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CI

CEVA INC (CEVA)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $25.7M, up 6% sequentially and down 10% YoY; licensing $15.0M and royalties $10.7M, with GAAP gross margin 86% and non-GAAP 87% .
  • Results modestly above Wall Street consensus: revenue $25.678M vs $25.325M*, and non-GAAP EPS $0.07 vs $0.053*; GAAP diluted loss per share was $(0.15) .
  • Management guided Q3 revenue to $26–$30M, GAAP GM ~87%/non-GAAP ~88%, GAAP opex $26–$27M, non-GAAP opex $21–$22M; reiterated expectation for double‑digit YoY growth in full-year non‑GAAP net income and EPS .
  • Strategic catalysts: four NeuPro NPU licensing wins, two automotive IP deals (V2X with Qualcomm/Autotalks and 4D radar), record cellular IoT and Wi‑Fi 6 shipments, and surpassing 20B cumulative CEVA-powered devices .

What Went Well and What Went Wrong

  • What Went Well

    • “We secured four strategic, high impact NPU customer agreements, validating the market’s readiness and our innovative, market leading NPU portfolio” .
    • Royalty momentum: consumer IoT shipments up 21% sequentially and 16% YoY; cellular IoT shipments hit a record 66M (+66% YoY) and Wi‑Fi shipments 62M (+80% YoY; Wi‑Fi 6 +113% YoY) .
    • Share repurchases of 300K shares for ~$6.2M; buyback capacity remains available as program expanded in Nov 2024 .

  • What Went Wrong

    • Year-over-year declines: revenue down to $25.7M from $28.4M; licensing $15.0M vs $17.3M; royalties $10.7M vs $11.2M .
    • GAAP operating loss widened to $(4.5)M; GAAP net loss $(3.7)M; non‑GAAP operating income fell to $0.8M from $4.4M YoY .
    • Smartphone market softness at the low end weighed on royalties; Bluetooth shipments down 5% YoY; industrial IoT shipments fell 16% YoY .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$29.223 $24.245 $25.678
Licensing & Related Revenue ($USD Millions)$15.733 $15.042 $15.022
Royalty Revenue ($USD Millions)$13.490 $9.203 $10.656
GAAP Gross Margin %88% 86% 86%
Non-GAAP Gross Margin %89% 87% 87%
GAAP Operating Income (Loss) ($USD Millions)$0.074 $(4.382) $(4.482)
Non-GAAP Operating Income ($USD Millions)$4.475 $0.293 $0.773
GAAP Diluted EPS ($USD)$(0.07) $(0.14) $(0.15)
Non-GAAP Diluted EPS ($USD)$0.11 $0.06 $0.07

Actual vs Consensus (Q2 2025):

MetricActualConsensus
Revenue ($USD Millions)$25.678 $25.325*
Non-GAAP EPS ($USD)$0.07 $0.053*
Primary EPS (reported) ($USD)$(0.15) —

Segment/Revenue Mix and Activity:

MetricQ4 2024Q1 2025Q2 2025
Licensing Deals Concluded (count)12 11 13
Royalties as % of Revenue46% 38% 41%
Licensing as % of Revenue54% 62% 59%

KPIs (Shipments and mix):

KPIQ4 2024Q1 2025Q2 2025
CEVA-powered device shipments (units)623M 420M 488M
Mobile handset modemsN/A49M 55M
Consumer IoT shipmentsN/A337M 409M (+21% seq, +16% YoY)
Industrial IoT shipmentsN/A34M 24M (−16% YoY)
Bluetooth shipmentsN/A233M 254M (−5% YoY)
Wi‑Fi shipmentsN/A35M 62M (+80% YoY; Wi‑Fi 6 +113% YoY)

