Financial Data and Key Metrics Changes - Revenue for Q3 2022 was $33.7 million, up 3% year-over-year from $32.8 million [18] - Licensing revenue was $22.3 million, reflecting 66% of total revenues, up 3% from $21.6 million [19] - Royalty revenue was $11.4 million, reflecting 34% of total revenues, up 2% from $11.2 million [19] - GAAP operating loss for Q3 was $4 million, down from a GAAP operating profit of $1.7 million in the same quarter a year ago [20] - Non-GAAP operating profit was $6.9 million, up 4% from Q3 2021 [21] - GAAP loss for the quarter was $21.3 million, with a diluted loss per share of $0.96 [21] Business Line Data and Key Metrics Changes - Licensing environment outperformed, with 18 licensing agreements across various market segments including ADAS and wireless audio devices [7][8] - Handset baseband royalties were up 16% year-over-year but down 20% sequentially due to inventory adjustments [9] - Base station IoT royalties were down 3% year-over-year but up 16% sequentially, driven by growing 5G RAN shipments [9][10] Market Data and Key Metrics Changes - China and the U.S. were the largest drivers of business, with Japan emerging as an important market due to automotive and industrial activities [8] - Shipped units by CEVA's licensees during Q3 2022 were 357 million units, down 23% from Q3 2021 [22] - Base station and IoT product shipments were 279 million units, down 20% sequentially and down 31% year-over-year [22] Company Strategy and Development Direction - The company aims to increase IP content by moving up the value chain and licensing software IP to OEMs [11][13] - The Penta-G RAN platform was announced to extend the portfolio for the 5G RAN market, reducing entry barriers for new entrants [12][49] - Focus on diversifying revenue through software IP for wearables and other devices, with over 50 licensees using CEVA technologies [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted the further deterioration of consumer demand and extended COVID-19 restrictions in China affecting inventory levels [11] - The company expects royalty revenue to be lower by about 10% sequentially in Q4 due to softer demand in smartphones and consumer electronics [24] - Annual revenue is expected to be in the range of $132.5 million to $135 million, representing 8% to 10% annual growth over 2021 [24] Other Important Information - CEO Gideon Wertheizer announced retirement effective December 31, 2022, with Amir Panush set to take over [16][17] - The company has a strong cash position of $144 million and continues its buyback program [23] Q&A Session Summary Question: Comparison of 5G rollout in India to China - Management highlighted that India is an untapped area for 5G, with significant opportunities as they start from scratch [30][31] Question: Differences in licensing software IP contracts - Licensing software IP is royalty-based, allowing for optimization due to the company's understanding of its IP [32][34] Question: Changes in customer demand across verticals - Management noted a combination of supply easing and reduced demand leading to higher inventory levels, particularly in mobile and consumer products [38][40] Question: M&A environment and future acquisitions - No immediate M&A plans, but the company is open to exploring interesting technologies and add-ons in the future [43] Question: Update on automotive business and revenue timing - Revenue from automotive customers is expected to materialize around 2024-2025 due to the lengthy qualification process [64]

PART I. FINANCIAL INFORMATION [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) CEVA, Inc.'s unaudited interim consolidated financial statements as of June 30, 2022, show increased revenues but net losses due to higher expenses and acquisition costs [Interim Condensed Consolidated Balance Sheets](index=6&type=section&id=Interim%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2022, shows a slight decrease in total assets and stockholders' equity compared to December 31, 2021, with total assets at $319.4 million Condensed Consolidated Balance Sheet Data (in thousands) | Account | June 30, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $173,572 | $188,980 | | **Total Assets** | **$319,407** | **$328,659** | | **Total Current Liabilities** | $31,589 | $35,440 | | **Total Liabilities** | **$45,702** | **$51,927** | | **Total Stockholders' Equity** | **$273,715** | **$276,732** | [Interim Condensed Consolidated Statements of Income (Loss)](index=8&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)) Q2 2022 revenues increased to $33.2 million, but a net loss of $1.1 million was reported, with H1 revenues at $67.6 million and a $2.8 million net loss Statement of Income Highlights (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $33,195 | $30,457 | $67,586 | $55,859 | | **Gross Profit** | $26,370 | $26,764 | $54,357 | $49,785 | | **Operating Income (Loss)** | $(276) | $1,588 | $192 | $258 | | **Net Income (Loss)** | **$(1,123)** | **$315** | **$(2,819)** | **$(3,315)** | | **Diluted EPS** | **$(0.05)** | **$0.01** | **$(0.12)** | **$(0.15)** | [Interim Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations for H1 2022 decreased to $1.7 million, with increased investing and financing outflows leading to a $13.9 million decrease in cash and equivalents Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $1,711 | $8,431 | | **Net cash used in investing activities** | $(12,256) | $(4,222) | | **Net cash provided by (used in) financing activities** | $(2,737) | $1,577 | | **Decrease in cash