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CEVA INC (CEVA)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $24.2M (+10% YoY) on strong licensing ($15.0M) but softer royalties ($9.2M); non-GAAP EPS was $0.06 and GAAP EPS was -$0.14 .
  • Results missed Wall Street consensus on revenue ($26.6M*) and EPS ($0.0704*) for Q1; however, CEVA subsequently beat Q2 2025 consensus on both revenue ($25.3M* est vs $25.7M actual) and EPS ($0.053* est vs $0.07 actual) .
  • Guidance was lowered: 2025 revenue growth cut from high-single digits to low-single digits; expense plan tightened to in-line with 2024; Q2 revenue guided to $23.7M–$27.7M, with GM ~86% GAAP/87% non-GAAP .
  • Operating context: first royalties from a leading U.S. OEM’s in-house 5G modem; Wi‑Fi royalties +183% YoY on mix shift to Wi‑Fi 6 ASP; licensing pipeline highlighted by Wi‑Fi 7 and Edge AI ADAS wins (Nextchip) .

What Went Well and What Went Wrong

What Went Well

  • Licensing momentum: 11 agreements in Q1 including Wi‑Fi 7 with a long-term connectivity customer, Edge AI NPU for automotive ADAS, and spatial audio for a leading PC OEM; licensing revenue +32% YoY to $15.0M .
  • Strategic royalty drivers: “We received the first royalty report from a leading U.S. OEM using our technology in their in-house 5G modem,” positioning CEVA for a meaningful long-term revenue stream .
  • Wi‑Fi royalty leverage: Wi‑Fi royalties +183% YoY on a 12% unit increase, reflecting higher ASPs of Wi‑Fi 6; shipments robust across consumer/industrial IoT and Bluetooth .

What Went Wrong

  • Royalty shortfall: “Royalty revenue fell short of expectations due to soft low-cost smartphone shipments and an industrial customer with a slower product ramp-up” .
  • Gross margin slightly below forecast/guidance (GAAP 86%, non-GAAP 87%) with some R&D costs allocated to COGS for a strategic satellite modem customer, trimming GM by ~1–2 pts .
  • 2025 outlook caution: management lowered full-year revenue growth to low-single digits amid macro uncertainty and indirect demand impacts; sequential recovery in royalties expected but visibility reduced .

Financial Results

Quarterly Financials (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$27.207 $29.223 $24.245
Licensing Revenue ($USD Millions)$15.574 $15.733 $15.042
Royalty Revenue ($USD Millions)$11.633 $13.490 $9.203
GAAP Gross Margin %85% 88% 86%
Non-GAAP Gross Margin %87% 89% 87%
GAAP EPS ($)-$0.06 -$0.07 -$0.14
Non-GAAP EPS ($)$0.14 $0.11 $0.06

Q1 2025 vs Q1 2024

MetricQ1 2024Q1 2025
Revenue ($USD Millions)$22.072 $24.245
Licensing Revenue ($USD Millions)$11.414 $15.042
Royalty Revenue ($USD Millions)$10.658 $9.203
GAAP Gross Margin %89% 86%
Non-GAAP Gross Margin %90% 87%
GAAP EPS ($)-$0.23 -$0.14
Non-GAAP EPS ($)-$0.05 $0.06

Estimates vs Actuals

PeriodMetricConsensus*Actual
Q1 2025Revenue ($USD Millions)$26.5515*$24.245
Q1 2025EPS (Non-GAAP, $)$0.0704*$0.06
Q2 2025Revenue ($USD Millions)$25.325*$25.678
Q2 2025EPS (Non-GAAP, $)$0.053*$0.07

Values retrieved from S&P Global.*

Segment Breakdown (Revenue)

SegmentQ3 2024Q4 2024Q1 2025
Licensing ($USD Millions)$15.574 $15.733 $15.042
Royalty ($USD Millions)$11.633 $13.490 $9.203

KPIs and Shipment Mix

KPIQ1 2025YoY Change
Total shipped units (M)420 +13%
Mobile handset modems (M; % of total)49; 12% N/A
Consumer IoT units (M)337 +19%
Industrial IoT units (M)34 +26%
Bluetooth units (M)233 +15%
Cellular IoT units (M)48 +31%
Wi‑Fi units (M)35 +12%
Wi‑Fi royalty revenueN/A+183% YoY

Non-GAAP adjustments in Q1 excluded equity-based comp ($4.3M), amortization ($0.2M), acquisition costs ($0.1M), and $0.1M remeasurement loss; non-GAAP operating income was $0.3M and non-GAAP EPS $0.06 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue growth vs 2024FY 2025High-single digits Low-single digits Lowered
Total expenses (COGS+OpEx) vs 2024FY 2025+2% to +6% In-line with 2024 ($96M–$100M) Lowered
Non-GAAP OpExFY 2025Slightly higher vs 2024 Slightly lower vs 2024 Lowered
Non-GAAP profitability (OP inc/margins, NI, EPS)FY 2025Double-digit % increase (earlier) Double-digit % increase (lower than earlier) Lowered trajectory
RevenueQ2 2025N/A$23.7M–$27.7M Set
GAAP / Non-GAAP Gross MarginQ2 2025N/A~86% / ~87% Set
GAAP OpExQ2 2025N/A$25.1M–$26.1M Set
Non-GAAP OpExQ2 2025N/A$20.3M–$21.3M Set
Net interest incomeQ2 2025N/A~$1.3M Set
TaxesQ2 2025N/A~$1.2M Set
Diluted share countQ2 2025N/A25.6M Set

