Ceva Inc ((CEVA)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for Ceva Inc. revealed a mixed sentiment, highlighting both significant achievements and notable challenges. The company showcased impressive strides in licensing and technology adoption, particularly in Wi-Fi and Edge AI. However, these successes were tempered by difficulties in royalty revenues and a cautious outlook for the year, influenced by broader macroeconomic factors.
10% Increase in Total Revenue
Ceva Inc. reported a 10% year-over-year increase in total revenue, reaching $24.2 million for the quarter. This growth was primarily driven by strong licensing performance, underscoring the company’s strategic focus on expanding its licensing operations.
Licensing Revenue Growth
Licensing revenues surged by 32% to $15 million, making up 62% of the total revenues. This growth was fueled by strategic deals in Bluetooth and Wi-Fi technologies, highlighting Ceva’s successful penetration into these critical markets.
Wi-Fi Royalties Surge
The company experienced a remarkable 183% year-over-year increase in Wi-Fi royalties, attributed to a 12% rise in unit shipments. This growth was driven by a shift towards Wi-Fi 6, which offers a higher average selling price (ASP), reflecting the market’s evolving technology demands.
New Design Wins in Edge AI and ADAS
Ceva secured a significant design win for its NeuPro-M Edge AI NPU with Nextchip, aimed at next-generation ADAS solutions. This win underscores the advanced capabilities of Ceva’s technology in the rapidly growing Edge AI market.
Strong Unit Shipments
During the first quarter, CEVA licensees shipped 420 million units, marking a 13% increase from the previous year. This growth was particularly strong in the IoT and Bluetooth segments, demonstrating robust demand in these areas.
14% Decline in Royalty Revenue
Despite the positive trends in other areas, royalty revenues fell by 14% to $9.2 million. This decline was primarily due to challenges in the low-cost smartphone market and slower product ramp-up by an industrial customer.
Lowered Revenue Guidance for 2025
Ceva has revised its revenue growth guidance for 2025 from high-single digits to low-single digits. This adjustment reflects a more cautious outlook due to a slower start in Q1 and ongoing macroeconomic uncertainties.
Operating Loss
The company reported a GAAP operating loss of $4.4 million for the first quarter, an improvement from a $5 million loss in the same period last year. This reduction in loss indicates a positive trend in managing operational efficiencies.
Forward-Looking Guidance
Looking ahead, Ceva remains focused on expanding its customer base and maintaining its technology leadership. Despite the lowered revenue guidance, the company anticipates a substantial future royalty stream, particularly from its first royalty report from a U.S. OEM for in-house 5G modem technology. This strategic focus aims to navigate the macroeconomic uncertainties while leveraging its strong licensing activity.
In summary, Ceva Inc.’s earnings call painted a picture of both triumphs and trials. While the company has made significant strides in licensing and technology adoption, challenges in royalty revenues and a cautious outlook for the year remain. Investors and stakeholders will be keenly watching how Ceva navigates these dynamics in the coming quarters.