575cc296ffb7a21a8d15b88eea844ed6130b2ce85825fb19569636347e1563f3

Operating cash flow in Q1 2023 turned so negative primarily because the company experienced a significantly higher **net loss** of **$(4,872) thousand** compared to **$(1,696) thousand** in Q1 2022. This larger loss was compounded by unfavorable changes in operating assets and liabilities—most notably, an increase in **trade receivables** by **$(3,802) thousand** (in contrast to a decrease of **$3,944 thousand** in Q1 2022) and an increase in **prepaid expenses and other assets** by **$(2,205) thousand**. Additionally, the positive impacts from deferred revenues and accrued payroll and related benefits were substantially lower compared to the previous period, further contributing to the net cash being **$(5,076) thousand** in Q1 2023.  **[0001437749-23-013600_ceva20230331_10q.htm:7]** **[0001437749-23-013600_ceva20230331_10q.htm:29]** 

Why did Operating Cash Flow turn so negative in Q1 2023?

In Q2 2023, the significant decline in operating cash flow was primarily driven by a **substantially higher net loss** compared to the previous period, an **increase in equity-based compensation** (a non-cash expense that required adjustment), a **less favorable change in deferred revenues**, a **marked increase in negative accrued payroll and related benefits**, and **unfavorable changes in accrued expenses and other payables**.  **[0001437749-23-022803_ceva20230630_10q.htm:7]** 

What factors contributed to the significant Operating Cash Flow decline in Q2 2023?

The improvement in Q3 2023’s Operating Cash Flow was driven by a **lower net loss** and the effect of significant **non-cash adjustments**. Specifically, while the net loss in the first nine months of 2023 was still negative, it was notably smaller than in the previous comparable period, and the large non-cash adjustments—particularly from **depreciation and amortization** and **equity-based compensation**—helped mitigate the cash outflows from operations.  **[0001437749-23-031089_ceva20230930_10q.htm:7]**  

What led to the notable improvement in Operating Cash Flow in Q3 2023?

a671227e0fa1a98d2fd99dc4f6b8144e14b7f2043f9da2636fc2a6abad626661

The sharp drop in **Licensing revenue** for Q3 2023 was primarily due to **macroeconomic factors** that slowed funding among smaller semiconductor companies, limiting new customer licensing agreements. Additionally, **broader market dynamics** impacted the semiconductor industry overall, and the **timing of agreements** also played a role in the revenue decline despite strong demand for CEVA’s wireless communications IP portfolio such as **Wi-Fi 7** and **Bluetooth IPs**.  **[0001437749-23-031089_ceva20230930_10q.htm:30]** **[0001437749-23-030793_ex_592002.htm:2]** 

Why did Licensing revenue drop so sharply in Q3 2023?

The negative cost of revenues reported for Q3 2023 is mainly attributable to the absence of several items that had previously increased the cost in Q3 2022. Specifically, there were no **impairment charges** related to prepaid and non‐performing NB-IoT assets, a reduction in **customization work** for licensees, and a slight change in **non-cash equity-based compensation** expense. These factors combined to significantly lower the cost of revenues for that period.  **[0001437749-23-031089_ceva20230930_10q.htm:32]** 

What caused the negative cost of revenues in Q3 2023?

The operating loss was nearly neutralized in Q2 2024 due to a combination of **revenue growth** and an **improved gross margin** that boosted profitability, along with **disciplined expense control** that kept operating costs in check. Additionally, favorable **non-GAAP adjustments** further offset the loss, contributing to a conversion from a large loss in the previous year to a nearly neutral operating result in Q2 2024.  **[20240807SF77950:4]** **[0001437749-24-025030_ex_708355.htm:4]** **[20240807SF77950:0]** 

Why was the operating loss nearly neutralized in Q2 2024?

