-mobile royalties grew 8%, driven by IoT, industrial, and AI-driven applications.
Unit shipments: 458 million units shipped, with significant growth in consumer IoT and Wi-Fi shipments.
Shift to integrated solutions: Customers increasingly adopting CEVA's system-level solutions, expanding value per design and long-term royalty potential.
Hybrid AI adoption: Structural shift towards hybrid AI, enabling real-time on-device decision-making and scalable compute.
Automotive AI: Collaboration with NXP and deployment in Toyota RAV4, signaling long-term royalty stream potential.
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Risk or Challenges
Mobile Royalties: First quarter royalties were impacted by seasonal softness in mobile and near-term effects from memory availability constraints and channel inventory in lower-tier segments. These dynamics are largely timing-related but could affect short-term revenue.
Industrial IoT: Shipments for industrial IoT products decreased from 34 million units to 18 million units year-over-year, though associated royalty revenues increased due to a better mix of higher ASP product shipments. This indicates potential volatility in shipment volumes.
Bluetooth Shipments: Bluetooth shipments declined from 233 million units to 206 million units year-over-year, reflecting potential challenges in maintaining shipment volumes.
Foreign Exchange Headwinds: Strengthening of the euro and Israeli shekel against the U.S. dollar poses a risk to operating expenses and cost management.
Memory Pricing Dynamics and Supply Conditions: Future revenue growth is subject to memory pricing dynamics and supply conditions, which could impact the company's ability to meet its financial targets.
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Guidance & Outlook
Revenue Growth: For the full year 2026, CEVA expects total revenue growth to be at the top end of the 8% to 12% range over 2025, with stronger growth anticipated in the second half of the year.
Expense Management: Overall expenses, including cost of revenues and operating expenses, are expected to increase approximately 8% over 2025. CEVA plans to maintain cost discipline and manage foreign exchange headwinds.
Non-GAAP Financial Metrics: Non-GAAP operating margins and net income are expected to increase by 40% to 50% year-over-year, exceeding prior expectations.
Second Quarter 2026 Revenue: Revenues for Q2 2026 are expected to be in the range of $26 million to $30 million, reflecting sequential and year-over-year growth.
Gross Margin: Gross margin for Q2 2026 is expected to be 87% on a GAAP basis and 88% on a non-GAAP basis.
Net Interest Income: Net interest income for Q2 2026 is expected to be approximately $1.7 million.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you elaborate on the Bluetooth HDT win and its implications for your RF strategy and potential expansion into other areas like WiFi and ultra-wideband?
A:The Bluetooth HDT win is significant as it represents a full system solution from antenna to software, including internally developed RF. This allows customers to get a complete solution, reducing pretesting and validation efforts, and accelerating time to market. The technology is planned to expand beyond Bluetooth HDT into other wireless technologies like WiFi and ultra-wideband. The integrated solution also results in higher royalties due to its added value.
Q:What are your expectations for the second half of the year, considering factors like memory pricing and macroeconomic dynamics?
A:Despite challenges in mobile and memory allocation, the company delivered strong results due to good execution in licensing and IoT momentum. IoT is less impacted by memory issues, and inventory drawdowns in mobile should position the company well for the second half. Historical trends show a 40% increase in shipments in the second half, and this is factored into the outlook.
Q:Can you provide an update on the sense, connect, and infer strategy and its traction with customers?
A:The strategy is progressing well, with customers licensing multiple technologies across connect, sense, and infer. Wireless connectivity remains a strong driver, complemented by investments in AI and infer technologies. Lenovo's adoption of 3D spatial audio and wireless connectivity is an example of this traction.
Q:What is the current status of WiFi adoption and its trajectory compared to Bluetooth and UWB?
A:WiFi adoption is ramping up, with record-high volumes in Q1 driven by transitions to WiFi 6 and upcoming WiFi 7. WiFi shipments are expected to exceed 0.5 billion units, complementing Bluetooth penetration. UWB is newer but shows promising use cases in smartphones and edge devices, with recent major licensing deals indicating growth potential.
Q:What drove the strong WiFi performance in Q1, and what are the expectations for the second half?
A:The strong Q1 WiFi performance was due to customer migration to WiFi 6 and new customer adoption. Over 30 licensing agreements in recent years are now ramping into production. The second half is expected to be stronger due to seasonality and continued customer ramp-ups.
Q:What is the company's approach to capital allocation and M&A?
A:The company focuses on scaling through M&A in technologies that complement its connect, sense, and infer strategy. The aim is to build scale in IoT and smart edge technologies.
Q:Can you discuss the RF subsystem and plans to broaden its scope across different process nodes and foundries?