and cash equivalents** | $(13,864) | $5,563 | [Notes to the Financial Statements](index=13&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Statements) The notes detail business operations, accounting policies, and financial results, highlighting Asia Pacific as the primary market, customer concentration, and share repurchases - CEVA licenses wireless connectivity and smart sensing technologies, and provides chip design services through its Intrinsix subsidiary, targeting mobile, consumer, automotive, and IoT markets[26](index=26&type=chunk)[27](index=27&type=chunk) Revenue by Geography - H1 2022 (in thousands) | Region | Licensing, NRE, etc. | Royalties | Total | | :--- | :--- | :--- | :--- | | United States | $9,637 | $4,100 | $13,737 | | Europe & Middle East | $2,534 | $1,340 | $3,874 | | Asia Pacific | $32,345 | $17,630 | $49,975 | - For the six months ended June 30, 2022, one customer (Customer A) accounted for **11%** of total revenues, down from **21%** in the prior year period[65](index=65&type=chunk) - During the three and six months ended June 30, 2022, the company repurchased **136,091** shares of common stock for an aggregate price of **$4.5 million**[103](index=103&type=chunk) [Management's Discussion and Analysis (MD&A)](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2022 financial performance, noting a 9% revenue increase to $33.2 million driven by licensing and NRE growth, and a strong liquidity position [Business Overview](index=30&type=section&id=BUSINESS%20OVERVIEW) CEVA licenses wireless connectivity and smart sensing technologies, with Intrinsix adding chip design services, driven by growth in 5G, IoT, and edge AI processors - CEVA's business model focuses on licensing IP for wireless connectivity and smart sensing, complemented by co-creation chip design services from its Intrinsix acquisition[108](index=108&type=chunk)[111](index=111&type=chunk) - Key growth drivers include 5G baseband processing, high-volume IoT connectivity (Bluetooth, Wi-Fi, UWB), TWS earbuds, and AI processors for edge devices[115](index=115&type=chunk)[116](index=116&type=chunk)[119](index=119&type=chunk) - In Q2 2022, **14** of **22** new IP licensing and NRE deals were for wireless connectivity, with eight for Wi-Fi platforms, indicating strong industry demand[113](index=113&type=chunk) [Results of Operations](index=32&type=section&id=RESULTS%20OF%20OPERATIONS) Q2 2022 total revenues increased 9% to $33.2 million, driven by licensing and NRE growth, but gross margin decreased and operating expenses rose, resulting in an operating loss Revenue Breakdown (in millions) | Revenue Type | Q2 2022 | Q2 2021 | % Change | | :--- | :--- | :--- | :--- | | Licensing, NRE & related | $22.1 | $15.5 | +42% | | Royalties | $11.1 | $14.9 | -26% | | **Total Revenues** | **$33.2** | **$30.5** | **+9%** | - The Q2 2022 royalty revenue decline was primarily due to a **$3.3 million** one-time payment from a customer in Q2 2021. Excluding this, royalty revenue would have been down only **4%** YoY[122](index=122&type=chunk)[128](index=128&type=chunk) - Gross margin decreased to **79%** in Q2 2022 from **88%** in Q2 2021, mainly due to higher cost of revenues from NRE-related costs associated with the Intrinsix business[133](index=133&type=chunk) - The company concluded **22** license and NRE agreements in Q2 2022, with **five** being first-time customers. Target applications include smartphones, smart home, PCs, ADAS, and 5G satellite communication[126](index=126&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As of June 30, 2022, CEVA held $146.1 million in cash and investments, generated $1.7 million from operations, and repurchased shares, with sufficient capital for the next 12 months - Total cash, cash equivalents, bank deposits, and marketable securities amounted to **$146.1 million** as of June 30, 2022[153](index=153&type=chunk) - Net cash provided by operating activities for H1 2022 was **$1.7 million**, down from **$8.4 million** in H1 2021[158](index=158&type=chunk)[159](index=159&type=chunk) - The company repurchased **136,091** shares for **$4.5 million** in H1 2022 under its share repurchase program[162](index=162&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=39&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company faces market risks including foreign currency fluctuations, interest rate risk on its investment portfolio with $5.2 million in unrealized losses, and credit risk - The company is exposed to foreign currency risk as most expenses are in NIS and Euro, while revenues are in USD. A hedging program is in place to mitigate this[165](index=165&type=chunk)[166](index=166&type=chunk) - The investment portfolio, consisting mainly of corporate bonds, had unrealized losses of approximately **$5.2 million** as of June 30, 2022, due to rising interest rates[168](index=168&type=chunk) - The company holds cash and deposits with major banks that exceed FDIC or similar insurance limits, posing a credit risk if these financial institutions were to fail[167](index=167&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[173](index=173&type=chunk) - There were no material changes in the company's internal control over financial reporting during the most recent fiscal quarter[173](index=173&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The company is not currently involved in any material legal proceedings[174](index=174&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section outlines key business risks, including intense competition, reliance on limited customers, acquisition integration challenges, and geopolitical tensions - The company faces significant competition from Verisilicon, Cadence, Synopsys, ARM, and internal design teams at major semiconductor companies[180](index=180&type=chunk) - A significant portion of revenue is derived from a limited number of customers. UNISOC accounted for **11%** of total revenues for H1 2022[189](index=189&type=chunk) - The business is exposed to geopolitical risks, including U.S.