CEVA, Inc. (CEVA) Q1 2025 Earnings Call Transcript
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Overview
The earnings call reveals mixed signals: while total revenue and licensing revenue have grown, royalty revenue has declined, and there's a GAAP operating loss. The cautious revenue guidance and lack of a share repurchase program are concerning. Although there are positive signs in Wi-Fi royalties and licensing, economic uncertainty and a cautious approach impact sentiment negatively. The Q&A highlights management's lack of clarity on key competitive metrics, adding to uncertainty. Overall, the negative aspects outweigh the positives, suggesting a negative market reaction.
Key Financial Performance
Total Revenue $24.2 million, up 10% year-over-year from $22.2 million due to solid progress in licensing business.
Licensing Revenue $15 million, up 32% year-over-year from $11.4 million, reflecting strong customer engagement and strategic agreements.
Royalty Revenue $9.2 million, down 14% year-over-year from $10.7 million, due to soft low-cost smartphone shipments and slower product ramp-up from an industrial customer.
Gross Margins 86% on GAAP and 87% on non-GAAP, 1% lower than forecasted due to allocation of design activities affecting R&D costs.
GAAP Operating Loss $4.4 million, improved from a loss of $5 million in Q1 2024, due to expense monitoring.
Non-GAAP Operating Income $0.3 million, compared to an operating loss of $0.8 million in Q1 2024, reflecting improved expense management.
Financial Income $2.1 million, up from $1.3 million in Q1 2024, due to a significant increase in the value of the euro against the US dollar.
GAAP Net Loss $3.3 million, improved from a net loss of $5.4 million in Q1 2024.
Diluted Loss Per Share $0.14, improved from $0.23 in Q1 2024.
Non-GAAP Net Income $1.4 million or $0.06 per share, compared to a net loss of $1.3 million in Q1 2024.
Shipped Units 420 million units, up 13% year-over-year, indicating strong demand across various markets.
Wi-Fi Royalties Up 183% year-over-year, driven by a favorable product mix shift towards Wi-Fi 6.
Cash and Cash Equivalents Approximately $158 million as of the end of March.
Cash Used in Operating Activities $7 million during the first quarter.
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Operating Highlights
New Product Launches: Secured multiple deals for Wi-Fi 7 IP and RealSpace spatial audio software, marking significant milestones in connectivity and sensing use cases.
Edge AI Solutions: Signed a deal for NeuPro-M, Edge AI NPU with Nextchip for next-generation ADAS solutions, enhancing performance in automotive applications.
Market Expansion: Secured strategic agreements with multiple key Bluetooth and Wi-Fi customers, reinforcing market leadership in wireless communication IP.
Royalty Growth: Wi-Fi royalties grew 183% year-over-year, driven by a favorable product mix shift towards Wi-Fi 6.
Operational Efficiencies: Implemented cost control measures to mitigate revenue impact, achieving profitability close to non-GAAP EPS consensus.
Revenue Performance: Total revenue for Q1 2025 was $24.2 million, up 10% year-over-year.
Strategic Shifts: Adopting a more cautious outlook for 2025, lowering revenue guidance from high-single digits to low-single digits growth.
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Risk or Challenges
Royalty Revenue Shortfall: Royalty revenue fell short of expectations due to soft low-cost smartphone shipments and a slower product ramp-up from an industrial customer.
Economic Uncertainty: The global macro environment and tariffs have increased uncertainty about consumer demand, impacting revenue forecasts.
Cautious Revenue Guidance: Lowered 2025 revenue guidance from a high-single digits range to a low-single digits range for growth over 2024 annual revenues.
Operating Loss: GAAP operating loss for Q1 was $4.4 million, indicating ongoing financial challenges.
Cost Control Measures: Implemented cost control measures to mitigate revenue impact, but reliance on these measures indicates potential vulnerability.
Dependence on Long-term Licensing Success: Success in the IP licensing business is measured over several years, indicating a long wait for revenue generation from current innovations.
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Guidance & Outlook
Licensing Business Progress: Solid progress in licensing business, reinforcing long-term growth strategy and expanding customer engagement across targeted use cases.
Design Wins: Achieved design wins that strengthen partnerships with key connectivity customers and expand footprint with new customers.
Market Leadership: Secured strategic agreements with multiple key Bluetooth and Wi-Fi customers, reinforcing market leadership.
