Ceva Inc. Earnings Call: Growth Amid Challenges

Ceva Inc ((CEVA)) has held its Q2 earnings call. Read on for the main highlights of the call.

The recent earnings call for Ceva Inc. painted a picture of both accomplishments and challenges. While the company celebrated strong licensing execution and significant growth in the consumer IoT sector, it also faced hurdles such as a decline in overall revenue and operating losses. The sentiment was cautiously optimistic, with confidence in future growth potential, particularly in AI and consumer IoT, despite current financial softness.

Strong Licensing Execution

Ceva Inc. reported securing 13 license agreements, including five with first-time customers and four with OEM customers. This quarter was particularly pivotal for their AI business, with four strategic high-impact NPU customer agreements. This achievement underscores Ceva’s robust licensing strategy and its potential to drive future growth.

Consumer IoT Growth

The company experienced a remarkable increase in consumer IoT shipments, which were up 21% sequentially and 60% year-over-year. This growth was fueled by record-high shipments in cellular IoT and Wi-Fi 6, highlighting Ceva’s strong position in the consumer IoT market.

20 Billion Devices Milestone

Ceva announced a significant milestone of over 20 billion CEVA-powered devices shipped. This achievement places the company among an elite group of IP companies, reinforcing its foundational role in mobile and IoT technology.

Sequential Growth in Royalties

The company reported a 16% sequential growth in royalties across most markets, with expectations for continued growth throughout the year. This sequential increase is a positive indicator of Ceva’s ability to capitalize on its existing technology portfolio.

Revenue Decline

Despite the positive developments, Ceva faced a revenue decline, with the second quarter revenue at $25.7 million, down 10% from $28.4 million in the same quarter last year. This decline reflects some of the challenges the company is navigating in the current market environment.

Operating Loss

Ceva reported a GAAP operating loss of $4.5 million for the second quarter, a significant increase from a $35,000 loss in the same period last year. This highlights the financial pressures the company is facing despite its strategic achievements.

Royalty Revenue Decrease

Year-over-year, royalty revenue decreased by 5%, primarily due to lackluster smartphone sales in the lower end of the market. This decline is a concern that Ceva will need to address to stabilize its financial performance.

Bluetooth Shipments Decline

Bluetooth shipments saw a 5% decline from 266 million in the second quarter of 2024. This drop is another area where Ceva will need to focus its efforts to regain momentum.

Forward-Looking Guidance

Looking ahead, Ceva provided robust guidance, emphasizing future expectations. The company anticipates continued sequential growth in royalties and aims for a double-digit percentage increase in non-GAAP net income and EPS relative to 2024. Strategic investments in AI are expected to bolster growth, with third-quarter revenue projected between $26 million and $30 million and a slight improvement in gross margins to 87% on a GAAP basis.

In summary, Ceva Inc.’s earnings call highlighted a mix of achievements and challenges. While the company is optimistic about future growth, particularly in AI and consumer IoT, it faces current financial challenges that need addressing. The overall sentiment was cautiously optimistic, with a focus on leveraging strategic investments to drive future success.