-China trade tensions and the Russia-Ukraine conflict, which could disrupt the semiconductor supply chain and customer demand[211](index=211&type=chunk) - Challenges exist in integrating the Intrinsix acquisition and its business, which relies heavily on U.S. government contracts subject to budgetary constraints and policy shifts[218](index=218&type=chunk)[241](index=241&type=chunk)[242](index=242&type=chunk) [Share Repurchases](index=60&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2022, the company repurchased 136,091 shares at an average price of $32.75, with 361,517 shares remaining available under the program Share Repurchases in Q2 2022 | Month | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2022 | 0 | N/A | | May 2022 | 121,729 | $32.74 | | June 2022 | 14,362 | $32.83 | | **Total** | **136,091** | **$32.75** | - As of June 30, 2022, **361,517** shares remained available for repurchase under the company's share repurchase program[264](index=264&type=chunk)[265](index=265&type=chunk)

Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $33.2 million, up 9% year-over-year from $30.5 million in Q2 2021 [14] - Licensing revenue was $22.1 million, representing 67% of total revenue, up 42% from $15.5 million in Q2 2021 [14] - Royalty revenue was $11.1 million, down 26% year-over-year from $14.9 million in Q2 2021, but down only 4% when excluding a one-time adjustment from the previous year [14][15] - Gross margin was 79% on a GAAP basis and 82% on a non-GAAP basis, slightly better than expectations [15] - GAAP net loss for the quarter was $1.1 million, with diluted loss per share of $0.05, compared to net income of $3 million and $0.01 per share in Q2 2021 [18] Business Line Data and Key Metrics Changes - Licensing and NRE related revenue was $22.1 million, reflecting a strong licensing environment [14] - Base station and IoT royalty revenue contributed $7 million, flat from the previous quarter and up 6% year-over-year [15] - Handset-related royalties were $4.1 million, indicating a decline due to economic uncertainty and COVID impacts [36] Market Data and Key Metrics Changes - Asia remains a major driver of business, with increasing engagement from U.S.-based customers [8] - Bluetooth shipments increased by 35% year-over-year to 255 million units, while cellular shipments rose by 12% year-over-year to 20 million units [19] - The overall market for wearables is growing, with CEVA's technology being integrated into various devices [11] Company Strategy and Development Direction - CEVA is focusing on co-creation business models to enhance customer engagement and drive revenue growth [10][13] - The company sees significant potential in the coexistence of 5G and Wi-Fi technologies, positioning itself as a one-stop shop for both [12] - CEVA aims to leverage its IP portfolio to address key technology trends in the semiconductor market [13] Management's Comments on Operating Environment and Future Outlook - Management expressed satisfaction with financial performance despite macroeconomic challenges, particularly in the wireless space [7][13] - The company is monitoring economic uncertainties, especially in the handset market, but remains optimistic about growth in base station and IoT segments [21][22] - Future guidance indicates expectations for slightly improved gross margins and operating expenses in Q3 2022 [22][23] Other Important Information - CEVA's total operating expenses for Q2 were $26.6 million, below guidance due to favorable foreign exchange and timing of grants [16] - The company activated its share buyback program, repurchasing approximately 136,000 shares for about $4.5 million [19] Q&A Session Summary Question: Trends in different end markets and revenue guidance - Management noted challenges in providing specific revenue guidance due to the nature of customer reporting under revenue recognition rules, but highlighted positive trends in base station IoT and Bluetooth devices [26][28] Question: Impact of handset royalties - Handset royalties were identified as the weakest link, particularly in low and mid-tier smartphones, with expectations for recovery as economic conditions improve [29][32] Question: New IT deals and revenue mix - Management clarified that the number of new deals does not directly correlate with revenue due to complexities in customer relationships and project delivery [37][39] Question: Opportunities from Intrinsix - Intrinsix is expected to play a significant role in defense market projects, with ongoing design engagements [41] Question: Synergies between Wi-Fi and 5G - CEVA highlighted the technological synergies between Wi-Fi and 5G, emphasizing the integration of both technologies in customer offerings [42][43] Question: Customer ramp-up in 5G infrastructure - Management indicated strong customer relationships in the 5G space, with significant growth opportunities ahead [45][46] Question: Operating margin dynamics - The mix of licensing and royalty revenues is expected to influence operating margins, with a focus on maintaining margins in the low 80s [48][50] Question: M&A pipeline considerations - Management is actively exploring M&A opportunities but emphasizes the importance of strategic fit over valuation [52][53] Question: Co-creation agreement catalysts - The co-creation model is seen as beneficial for both CEVA and its customers, providing more visibility and potential for royalties [56][59] Question: Engagements with U.S. companies - Recent engagements have focused on wireless audio technologies for wearables, indicating a shift towards more complex projects [60][62]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) Presents CEVA's unaudited Q1 2022 consolidated financial statements, including balance sheets, loss, and cash flows [Interim Condensed Consolidated Balance Sheets](index=6&type=section&id=Interim%20Condensed%20Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | **$197,304** | **$188,980** | | Cash and cash equivalents | $39,778 | $33,153 | | Marketable securities | $92,625 | $90,298 | | **Total Assets** | **$335,040** | **$328,659** | | Goodwill | $74,777 | $74,777 | | **Total Current Liabilities** | **$40,787** | **$35,440** | | **Total Liabilities** | **$56,961** | **$51,927** | | **Total Stockholders' Equity** | **$278,079** | **$276,732** | [Interim Condensed Consolidated Statements of Loss](index=8&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Loss) Consolidated Statements of Loss (in thousands, except per share data) | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | **Total Revenues** | **$34,391** | **$25,402** | | Licensing, NRE and related revenue | $22,393 | $14,397 | | Royalties | $11,998 | $11,005 | | **Gross Profit** | **$27,987** | **$23,021** | | **Operating Income (Loss)** | **$468** | **($1,330)** | | **Net Loss** | **($1,696)** | **($3,630)** | | **Diluted Net Loss Per Share** | **($0.07)** | **($0.16)** | [Interim Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$9,824** | **$15,193** | | **Net cash provided by (used in) investing activities** | **($4,813)** | **$16,218** | | **Net cash provided by financing activities** | **$1,720** | **$1,577** | | Increase in cash and cash equivalents | $6,625 | $32,519 | | **Cash and cash equivalents at end of period** | **$39,778** | **$53,662** | [Notes to the Interim Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes explain CEVA's business, accounting policies, revenue disaggregation, major customers, and key items - **CEVA is a licensor of wireless connectivity and smart sensing technologies**, including Digital Signal Processors, AI processors, and wireless platforms. The company's offerings are used in mobile, consumer, automotive, industrial, and IoT end products. The **acquisition of Intrinsix expands its market reach into aerospace and defense**[28](index=28&type=chunk)[29](index=29&type=chunk) Disaggregated Revenue by Geography (Q1 2022 vs Q1 2021, in thousands) | Primary Geographical Markets | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | United States | $6,746 | $3,950 | | Europe and Middle East | $1,102 | $1,099 | | Asia Pacific | $26,543 | $20,353 | | **Total** | **$34,391** | **$25,402** | Disaggregated Revenue by Product Line (Q1 2022 vs Q1 2021, in thousands) | Major Product/Service Lines | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Connectivity products | $25,877 | $20,910 | | Smart sensing products | $8,514 | $4,492 | | **Total** | **$34,391** | **$25,402** | - In Q1 2022, two customers accounted for **12%** and **11%** of total revenues, respectively. This is a **decrease in concentration** from Q1 2021, when three customers accounted for **23%**, **14%**, and **12%** of total revenues[68](index=68&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses CEVA's Q1 2022 financial performance, revenue trends, cost structure, liquidity, and cash flows [Business Overview and Growth Drivers](index=28&type=section&id=Business%20Overview%20and%20Growth%20Drivers) CEVA, a licensor of wireless and smart sensing tech, highlights growth drivers in 5G, IoT, wearables, and Edge AI - **Key growth drivers include**: - **5G baseband processing for mobile and RAN**. - **Broad IoT connectivity IP portfolio (Bluetooth, Wi-Fi, UWB)** with an addressable market of **over 15 billion devices annually by 2026**. - **Growing markets for TWS earbuds, wearables, and AR/VR headsets**. - **Expansion into Edge AI applications with SensPro2 and NeuPro-M processors for automotive, drones, and surveillance**[114](index=114&type=chunk)[115](index=115&type=chunk)[118](index=118&type=chunk) - In Q1 2022, shipments of devices with CEVA's Bluetooth, Wi-Fi, and cellular IoT IPs reached a **record 386 million units, a 125% year-over-year increase**[115](index=115&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Q1 2022 revenues grew 35% to $34.4 million, driven by licensing, while gross margin decreased due to Intrinsix costs Q1 2022 Key Financial Results (in millions) | Metric | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | **$34.4** | **$25.4** | **+35%** | | Licensing, NRE & Related | $22.4 | $14.4 | +56% | | Royalty Revenues | $12.0 | $11.0 | +9% | | **Gross Margin** | **81%** | **91%** | **-10 p.p.