Technology Innovations: Continued focus on technology innovations, particularly in edge AI and sensing use cases.
Long-term Partnerships: Established long-term partnerships with high-volume customers for next-generation products.
Revenue Guidance: Lowering 2025 revenue guidance from high-single digits to low-single digits growth over 2024 annual revenues.
Expense Guidance: Lowering overall expense levels to align with 2024, targeting $96 million to $100 million.
Operating Income and Margins: Anticipating double-digit percentage increase in non-GAAP operating income and margins relative to 2024.
Q2 Revenue Forecast: Forecasting total revenue for Q2 2025 to be between $23.7 million and $27.7 million.
Q2 Operating Expenses: GAAP OpEx for Q2 expected to be in the range of $25.1 million to $26.1 million.
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Shareholder Return Plan
Share Repurchase Program: None
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Key Q&A
Q:Can you say whether the AI NPU ADAS win was just with a tier one supplier or does the tier one supplier have a program at an automotive OEM that's secured?
A:This is with the ones they already have secure so-called OEM customers but it's not going to go into only one specific OEM but that it will be part of the next generation platform.
Q:Is there a similar increase in ASPs with Wi-Fi 7 or is it even greater than the transition from 5 to 6?
A:We expect to see another uplift in average ASP as customers migrate in volume production to Wi-Fi 7.
Q:Can you give us a sense of the competitive environments around the new ADAS win?
A:Our technology excels in metrics like power efficiency, size, cost structure, and low latency, which gives us a great advantage in the market.
Q:Was the softness in the low end of the smartphone market related to tariffs or customer product transition?
A:We don't expect direct impact of tariffs on this customer. We anticipate a nice ramp through the year.
Q:How would you describe the licensing pipeline? Are you seeing an acceleration in design activity?
A:We haven't seen decisions being postponed due to macro concerns, but we are taking a more cautious approach for the rest of the year.
Q:Can you give us an idea of what percent the design customer contributes to overall gross margin?
A:This is one of the advantages for us in very advanced technologies like 5G Advanced to win new business.
Q:Is there any other area you're concerned about, or is it just an overall proactive conservatism?
A:We believe it's just a timing issue and expect to see a ramp-up in the second quarter.
Q:Are you seeing any impact in the licensing environment due to macro and tariff uncertainty?
A:We haven't seen any impact on the pipeline decrease, but customers are a little more cautious.
Q:Are the royalty units and Wi-Fi wins ramping and tracking to follow the success you've had with Bluetooth?
A:We are extremely encouraged and have licensed to tens of customers our Wi-Fi 6 technology.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer regarding the specific competitive solutions considered by the customer for the ADAS win, as well as the exact percentage contribution of the design customer to overall gross margin.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ADAS solution
ADAS system
ADAS vision
AI IPs
AI NeuPro
AI Royalty
AI advancement
AI communication
Bluetooth Wi
Chief Executive
Chief Financial
Edge AI
Executive Officer
Fi IP
Fi royalty
Financial Officer
Instructions today
Investor Relations
Officer Chief
Wi Fi
audio software
case deal
communication IP
edge AI
environment
generation ADAS
image
innovation
model
momentum royalty
pillar
royalty customer
share communication
stream
vision transformer
volume customer
CEVA Transcript
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, Inc. (CEVA) Q1 2025 Earnings Call Transcript
Unknown5-7
The earnings call reveals mixed signals: while total revenue and licensing revenue have grown, royalty revenue has declined, and there's a GAAP operating loss. The cautious revenue guidance and lack of a share repurchase program are concerning. Although there are positive signs in Wi-Fi royalties and licensing, economic uncertainty and a cautious approach impact sentiment negatively. The Q&A highlights management's lack of clarity on key competitive metrics, adding to uncertainty. Overall, the negative aspects outweigh the positives, suggesting a negative market reaction.
CEVA, Inc. (CEVA) Q3 2024 Earnings Call Transcript
Positive11-8
The earnings call reveals strong financial performance with a 13% revenue increase, a significant rise in non-GAAP net income, and a healthy cash position. The Q&A indicates a robust pipeline and strategic focus on expanding Wi-Fi and AI capabilities. Despite some margin concerns, the positive guidance, share repurchase program, and strategic agreements suggest a positive outlook. The market is likely to react positively, with a predicted stock price movement of 2% to 8% over the next two weeks, given the company's strategic initiatives and financial health.
CEVA Report
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