NASDAQ:CEVA

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Ceva, Inc. (NASDAQ:CEVA), a leading licensor of wireless connectivity and smart sensing technologies for the Internet of Things (IoT), reported strong financial results for the second quarter of 2024. It exceeded estimates with robust licensing execution and royalty growth across multiple markets. Ceva's technologies are aligned with today's most advanced smart-edge products, enabling a smarter, safer, and more interconnected world.

Company Background and Market Position

For over 30 years, Ceva has provided comprehensive, vertically integrated silicon and software IP solutions, enabling custom?ers to develop intelligent, connected devices with superior performance, power efficiency, and flexibility.

Ceva's solutions power over 17 billion of the world's most innovative smart-edge products across various end markets, including consumer IoT, mobile, automotive, industrial, and PC infrastructure. The company ships over 1 billion devices powered by IoT connectivity IPs annually, cementing its position as a leader in the IoT revolution.

Financial Highlights

For Q2 2024, Ceva reported a total revenue of $28.4 million, up 24% compared to $22.9 million in Q2 2023. Licensing and related revenue totaled $17.3 million, up 28% year-over-year and 51% on a sequential-quarter basis. Royalty revenue grew to $11.2 million, up 19% year-over-year and 5% quarter-over-quarter.

CEVA’s gross margin improved to 90% on a GAAP basis and 91% on a non-GAAP basis, compared to 85% and 86%, respectively, in the prior-year quarter. The company’s son-GAAP operating margin came in at 15%, representing a substantial improvement from negative margins in both Q1 2024 and Q2 2023.

Non-GAAP net income for Q2 2024 increased significantly to $4.2 million, or $0.17 per diluted share, compared to a net loss of $0.5 million, or $0.02 per diluted share, in Q2 2023.

Technology Portfolio and Market Expansion

Ceva's IP portfolio addresses key technology trends across multiple markets:

1. 5G Mobile & Infrastructure: The company's PentaG2 baseband platform and Ceva-XC vector DSPs help to form the backbone of 5G networks worldwide, powering smartphones, fixed wireless access, and cellular V2X applications.
2. Wireless IoT: As the world's leading licensor of connectivity solutions for IoT, Ceva offers advanced Bluetooth, Wi-Fi, UWB, and cellular IoT solutions for a wide range of devices, from smart hearables to wireless biosensors.
3. Edge AI Sensing: Ceva's comprehensive suite of processor solutions, including NeuPro-M NPUs and SensPro2 DSPs, caters to the growing demand for power-efficient Edge AI deployment in neural network-based designs.
4. Sensing & Audio Software: The company's software solutions, such as RealSpace for spatial audio and ClearVox for voice clarity, provide cutting-edge user experiences in various consumer devices.

In Q2 2024, Ceva signed 11 licensing deals addressing AI solutions for industrial and consumer edge AI devices, next-generation wireless infrastructure, 5G satellite, 5G RedCap, and Bluetooth connectivity for wearables and hearables. Notably, Ceva agreed to a strategic Bluetooth portfolio deal with a top 3 U.S. semiconductor analog company expanding from sensing to connectivity and AI.

New Product Launches and AI Focus

Ceva introduced two new IP products in Q2 2024:

1. NeuPro-Nano: The newly launched Neural Processor Unit (NPU) is specifically designed for TinyML applications, making it an ideal choice for AIoT devices such as hearables, wearables, smart home products, and industrial IoT solutions. The NeuPro-Nano NPU delivers a superior balance of ultra-low power consumption and high performance in a compact silicon area, efficiently handling TinyML workloads. With its fully programmable architecture, the NeuPro-Nano supports advanced machine learning data types and operators, including native transformer computation, fast quantization, and sparsity support, which are crucial for modern AI tasks.

The NeuPro-Nano is available in two configurations: Ceva-NPN32 and Ceva-NPN64, catering to a wide range of use cases. Its self-sufficient architecture allows it to operate independently without needing a companion MCU/CPU, offering significant power efficiency and a smaller silicon footprint. Moreover, the NPU's innovative features, such as weight decompression and sparsity acceleration, reduce memory and energy usage, making it highly optimized for on-device AI applications across various markets.

2. Ceva-Waves Links: The Ceva-Waves Links family represents an innovative multi-protocol wireless platform designed to accelerate the development of connected Smart Edge SoCs. It integrates a wide range of wireless protocols, including Wi-Fi, Bluetooth, IEEE 802.15.4 (for Thread/Matter and Zigbee), and Ultra-Wideband (UWB), making it a versatile solution for various IoT and smart home applications.

The Ceva-Waves Links platform offers a modular architecture, allowing tailored solutions to meet specific application requirements. The first member of this family, the Links100, is an integrated, low-power communication subsystem optimized for IoT applications. It supports Wi-Fi 6, Bluetooth 5.4 with advanced features like Auracast and LE Audio, and IEEE 802.15.4 for Thread and Zigbee. The platform also includes pre-integrated radio solutions and optimized hardware platforms to ensure low power consumption and efficient concurrent communications.

AI is becoming a key factor driving Ceva's business. The company's strategy aligns well with the growing adoption of AI across industries, positioning Ceva to capitalize on the trend towards hybrid AI where processing is distributed between cloud and edge devices.

Financial Outlook and Conclusion

For Q3 2024, Ceva expects total revenue between $26.0 million to $28.0 million, with gross margins similar to Q2 2024. The company anticipates achieving the mid- to high-end of its 4%-8% annual revenue growth guidance for 2024.

As Ceva continues to innovate and expand its IP offerings across the Connect, Sense, and Infer domains, the company remains well-positioned to capitalize on growing demand for smart, connected devices. With its comprehensive portfolio addressing key technology trends in 5G, IoT, and Edge AI, Ceva remains at the forefront of enabling the next generation of intelligent, connected devices that are shaping our increasingly interconnected world.

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