Ceva Inc ((CEVA)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Ceva Inc.’s latest earnings call struck an overall optimistic tone despite some near‑term headwinds. Management highlighted double‑digit revenue growth, a strong rebound in licensing activity and record Wi‑Fi shipments, alongside upgraded full‑year guidance and expanding margins. These gains helped offset concerns around flat royalties, softer mobile demand and wider GAAP losses, framing the quarter as a solid execution story in transition.
Revenue Growth
Ceva reported first‑quarter fiscal 2026 revenues of $27.0 million, an 11% year‑over‑year increase fueled mainly by licensing strength. The company emphasized that this growth came despite flat royalty income, underscoring the resilience of its high‑margin, IP‑driven model even in a choppy end‑market environment.
Strong Licensing Performance
Licensing and related revenue climbed 18% year‑over‑year to $17.8 million, accounting for 66% of total sales and marking the strongest licensing quarter in three years. Management signed 14 licensing deals during the period, signaling robust demand for Ceva’s signal‑processing and connectivity IP across a broad customer base.
Record Wi‑Fi Shipments
Wi‑Fi shipments surged to a record 91 million units, up 158% from the prior year as large Wi‑Fi 6 ramps kicked in. The company also pointed to rising design activity for Wi‑Fi 7, suggesting that current momentum could extend as customers migrate to next‑generation wireless standards.
Smart Edge and Non‑Mobile Growth
Non‑mobile royalties grew 8% year‑over‑year as Ceva’s technology gained traction in IoT, industrial and AI‑driven applications at the smart edge. Total royalties held flat at $9.2 million, with non‑mobile strength cushioning weakness in mobile devices and helping diversify the company’s revenue base.
Strategic Wins and Product Momentum
The quarter brought several high‑profile design wins, including a full Bluetooth HDT stack license with a leading U.S. semiconductor player and an expansion of the PentaG‑NTN satellite 5G platform with a satellite OEM. Ceva also secured a next‑generation ultra‑wideband license with a major MCU vendor and multiple Wi‑Fi/Bluetooth combo design wins, reinforcing its strategic positioning across wireless standards.
Automotive and AI Traction
Ceva highlighted its first mass‑volume automotive AI deployment as Renesas’s R‑Car V4H, integrating Ceva AI DSP and accelerator, enters production in the 2026 Toyota RAV4. AI represented more than 20% of licensing revenue, with two new AI licenses signed, underscoring the growing role of Ceva’s AI portfolio in automotive and edge applications.
Margin Profile and Upgraded Outlook
The company delivered robust profitability metrics, with GAAP gross margin at 86% and non‑GAAP gross margin at 87%, reflecting the capital‑light nature of its IP business. Management lifted its full‑year outlook toward the top end of the prior 8% to 12% revenue growth range and now expects non‑GAAP operating margins and non‑GAAP net income to climb 40% to 50% year over year.
Balance Sheet and Operating Metrics
Ceva ended the quarter with approximately $216 million in cash, marketable securities and deposits, providing ample financial flexibility. The company shipped 458 million Ceva‑powered units, up 9% year‑on‑year, while maintaining days sales outstanding at 59 days and reiterating a disciplined approach to capital allocation.
Flat Royalties and Mobile Softness
Total royalty revenue was unchanged at $9.2 million as mobile‑related demand remained under pressure from seasonal trends and supply‑chain issues. Management cited memory availability constraints and elevated inventory in lower‑tier mobile segments as key factors weighing on near‑term royalty recognition.
Bluetooth Shipment Decline
Bluetooth unit shipments fell to 206 million from 233 million a year earlier, an 11.6% decline that management linked to product mix changes and combo‑chip counting effects. While the company positioned this more as a normalization than a structural issue, the drop underscores the volatility in legacy wireless categories.
Industrial IoT Unit Decline
Industrial IoT unit volumes dropped sharply to 18 million from 34 million, a roughly 47% year‑over‑year decline that management acknowledged as significant. Even so, royalty dollars from industrial customers increased due to a more favorable product mix, highlighting how higher‑value designs can offset lower unit counts.
GAAP Losses and Non‑GAAP Earnings
GAAP operating loss widened to $5.1 million from $4.4 million and GAAP net loss increased to $4.5 million, translating to a diluted loss per share of $0.16. On a non‑GAAP basis, net income slipped to $1.1 million and EPS to $0.04, down from $1.4 million and $0.06, reflecting higher costs and investment levels.
Cash Usage and FX Headwinds
The company used $4.9 million of cash in operating activities during the quarter as working‑capital swings and timing of collections weighed on cash flow. Management also pointed to foreign‑exchange headwinds, with a stronger euro and Israeli shekel versus the U.S. dollar pressuring reported results.
Supply‑Chain and Memory Uncertainty
Ceva cautioned that memory pricing and availability, along with supply‑chain inventory dynamics, could create near‑term volatility in mobile royalties and first‑half performance. While these factors are largely outside the company’s control, they add another layer of uncertainty to the timing of royalty recovery.
Forward‑Looking Guidance
Looking ahead, Ceva raised its 2026 outlook toward the high end of its 8% to 12% revenue growth range over 2025 and expects typical seasonality with a softer first half and stronger second half. For the second quarter, management guided revenue to $26 million to $30 million, GAAP gross margin near 87% and non‑GAAP gross margin around 88%, with non‑GAAP operating expenses of $22.2 million to $23.2 million and non‑GAAP net income and operating margins targeted to rise 40% to 50% for the year.
Ceva’s earnings call painted the picture of a company leaning into high‑growth, high‑margin opportunities while navigating a sluggish mobile cycle and currency pressure. Investors will watch whether record Wi‑Fi shipments, growing AI and automotive traction, and a strong licensing pipeline can translate into sustained royalty growth and the sizable non‑GAAP margin expansion management has promised.