** | | **Operating Expenses** | **$27.5** | **$24.4** | **+13%** | - The **increase in Licensing, NRE and related revenues** was driven by high demand for WiFi IP and NRE services from the newly acquired Intrinsix business[124](index=124&type=chunk) - The **decrease in gross margin** was mainly due to higher service costs associated with the NRE-intensive Intrinsix business, which was not part of the company in Q1 2021[130](index=130&type=chunk)[131](index=131&type=chunk) - Total CEVA-powered chipsets shipped in Q1 2022 reached a **record 531 million units**, an increase of **56%** YoY[121](index=121&type=chunk)[128](index=128&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) CEVA's liquidity reached $162.4 million by March 31, 2022, with $9.8 million from operations, sufficient for 12 months Cash and Liquidity Position (in millions) | Position | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $39.8 | $33.2 | | Short-term bank deposits | $30.0 | $31.4 | | Marketable securities | $92.6 | $90.3 | | **Total Liquidity** | **$162.4** | **$154.9** | - **Cash provided by operating activities was $9.8 million** in Q1 2022, **compared to $15.2 million** in Q1 2021. The **decrease was primarily due to changes in operating assets and liabilities**[153](index=153&type=chunk)[155](index=155&type=chunk) - The company **did not repurchase any shares of common stock** during the first quarter of 2022. As of March 31, 2022, **497,608 shares remained available** for repurchase under the existing program[101](index=101&type=chunk)[158](index=158&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=37&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company faces market risks from foreign currency fluctuations and interest rate changes, mitigated by hedging programs - The company's **primary market risk is foreign currency fluctuation**, as most expenses are in NIS and Euro while revenues are primarily in USD. A **foreign currency cash flow hedging program is in place** to mitigate risks associated with non-U.S. dollar payroll[161](index=161&type=chunk)[164](index=164&type=chunk) - The company's **investment portfolio of corporate bonds had unrealized losses of approximately $3.4 million** as of March 31, 2022, **due to changes in the interest rate environment**[166](index=166&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) Management confirmed effective disclosure controls and procedures as of March 31, 2022, with no material changes - Based on an evaluation as of the end of the period, the Chief Executive Officer and Chief Financial Officer concluded that the company's **disclosure controls and procedures were effective**[169](index=169&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) The company is not involved in any material legal proceedings expected to impact its business or financial condition - The company is **not currently involved in any material legal proceedings**[170](index=170&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20RISK%20FACTORS) Outlines significant risks: customer concentration, geopolitical tensions, cyclical industry, and acquisition challenges - The company relies significantly on a limited number of customers. **Sales to UNISOC accounted for 12% of total revenues** in Q1 2022. Two royalty-paying customers collectively represented **47% of total royalty revenues** in the same period[182](index=182&type=chunk) - The business is exposed to **geopolitical risks, including U.S.-China trade tensions**, which could result in tariffs, sanctions, or other restrictions that disrupt the semiconductor industry and harm the company's business, as a **substantial portion of revenue comes from the Asia Pacific region**[201](index=201&type=chunk)[202](index=202&type=chunk) - The **acquisition of Intrinsix introduces risks related to U.S. government contracts**, including **budget constraints, potential early termination, and complex procurement regulations**[208](index=208&type=chunk)[209](index=209&type=chunk) - The company's operating results are affected by the **highly cyclical nature of the semiconductor industry**, which is currently facing **significant global supply chain disruptions** and **potential negative cycles**, especially in the handset market[242](index=242&type=chunk)[243](index=243&type=chunk) - **Royalty rates are under pressure** due to decreasing average selling prices of semiconductor products, consolidation among customers, and competitive pressures, which could adversely affect operating results[186](index=186&type=chunk)[187](index=187&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) No shares of common stock were repurchased during the first quarter of 2022 - **No shares of common stock were repurchased** during the first quarter of 2022[252](index=252&type=chunk) [Item 6. Exhibits](index=56&type=section&id=Item%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including compensation plans and certifications

CEVA, Inc. (NASDAQ:CEVA) Q1 2022 Earnings Conference Call May 9, 2022 8:30 AM ET Company Participants Richard Kingston - Vice President of Market Intelligence, Investor & Public Relations Gideon Wertheizer - Chief Executive Officer Yaniv Arieli - Chief Financial Officer Conference Call Participants Kevin Cassidy - Rosenblatt Securities Suji DeSilva - ROTH Capital Partners Chris Reimer - Barclays Martin Yang - Oppenheimer Gus Richard - Northland Operator Good day, and welcome to the CEVA, Inc. First Quarter ...

CEVA, Inc. (NASDAQ:CEVA) Q4 2021 Earnings Conference Call February 15, 2022 8:30 AM ET Company Participants Richard Kingston - Vice President of Market Intelligence, Investor & Public Relations Gideon Wertheizer - Chief Executive Officer Yaniv Arieli - Chief Financial Officer Conference Call Participants Suji DeSilva - ROTH Capital Partners Chris Reimer - Barclays Ethan Petazni - Cowen & Company Martin Yang - Oppenheimer Operator Good day, and welcome to the CEVA Inc. Fourth Quarter and Full Year 2021 Earni ...