A:The RF subsystem currently supports TSMC 12-nanometer but plans to expand to other process nodes and foundries. The company aims to support a significant portion of market needs without covering the entire spectrum.
Q:How does the current licensing pipeline compare to a year ago, and what is the mix of recurring versus one-time revenue?
A:The licensing pipeline is strong, with more repeat customers, multi-technology licenses, and solution-based deals. This supports a good growth year in licensing, with a mix of recurring and one-time revenues.
Q:What is the momentum in the embedded CPU and NPU space, and how does it align with market trends?
A:The hybrid AI model and edge computing trends are driving momentum in embedded CPUs and NPUs. The company's NPU portfolio complements various CPU architectures and benefits from increased AI adoption at the edge.
Q:What are the expectations for the large North American smartphone customer in the second half?
A:The company has built estimates into its model but does not have specific insights into the customer's internal plans. Historical trends and contributions from other segments like automotive and AI support a strong second half.
Q:Which end markets are showing the most interest in NeuPro?
A:NeuPro is gaining interest across automotive, industrial, smart home, and consumer applications, with a broad distribution of deals in these markets.
Q:Are there plans to extend Bluetooth radio IP to other connectivity products like WiFi?
A:Yes, the company plans to expand its Bluetooth radio IP to other connectivity products, including WiFi and UWB, as part of its strategy to offer complete solutions.
Q:What is the potential for satellite communication beyond smartphone messaging?
A:Satellite communication has potential in industrial and logistical use cases, providing ubiquitous connectivity and augmenting areas with limited wireless infrastructure. The company offers solutions for both terminal and satellite sides.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the large North American smartphone customer's plans, citing a lack of shared internal plans. Additionally, while they discussed the potential impact of memory pricing and macroeconomic factors, the responses lacked precise data or clarity on how these issues might specifically affect the company's performance.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI SoC
AI content
AI deployment
AI edge
DSP accelerator
Edge AI
Edge market
Fi Bluetooth
HDT solution
NTN
RF
Toyota
UWB
application
asset tracking
audio
building
communication infrastructure
connectivity communication
connectivity system
content device
design term
design value
development risk
edge device
engagement
expansion
inference edge
inventory
level solution
modem software
network
position AI
processing
relationship customer
satellite communication
shift
system level
value design
CEVA Transcript
CEVA, Inc. (CEVA) Q1 2026 Earnings Call Transcript
Positive5-11
The earnings call summary and Q&A session reveal strong financial performance, with significant growth in royalty revenues and a robust licensing pipeline. The company's strategic focus on AI, IoT, and wireless connectivity is gaining traction, and optimistic guidance for the second half suggests further growth. Despite some management ambiguity, the overall sentiment is positive, supported by strong WiFi performance and expansion plans. The absence of negative indicators and the positive outlook for the second half, driven by IoT and connectivity, suggest a stock price increase of 2% to 8% over the next two weeks.
CEVA, Inc. (CEVA) Q4 2025 Earnings Call Transcript
Positive2-17
The earnings call summary shows strong financial performance with record revenues and shipments, improved operating income, and increased EPS. The Q&A reveals a healthy NPU pipeline and potential for further OEM adoption, despite some uncertainties in memory pricing and royalties. The company's strategic focus on AI and connectivity, alongside a robust M&A strategy, suggests a positive outlook. Given these factors, the stock price is likely to see a positive movement in the short term.
CEVA, Inc. (CEVA) Q3 2025 Earnings Call Transcript
Positive11-10
The earnings call highlights strong financial performance with record shipments in cellular IoT and Wi-Fi, improved gross margins, and optimistic guidance for future royalty revenue growth. Despite a GAAP net loss, the company shows a positive trend in non-GAAP metrics. Q&A insights reveal promising partnerships, particularly with Microchip, and strong customer interest in new technologies. The lack of specific guidance details is a minor concern, but overall, the positive financial metrics and strategic developments indicate a likely positive stock reaction.
CEVA, Inc. (CEVA) Q2 2025 Earnings Call Transcript
Unknown8-11
The earnings call reveals a mixed performance with declining revenue and increasing losses, despite some positive trends in IoT shipments. The lowering of revenue guidance and higher-than-expected expenses contribute to a negative sentiment. While there is optimism in AI and NPU licensing, the lack of specific guidance and declining margins overshadow these positives. The Q&A section also highlights management's reluctance to provide detailed future guidance, adding uncertainty. Overall, the combination of financial underperformance and cautious outlook leads to a negative sentiment, likely resulting in a stock price decline.
CEVA Report
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