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Edge AI NPUs / ADASFirst NeuPro-Nano licensing; embedded AI momentum Nextchip licensed NeuPro‑M for ADAS; Mgmt highlights vision transformers and scalable NPU (4–400 TOPS) Strengthening adoption
Connectivity leadership (Wi‑Fi/Bluetooth/UWB)Strategic Wi‑Fi architecture deal with global MCU leader; strong shipments Wi‑Fi 7 design win with long-term customer; Wi‑Fi 6 ASP uplift drives +183% Wi‑Fi royalties YoY Improving mix/ASP
Smartphone royalties (low-end)Record shipments; diversified royalties Q1 softness in low-cost smartphones; sequential royalty growth expected from Q2 Near-term soft, improving sequentially
Macro/tariffsRaised FY24 guidance on strength Indirect demand impact; 2025 growth guide lowered; no direct tariff impact cited More cautious
Gross margin driversGM 85–89% on mix; services allocations intermittent GM ~86–87%; R&D allocated to COGS for satellite modem customization Slightly lower due to allocation
Licensing cadenceQ3: 10 deals; Q4: 12 deals Q1: 11 deals; robust pipeline; 2 first-time customers Consistent execution
Repurchases / CapitalExpanded buyback in Q3; repurchased Q4 shares No Q1 repurchase disclosed; later Q2 repurchased 300k shares ($6.2M) Program-active (post-Q1)

Management Commentary

  • CEO: “We delivered solid progress in our licensing business… While royalty revenue was below expectations, we are encouraged by adoption… in a leading U.S. OEM’s in-house 5G modem launched in the quarter” .
  • CEO on ADAS: “NeuPro‑M’s support for vision transformers… and ability to process multiple video streams and AI models in parallel make it ideal for next-generation ADAS” .
  • CFO: “Quarterly gross margins came in 1% lower than forecasted… As discussed, some R&D costs… are presented in COGS” .
  • CFO on financial items: Net financial income $2.1M boosted by ~7% euro appreciation impacting euro-denominated assets (e.g., French tax receivables) .
  • CFO on shipments: 420M units (+13% YoY), with Bluetooth 233M (+15%), Cellular IoT 48M (+31%), Wi‑Fi 35M (+12%); Wi‑Fi royalties +183% YoY on Wi‑Fi 6 ASP mix .

Q&A Highlights

  • ADAS win scope: With a Tier‑1 supplier; program spans multiple OEMs and next-gen platforms, not a single OEM .
  • Wi‑Fi 6/7 ASPs: Transition from Wi‑Fi 4→6 drove major ASP uplift; Wi‑Fi 7 expected to add further uplift as it ramps in future years .
  • Smartphone softness: Seasonality and supply chain adjustments drove Q1 softness; management expects sequential ramp through the year and limited direct tariff impact .
  • Licensing pipeline: Activity remains healthy; customers are cautious given macro, but no material licensing push-outs observed; localization trends may be tailwinds .
  • Gross margin allocation: Temporary services/customization for advanced 5G use cases moves costs to COGS; expected to normalize post-completion while IP re-use benefits future designs .

Estimates Context

  • Q1 2025 missed consensus: Revenue $24.245M vs $26.5515M*; EPS $0.06 vs $0.0704*; driven by royalty shortfall (low-cost smartphones, slower industrial ramp) and slightly lower GM .
  • Q2 2025 beat consensus: Revenue $25.678M vs $25.325M*; EPS $0.07 vs $0.053*; aided by sequential royalty recovery, Wi‑Fi 6 ASP mix, and disciplined OpEx .
  • FY 2025 consensus stands at $109.41M* revenue and $0.4232* EPS; management cut revenue growth guidance to low-single digits, implying potential near-term estimate recalibration .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Licensing strength and strategic wins (Wi‑Fi 7, NeuPro‑M ADAS, spatial audio) support medium-term royalty growth and diversify end markets .
  • Near-term royalty headwinds in low-end smartphones weighed on Q1; management expects sequential recovery starting Q2, with initial 5G modem royalties from a leading U.S. OEM as a multi-year driver .
  • Mix shift to Wi‑Fi 6 is materially accretive to royalties (+183% YoY on 12% unit growth), a high-quality earnings lever as volumes scale .
  • GM modestly below guide due to temporary COGS allocation for advanced 5G customization; margins should normalize post-completion while IP enhancements are reusable .
  • 2025 guidance was de-risked (low-single-digit revenue growth; expenses in-line with 2024), prioritizing profitability and OpEx discipline; monitor delivery vs Q2 guidance range and margins .
  • FX tailwinds (EUR appreciation) boosted net financial income in Q1; not core but supportive to EPS variability .
  • Trading lens: Post-Q1 miss, the narrative hinges on sequential royalty recovery, Wi‑Fi 6/7 ASP uplift, and AI NPU adoption pace; catalysts include additional OEM ramps and ADAS design wins converting to licenses/royalties .