[Forward-Looking Statements](index=4&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section outlines CEVA's optimistic projections for IP licensing, royalty growth, and market opportunities in AI and IoT - CEVA believes its IP licensing and Intrinsix design services are robust with a diverse customer base and myriad target markets[6](index=6&type=chunk) - Strong demand for wireless connectivity IP, especially in China, and progress in adopting wireless connectivity and smart sensing IP beyond handset baseband[6](index=6&type=chunk) - Expects significant growth in royalty revenues from base station and IoT applications over the next few years, with varying royalty ASPs[8](index=8&type=chunk) - Anticipates cash and cash equivalents, short-term bank deposits, marketable securities, and cash from operations will fund operations for at least the next 12 months[8](index=8&type=chunk) - The market opportunity for AI at the edge is expected to drive new IP licensing and royalty revenues[6](index=6&type=chunk) - Camera-enabled devices with computer vision and AI are projected to exceed **1 billion units**, and voice AI devices to reach **600 million units by 2025** (Yole Développement)[6](index=6&type=chunk) - IoT addressable market for Bluetooth, Wi-Fi, UWB, and NB-IoT is expected to exceed **9 billion devices annually by 2022** (ABI Research and Ericsson Mobility Reports)[6](index=6&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents CEVA's unaudited interim condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) This section presents CEVA's unaudited interim condensed consolidated financial statements and detailed notes for the specified periods [Interim Condensed Consolidated Balance Sheets](index=6&type=section&id=Interim%20Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of CEVA's financial position, detailing assets, liabilities, and equity at specific dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2021 | Dec 31, 2020 | Change | | :----- | :----------- | :----------- | :----- | | Total Assets | $317,711 | $306,952 | +$10,759 | | Cash and Cash Equivalents | $34,278 | $21,143 | +$13,135 | | Short-term Bank Deposits | $36,806 | $20,233 | +$16,573 | | Marketable Securities | $74,149 | $88,754 | -$14,605 | | Goodwill | $75,506 | $51,070 | +$24,436 | | Total Current Liabilities | $30,638 | $28,180 | +$2,458 | | Total Stockholders' Equity | $269,742 | $260,889 | +$8,853 | [Interim Condensed Consolidated Statements of Loss](index=8&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Loss) This section details CEVA's revenues, costs, and net loss for the three and nine months ended September 30, 2021 and 2020 Condensed Consolidated Statements of Loss Highlights (in thousands, except per share) | Metric | 9 Months Sep 30, 2021 | 9 Months Sep 30, 2020 | 3 Months Sep 30, 2021 | 3 Months Sep 30, 2020 | | :----- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Total Revenues | $88,649 | $72,181 | $32,790 | $24,960 | | Cost of Revenues | $10,904 | $8,259 | $4,830 | $2,503 | | Gross Profit | $77,745 | $63,922 | $27,960 | $22,457 | | Operating Income (Loss) | $1,952 | $(3,170) | $1,694 | $2 | | Financial Income (Loss), net | $345 | $2,689 | $(47) | $1,020 | | Income (Loss) before taxes on income | $2,297 | $(481) | $1,647 | $1,022 | | Income Tax Expense | $5,779 | $2,533 | $1,814 | $1,761 | | Net Loss | $(3,482) | $(3,014) | $(167) | $(739) | | Basic Net Loss Per Share | $(0.15) | $(0.14) | $(0.01) | $(0.03) | | Diluted Net Loss Per Share | $(0.15) | $(0.14) | $(0.01) | $(0.03) | - Total revenues increased by **23%** for the nine months ended September 30, 2021, and by **31%** for the three months ended September 30, 2021, compared to the corresponding periods in 2020[19](index=19&type=chunk) [Interim Condensed Consolidated Statements of Comprehensive Loss](index=9&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This section presents CEVA's comprehensive loss, including net loss and other comprehensive income (loss) components Condensed Consolidated Statements of Comprehensive Loss Highlights (in thousands) | Metric | 9 Months Sep 30, 2021 | 9 Months Sep 30, 2020 | 3 Months Sep 30, 2021 | 3 Months Sep 30, 2020 | | :----- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Net Loss | $(3,482) | $(3,014) | $(167) | $(739) | | Other Comprehensive Income (Loss), net of taxes | $(414) | $267 | $(175) | $(72) | | Comprehensive Loss | $(3,896) | $(2,747) | $(342) | $(811) | [Interim Condensed Consolidated Statements of Changes in Stockholders' Equity](index=10&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section outlines the changes in CEVA's stockholders' equity, including net loss, comprehensive loss, and equity-based compensation Changes in Stockholders' Equity (in thousands) | Metric | Jan 1, 2021 Balance | Sep 30, 2021 Balance | Change | | :----- | :------------------ | :------------------- | :----- | | Total Stockholders' Equity | $260,889 | $269,742 | +$8,853 | | Net Loss | — | $(3,482) | $(3,482) | | Other Comprehensive Loss | — | $(414) | $(414) | | Equity-based Compensation | — | $9,507 | +$9,507 | | Issuance of Treasury Stock upon exercise of