Non-GAAP adjustments included equity-based compensation, amortization of intangibles, asset acquisition costs, and marketable equity securities remeasurement; per share impacts detailed in the reconciliation .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Millions)Q3 2025N/A$26–$30 New
GAAP Gross Margin %Q3 2025N/A~87% New
Non-GAAP Gross Margin %Q3 2025N/A~88% New
GAAP Operating Expenses ($M)Q3 2025N/A$26–$27 New
Non-GAAP Operating Expenses ($M)Q3 2025N/A$21–$22 New
Net Interest Income ($M)Q3 2025N/A~$1.3 New
Taxes ($M)Q3 2025N/A~$1.8 New
Share Count (M)Q3 2025N/A25.8 New
FY Revenue Growth vs 2024FY 2025Lowered to low single‑digit growth (from high single‑digit) Maintained overall revenue growth discussed prior Maintained
FY Non-GAAP Net Income and EPSFY 2025Double‑digit increase, lowered percentage vs earlier guidance Reiterated double‑digit increase Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (Prev.)Q1 2025Q2 2025Trend
Edge AI NPUs adoptionHigh-level momentum noted Nextchip ADAS NeuPro‑M win; strong pipeline Four NPU deals (NeuPro‑Nano and NeuPro‑M); expansion to infrastructure/datacenter inference Accelerating
Smartphone royaltiesRecord shipments in Q4; strength broadly Soft low-end smartphones; first royalties from US OEM 5G modem Low-end softness persists; anticipating 2H growth incl. US OEM share gains Mixed, improving 2H
Wi‑Fi 6/7 trajectoryRecord annual Wi‑Fi devices Wi‑Fi royalties +183% YoY on ASP uplift; Wi‑Fi 7 design win Wi‑Fi 6 shipments +113% YoY; continued ramp Strong ramp
Automotive/V2X & radarStrategic licensing progress ADAS traction; royalty ramps starting Qualcomm/Autotalks V2X, 4D radar sensor fusion DSP; more production starts Building royalties
Macro/tariffs & seasonalityN/ACautious macro; lowered FY revenue growth to low single-digit Maintains growth view; seasonally stronger H2; Q3 guidance detailed Cautiously optimistic

Management Commentary

  • “We secured 13 license agreements… highlighting the breadth and strength of our IP portfolio… this quarter marked a pivotal moment for our AI business… four strategic, high impact NPU customer agreements” .
  • “Royalty revenue… up 16% sequentially but a 5% decrease year over year… consumer IoT customers showed strong sequential and year-over-year growth… record high cellular IoT and Wi‑Fi 6 shipments” .
  • “We reiterate our belief that we will reach a double-digit percentage increase of non-GAAP net income and fully diluted non-GAAP EPS relative to 2024” .
  • “Surpassed 20 billion Ceva-powered devices shipped globally… a launchpad for Ceva’s next chapter” .

Q&A Highlights

  • Royalty leverage from NPUs: Management expects higher per‑unit royalty economics as NPU‑based designs reach production; typical license‑to‑royalty lag ~18–24 months, potentially shorter for consumer devices .
  • Smartphone outlook: H2 royalty strength supported by seasonal patterns and US OEM share gains using CEVA tech in in‑house 5G modem; 2026 commentary deferred, but trajectory expected to improve .
  • AI scaling and data center: CEVA’s silicon IP is scalable (hundreds of GOPS to hundreds of TOPS) with full SDK; emerging use in cloud inference alongside GPUs, focused on low‑power, high‑bandwidth workloads .
  • Bluetooth dynamics: YoY decline in Q2 attributed to mix; adoption shifting toward Bluetooth 6.0, with Bluetooth 7.0 underway for 2026–2027 growth .

Estimates Context

  • Q2 2025: Revenue $25.678M vs consensus $25.325M*; non‑GAAP EPS $0.07 vs $0.053* .
  • Forward consensus: Q3 2025 revenue $28.035M*, EPS $0.105*; Q4 2025 revenue $31.159M*, EPS $0.1914* (management guided Q3 $26–$30M and reiterated full‑year non‑GAAP growth) .
  • Implication: Modest beat reduces near‑term estimate risk; trajectory depends on H2 smartphone royalties, sustained Wi‑Fi 6 ramp, and licensing execution in AI/automotive.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Sequential growth with small consensus beat reduces downside risk; watch H2 royalty ramp tied to smartphone seasonality and US OEM modem share .
  • AI monetization improving: four NPU wins broaden TAM (consumer audio, STB/displays, infrastructure inference); expect higher royalty ASPs as designs enter production over 18–24 months .
  • Connectivity tailwinds: Wi‑Fi 6 shipments +113% YoY and ASP uplift support royalties; Wi‑Fi 7 design wins provide multi‑year runway .
  • Automotive optionality: V2X via Qualcomm/Autotalks and 4D radar sensor fusion wins plus ADAS NeuPro‑M deployments set up durable royalty streams .
  • Cost discipline vs investment: opex above guidance in Q2 due to benefits and AI investments; Q3 opex guided flat; margin improvement targeted .
  • Capital returns: Buybacks ($6.2M) signal confidence; ample cash/securities (~$157M) support investment and returns .
  • Trading lens: Near‑term catalyst is Q3 execution against $26–$30M guide; medium‑term thesis hinges on AI NPU adoption curve, connectivity leadership, and automotive royalty scale .