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CI

CEVA INC (CEVA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $29.2M (+21% y/y) with licensing $15.7M (+33% y/y) and royalties $13.5M (+9% y/y); non-GAAP operating income rose to $4.5M (15% margin) and non-GAAP EPS was $0.11 .
  • Record shipments of 623M units (+38% y/y) driven by Wi‑Fi 6 and Bluetooth; Wi‑Fi shipments were 66M (+110% y/y) and Wi‑Fi royalties up 175% y/y, highlighting higher ASPs from Wi‑Fi 6 .
  • Strategic wins: long-term Wi‑Fi architecture deal with a global MCU leader and cellular DSP licensing to a leading U.S. mobile OEM for its in‑house 5G modem, creating potential multi‑year royalty tailwinds .
  • 2025 guidance: revenue growth 7–11%, expense growth 2–6%, and non‑GAAP operating income/EPS growth ~48–52%; Q1 2025 revenue guided to $25.5–$27.5M with GAAP GM ~87% and non‑GAAP GM ~88% .
  • Consensus estimates from S&P Global were unavailable at time of request due to a daily limit; management stated results “exceeded market expectations,” but we cannot quantify beats/misses vs Street .

What Went Well and What Went Wrong

What Went Well

  • Licensing traction and strategic OEM deals: Wi‑Fi architecture license with a top-tier global MCU company and a cellular DSP/IP license for a leading U.S. mobile OEM’s in‑house 5G modem, positioning CEVA for higher long-term royalty streams .
  • Record shipments and royalty diversification: 623M units in Q4 (record), with Wi‑Fi shipments +110% y/y, Bluetooth +41% y/y; strong smartphone demand and 5G RAN contribution strengthened non‑mobile royalties (second-highest quarter ex‑mobile) .
  • Operating leverage: non‑GAAP operating margin improved to 15% vs 8% last year and non‑GAAP operating income doubled y/y, supported by focused execution and expense monitoring .

Management quotes:

  • “We are pleased to finish the year with another strong quarter… ahead of our guidance.” — Amir Panush, CEO .
  • “We anticipate… a meaningful, long‑term royalty stream in the years to come.” — Amir Panush on the U.S. mobile OEM 5G modem deal .
  • “We drove double‑digit revenue growth and doubled our non‑GAAP EPS.” — Yaniv Arieli, CFO .

What Went Wrong

  • FX headwind: financial income turned negative (~$0.1M) vs +$1.8M last year due to ~7% euro depreciation impacting euro‑denominated assets (e.g., French tax receivables) .
  • Gross margin down vs prior year: GAAP GM was 88% (vs 91% in Q4’23) and non‑GAAP GM 89% (vs 92%), reflecting mix and earlier customization work tied to large 5G deals (mainly Q3/Q1 seasonality and allocation of design activities) .
  • GAAP profitability still negative: GAAP net loss of $1.7M (EPS −$0.07), albeit improved from −$8.1M in Q4’23, with taxes slightly higher than guidance due to revenue geography .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$28.44 $27.21 $29.22
Licensing & Related Revenue ($USD Millions)$17.28 $15.57 $15.73
Royalty Revenue ($USD Millions)$11.16 $11.63 $13.49
GAAP Gross Margin %90% 85% 88%
Non-GAAP Gross Margin %91% 87% 89%
GAAP Operating Income (Loss) ($USD Millions)−$0.04 −$2.62 $0.07
Non-GAAP Operating Income ($USD Millions)$4.40 $2.11 $4.48
GAAP Net Income (Loss) – Continuing ($USD Millions)−$0.29 −$1.31 −$1.74
GAAP Diluted EPS ($USD)−$0.01 −$0.06 −$0.07
Non-GAAP Net Income ($USD Millions)$4.20 $3.41 $2.66
Non-GAAP Diluted EPS ($USD)$0.17 $0.14 $0.11

Segment revenue breakdown:

SegmentQ2 2024Q3 2024Q4 2024
Licensing & Related ($USD Millions)$17.28 $15.57 $15.73
Royalties ($USD Millions)$11.16 $11.63 $13.49

Key KPIs:

KPIQ2 2024Q3 2024Q4 2024
Total Units Shipped (Millions)461 522 623
Mobile Handset Modems (Millions)79 72 129
Consumer IoT Units (Millions)353 414 459
Industrial IoT Units (Millions)28 36 35
Bluetooth Units (Millions)266 306 343
Cellular IoT Units (Millions)40 48 46
Wi‑Fi Units (Millions)35 47 66

Additional notes:

  • Q4 Wi‑Fi royalties +175% y/y due to Wi‑Fi 6 ramp (higher royalty per unit) .
  • Record combined shipments across Bluetooth/Wi‑Fi/cellular IoT; strong smartphone and 5G RAN contributions .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue Growth (%)FY 20244%–8% (initial) 7%–9% (raised in Nov) Raised
Revenue ($USD Millions)Q4 2024$26.5–$28.5 Actual $29.22 Outperformed guidance
Revenue Growth (%)FY 2025N/A7%–11% New
Total Expenses (COGS+OpEx)FY 2025N/A$99–$103M; +2%–6% y/y New
Non‑GAAP Operating Income/EPS GrowthFY 2025N/A+48%–52% y/y New
Revenue ($USD Millions)Q1 2025N/A$25.5–$27.5 New
GAAP / Non‑GAAP Gross Margin (%)Q1 2025N/A~87% / ~88% New
GAAP OpEx ($USD Millions)Q1 2025N/A$25.1–$26.1 New
Non‑GAAP OpEx ($USD Millions)Q1 2025N/A$21–$22 New
Net Interest Income ($USD Millions)Q1 2025N/A~$1.3 New
Taxes ($USD Millions)Q1 2025N/A~$1.2 New
Share Count (Millions)Q1 2025N/A~25.4 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Edge AI initiatives (NeuPro‑Nano)Introduced NeuPro‑Nano; TinyML opportunity; partnerships (Edge Impulse) First NeuPro‑Nano licensing win; second implementation; broader pipeline Additional AI DSP/NPU licensing; rising customer demand and positive feedback Accelerating
Wi‑Fi ramp (Wi‑Fi 6)Wi‑Fi units 35M (+21% y/y) Wi‑Fi units 47M (+100% y/y) Wi‑Fi units 66M (+110% y/y); royalties +175% y/y Rapid adoption; higher ASPs
Bluetooth266M units (+26% y/y) 306M units (−2% y/y) 343M units (+41% y/y) Strong rebound
5G advanced/customizationLong‑term infrastructure OEM deals; hybrid AI comms Customization depressed GM; multiple 5G advanced wins (satellite, V2X) Q4 deals mostly off‑the‑shelf; lingering Q3 customization affects seasonality Normalizing GM
U.S. mobile OEM 5G modem——Long‑term licensing for in‑house 5G modem New royalty driver
Macro/FXFinancial income +$1.4M Financial income +$2.3M Financial income −$0.1M; euro −7% impacted assets FX headwind in Q4

Management Commentary

  • Strategic positioning: “Our business momentum is fueled by the AI super‑cycle… enabling AI inference processing at the edge… connect wirelessly, sense… and perform real‑time, on‑device inference.” — Amir Panush, CEO .
  • OEM partnerships: “Top‑tier global MCU… long‑term architecture license for our Wi‑Fi platform… Leading U.S. OEM to use our technology in their in‑house 5G modem… drive a meaningful, long‑term royalty stream.” — Amir Panush .
  • Operating discipline: “Non‑GAAP operating margins and income were 15% of revenue and $4.5M… Strong business execution and expense monitoring contributed to increased growth and profitability.” — Yaniv Arieli, CFO .
  • 2025 outlook: “Annual revenue expected to grow 7%–11%… expenses to increase 2%–6%… non‑GAAP operating income and EPS to grow ~48%–52%.” — Yaniv Arieli .

Q&A Highlights

  • AI at the Edge and MCU integration: Opportunity to integrate NPUs alongside wireless into MCU portfolios as Edge AI proliferates; CEVA positioning to enable MCU OEMs to add AI capabilities .
  • U.S. mobile OEM 5G modem ramp: Timing/run‑rate depends on the customer’s production schedule; CEVA expects multi‑year royalty opportunity but defers specifics to OEM launch timelines .
  • Wi‑Fi penetration: Expect acceleration during transition to Wi‑Fi 6 across IoT markets; combo Bluetooth/Wi‑Fi chips present multi‑year growth and higher ASP opportunity .
  • Gross margin and customization: Q4 new deals were off‑the‑shelf; prior large mobile customization continues into 2025, modestly lowering near‑term GM; seasonality reduces Q1 royalties .
  • Relative growth (modem vs Wi‑Fi): Hard to forecast exact ramp timing due to royalty visibility; second‑half typically stronger; broad-based growth expected across Wi‑Fi, Bluetooth, cellular IoT, mobile .

Estimates Context

  • S&P Global consensus estimates for Q2–Q4 2024 (Revenue, EPS) were unavailable due to a daily request limit exceeded at the time of query. We cannot quantify beats/misses vs Street for Q4 2024. Management stated Q4 “exceeded market expectations,” but absent S&P Global figures, treat this as qualitative commentary only .
MetricQ4 2024 Consensus (S&P Global)Actual
Revenue ($USD Millions)Unavailable$29.22
EPS ($USD)Unavailable$0.11 non‑GAAP; −$0.07 GAAP

Key Takeaways for Investors

  • Licensing momentum plus record royalty shipments underpin a durable growth cycle; Wi‑Fi 6 ramp materially improves royalty economics (ASP uplift) .
  • Strategic OEM wins (MCU Wi‑Fi architecture; U.S. mobile OEM 5G modem) broaden end‑market exposure and set up multi‑year royalty streams; monitor product launch timing for revenue inflection .
  • Operating leverage improving: non‑GAAP operating margin reached 15% in Q4, with 2025 guidance for ~50% y/y growth in non‑GAAP operating income/EPS on modest expense growth (+2%–6%) .
  • Near‑term seasonality and FX are headwinds (Q1 royalties seasonally lower; euro depreciation hit Q4 financial income), but mix shift to higher‑royalty Wi‑Fi/Bluetooth supports margin trajectory .
  • Watch Wi‑Fi combo momentum: OEM adoption of Bluetooth+Wi‑Fi combo chips is an important driver of unit volumes and royalties over the next 12–24 months .
  • Edge AI cross‑sell: NeuPro‑Nano enables AI features in existing connectivity customer bases (audio, wearables, IoT), potentially lifting royalty per device; track additional NPU deals .
  • With consensus data unavailable, trading catalysts focus on OEM design win disclosures, Wi‑Fi 6 production ramps, and confirmation of 2025 H2 weighting in revenues per management guidance .