stock-based awards | — | $3,242 | +$3,242 | [Interim Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes CEVA's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | 9 Months Sep 30, 2021 | 9 Months Sep 30, 2020 | | :----- | :-------------------- | :-------------------- | | Net Cash Provided by Operating Activities | $14,836 | $8,340 | | Net Cash Used in Investing Activities | $(4,635) | $(7,344) | | Net Cash Provided by (Used in) Financing Activities | $3,242 | $(1,909) | | Effect of exchange rate changes on cash and cash equivalents | $(308) | $177 | | Increase (Decrease) in Cash and Cash Equivalents | $13,135 | $(736) | | Cash and Cash Equivalents at the beginning of the period | $21,143 | $22,803 | | Cash and Cash Equivalents at the end of the period | $34,278 | $22,067 | [Notes to the Interim Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the interim condensed consolidated financial statements [NOTE 1: BUSINESS](index=13&type=section&id=NOTE%201:%20BUSINESS) This note describes CEVA's core business of licensing signal processing IPs and the strategic expansion through the Intrinsix acquisition - CEVA licenses signal processing IPs and integrated solutions in wireless connectivity and smart sensing, including DSPs, AI accelerators, and application software[32](index=32&type=chunk) - The acquisition of Intrinsix Corp. expands CEVA's market reach to aerospace and defense, combining CEVA's IP with Intrinsix's NRE design capabilities in RF, mixed-signal, security, and digital design[33](index=33&type=chunk) [NOTE 2: BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=13&type=section&id=NOTE%202:%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the basis of financial statement preparation and significant accounting policies, including the impact of recent accounting standards and COVID-19 - Interim condensed consolidated financial statements are prepared in accordance with U.S. GAAP and apply consistent accounting policies from the 2020 Annual Report[35](index=35&type=chunk)[36](index=36&type=chunk) - The adoption of ASU 2019-12, Income Taxes, did not have a material impact on the consolidated financial statements[37](index=37&type=chunk) - Management determined that COVID-19 had no material adverse impact on the interim condensed consolidated financial statements for the period ended September 30, 2021[39](index=39&type=chunk) [NOTE 3: ACQUISITION OF INTRINSIX](index=14&type=section&id=NOTE%203:%20ACQUISITION%20OF%20INTRINSIX) This note details the acquisition of Intrinsix Corp., including the purchase price, strategic rationale, and preliminary financial allocations - CEVA acquired **100%** of Intrinsix Corp. on May 31, 2021, for **$33.096 million** in cash[40](index=40&type=chunk) - The acquisition aims to extend market reach into aerospace and defense, increase license and royalty revenue opportunities by offering turnkey IP platforms, and expand the IP portfolio with secure processor IP and Heterogeneous SoC interface IP[43](index=43&type=chunk) Preliminary Purchase Price Allocation for Intrinsix Acquisition (in thousands) | Asset | Amount | | :---- | :----- | | Net assets (including cash of $600) | $755 | | Intangible assets | $5,300 | | Goodwill | $24,436 | | Total assets | $30,491 | Estimated Fair Value and Useful Life of Acquired Intangible Assets (in thousands) | Identifiable Intangible Assets | Estimated Fair Value | Weighted-Average Estimated Useful Life (Years) | | :----------------------------- | :------------------- | :--------------------------------------------- | | Customer relationships | $4,820 | 5.5 | | Customer backlog | $262 | 1.5 | | Patents | $218 | 5.0 | | Total identifiable intangible assets | $5,300 | | Unaudited Pro Forma Financial Information (in thousands) | Metric | 9 Months Sep 30, 2021 | 9 Months Sep 30, 2020 | 3 Months Sep 30, 2021 | 3 Months Sep 30, 2020 | | :----- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Pro forma total revenues | $97,340 | $88,667 | $32,790 | $31,668 | | Pro forma net income (loss) | $(5,170) | $(3,323) | $(167) | $(238) | [NOTE 4: REVENUE RECOGNITION](index=15&type=section&id=NOTE%204:%20REVENUE%20RECOGNITION) This note details CEVA's revenue recognition policies, disaggregated revenue data by geography and product, and contract balances - Revenue is recognized under ASC 606, mostly at a point in time upon IP delivery, or over time for significant license customization contracts[49](index=49&type=chunk) Disaggregated Revenue by Geographical Market (in thousands) | Primary Geographical Markets | 9 Months Sep 30, 2021 Total | 9 Months Sep 30, 2020 Total | 3 Months Sep 30, 2021 Total | 3 Months Sep 30, 2020 Total | | :--------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | United States | $19,290 | $13,754 | $8,792 | $3,079 | | Europe and Middle East | $3,435 | $10,017 | $1,430 | $825 | | Asia Pacific | $65,914 | $48,410 | $22,558 | $21,056 | | Other | $10 | $0 | $10 | $0 | | **Total** | **$88,649** | **$72,181** | **$32,790** | **$24,960** | Disaggregated Revenue by Major Product/Service Lines (in thousands) | Major Product/Service Lines | 9 Months Sep 30, 2021 Total | 9 Months Sep 30, 