The dramatic reduction in net loss from continuing operations in Q3 2024 was driven by a combination of factors. **Revenue growth** played a significant role, with total revenues increasing by **13% year-over-year** to **$27.2 million**, which included a **12% increase in licensing and related revenue** to **$15.6 million** and a **15% increase in royalty revenue** to **$11.6 million**.  **[20241107SF50059:4]** **[20241107SF50059:0]** **[0001437749-24-033785_ex_743441.htm:0]**  Additionally, **improved non-GAAP operating income** rose by **30% year-over-year** to **$2.1 million**, bolstered by enhanced operational efficiency.  **[20241107SF50059:1]** **[0001437749-24-033785_ex_743441.htm:1]**  There was also **better cost management**, evidenced by a slightly lower GAAP operating loss and **higher gross profit**, despite a modest decline in gross margins due to customization efforts for 5G advanced deals.  **[20241107SF50059:0]** **[CEVA_3406678_4]**  Finally, **lower GAAP tax expenses**—$1 million less than guidance—further contributed to the improved net loss.  **[CEVA_3406678_4]** 

What drove the dramatic reduction in net loss from continuing operations in Q3 2024?

The reversal from net income to a net loss in Q4 2023 was largely driven by a mix of factors. **Declining revenues** had a major impact, with total revenue dropping from **$30.3 million** in Q4 2022 to **$24.2 million** in Q4 2023, including a sharp decline in licensing and related revenue from **$19.4 million** to **$11.8 million**. In addition, **higher tax expenses** played a significant role—this included a **$1.3 million tax charge** due to a completed tax audit and a **$4.5 million one-time tax charge** associated with the write-off of a deferred tax asset. Furthermore, the operating performance deteriorated, with Q4 2023 reporting a **GAAP operating loss of $2.8 million** compared to the previous period's operating profit. Finally, **one-time expenses** such as equity-based compensation, extrapayment of acquired intangibles, and deal-related costs also contributed to the shift from profitability to an overall net loss.  **[CEVA_3373258_5]** **[0001437749-24-004004_ex_625426.htm:0]** **[0001437749-24-004004_ex_625427.htm:5]** 

What factors contributed to the reversal of net loss in Q4 2023?

dfa8b195b748e16ed2983e67836338f58db0d6d92f9411c6ea383997b1cf7fc0

Licensing and related revenue (USD, thousands)

Royalties (USD, thousands)

Total revenues (USD, thousands)

Cost of revenues (USD, thousands)

Gross profit (USD, thousands)

Research and development, net (USD, thousands)

Sales and marketing (USD, thousands)

General and administrative (USD, thousands)

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Total operating expenses (USD, thousands)

Operating loss (USD, thousands)

Financial income, net (USD, thousands)

Remeasurement of marketable equity securities (USD, thousands)

Loss from continuing operation before taxes on income (USD, thousands)

Income tax expense (USD, thousands)

Net loss (USD, thousands)

Basic and diluted net loss per share (USD)

Weighted-average shares used to compute net loss per share, Basic and diluted (thousands)

5dc4c2f63ff1729af84119d6bb6d74b160fac31c0d864575c97f4773364e1a7a

a9fa6f5cdf5805e2adf026e11aa0e9175a6dd4fdad877cdfeb015890ff8fbc67

ad80048228e36a9a99b7ce29d133e6ee9729256b00a4a4cb427dbd43c8c85d52

ed34634f05992506199e65178e5899f756dca696acbdcc97dea7f151302760f4

Overall addressable market size for IoT industrial, consumer and smart home markets (billion devices annually)

9f4f8b8c32620cae8f3a859fa56bdea89b742e524439302d04e429e21ccef303

3a75ddcb548b54afd4326654410c315c40a94e218513b497fac365d6b74b4413

cc30e1772a9f03b5226d18073f5b82648a90dbb9a01a3cb3f960f8d92c36d1b9

4a3a6cbfc90f885eea1c84ea5fc10f01554c8e69d29b8926358752d13b1e527e

CEVA (CEVA)

Financials