2020 Total | 3 Months Sep 30, 2021 Total | 3 Months Sep 30, 2020 Total | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Connectivity products | $66,578 | $56,716 | $23,868 | $18,573 | | Smart sensing products | $22,071 | $15,465 | $8,922 | $6,387 | | **Total** | **$88,649** | **$72,181** | **$32,790** | **$24,960** | Contract Balances (in thousands) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :----- | :----------- | :----------- | | Trade receivables | $15,269 | $14,765 | | Unbilled receivables (licensing, NRE) | $2,123 | $5,479 | | Unbilled receivables (royalties) | $9,189 | $10,980 | | Deferred revenues (short-term) | $6,217 | $2,434 | [NOTE 5: LEASES](index=18&type=section&id=NOTE%205:%20LEASES) This note provides a summary of CEVA's operating lease terms, discount rates, costs, and cash payments Operating Lease Summary (Sep 30, 2021) | Metric | Value | | :----- | :---- | | Weighted average remaining lease term | 5.07 years | | Weighted average discount rates | 1.98% | Operating Lease Cost and Cash Payments (in thousands) | Metric | 9 Months Sep 30, 2021 | 9 Months Sep 30, 2020 | 3 Months Sep 30, 2021 | 3 Months Sep 30, 2020 | | :----- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Operating lease cost | $2,305 | $1,883 | $806 | $652 | | Cash payments for operating leases | $2,397 | $1,968 | $799 | $623 | [NOTE 6: MARKETABLE SECURITIES](index=19&type=section&id=NOTE%206:%20MARKETABLE%20SECURITIES) This note details CEVA's available-for-sale marketable securities, including fair values, unrealized gains/losses, and realized gains/losses from sales Available-for-Sale Marketable Securities (in thousands) | Metric | Sep 30, 2021 Fair Value | Dec 31, 2020 Fair Value | | :----- | :---------------------- | :---------------------- | | Corporate bonds (within one year) | $5,435 | $12,709 | | Corporate bonds (after one year through five years) | $68,714 | $76,045 | | **Total Fair Value** | **$74,149** | **$88,754** | | Gross unrealized gains (Sep 30, 2021) | $491 | | | Gross unrealized losses (Sep 30, 2021) | $(413) | | Gross Realized Gains and Losses from Sale of Marketable Securities (in thousands) | Metric | 9 Months Sep 30, 2021 | 9 Months Sep 30, 2020 | 3 Months Sep 30, 2021 | 3 Months Sep 30, 2020 | | :----- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Gross realized gains | $43 | $4 | $0 | $0 | | Gross realized losses | $(30) | $(19) | $(2) | $0 | [NOTE 7: FAIR VALUE MEASUREMENT](index=20&type=section&id=NOTE%207:%20FAIR%20VALUE%20MEASUREMENT) This note describes the fair value hierarchy classification for CEVA's marketable securities and foreign currency derivative contracts - Marketable securities and foreign currency derivative contracts are classified within Level II of the fair value hierarchy[73](index=73&type=chunk) Assets Measured at Fair Value (in thousands) | Description | Sep 30, 2021 (Level II) | Dec 31, 2020 (Level II) | | :---------- | :---------------------- | :---------------------- | | Corporate bonds | $74,149 | $88,754 | [NOTE 8: INTANGIBLE ASSETS, NET](index=21&type=section&id=NOTE%208:%20INTANGIBLE%20ASSETS,%20NET) This note provides a breakdown of CEVA's intangible assets, net, and estimated future annual amortization charges Intangible Assets, Net (in thousands) | Asset Category | Sep 30, 2021 Net | Dec 31, 2020 Net | | :------------- | :--------------- | :--------------- | | Intrinsix acquisition related | $4,935 | $0 | | Immervision investment related | $4,660 | $5,488 | | Hillcrest Labs acquisition related | $3,352 | $4,251 | | NB-IoT technologies | $887 | $1,097 | | **Total Intangible Assets, Net** | **$13,834** | **$10,836** | Future Estimated Annual Amortization Charges (in thousands) | Year | Amount | | :--- | :----- | | 2021 (remainder) | $918 | | 2022 | $3,661 | | 2023 | $2,826 | | 2024 | $2,772 | | 2025 | $2,483 | | 2026 and thereafter | $1,174 | | **Total** | **$13,834** | [NOTE 9: GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER DATA](index=22&type=section&id=NOTE%209:%20GEOGRAPHIC%20INFORMATION%20AND%20MAJOR%20CUSTOMER%20DATA) This note presents CEVA's revenues disaggregated by geographic area and the contribution of major customers to total revenues Revenues by Geographic Area (in thousands) | Geographic Area | 9 Months Sep 30, 2021 | 9 Months Sep 30, 2020 | 3 Months Sep 30, 2021 | 3 Months Sep 30, 2020 | | :-------------- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | United States | $19,290 | $13,754 | $8,792 | $3,079 | | Europe and Middle East | $3,435 | $10,017 | $1,430 | $825 | | Asia Pacific | $65,914 | $48,410 | $22,558 | $21,056 | | China | $54,489 | $37,713 | $18,041 | $16,085 | | Other | $10 | $0 | $10 | $0 | | **Total** | **$88,649** | **$72,181** | **$32,790** | **$24,960** | Major Customer Data as Percentage of Total Revenues | Customer | 9 Months Sep 30, 2021 | 9 Months Sep 30, 2020 | 3 Months Sep 30, 2021 | 3 Months Sep 30, 2020 | | :------- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Customer A | 25% | 12% | 32% | 18% | | Customer B | <10% | 13% | <10% | <10% | | Customer C | <10% | 13% | <10% | 16% | [NOTE 10: NET LOSS PER SHARE OF COMMON STOCK](index=25&type=section&id=NOTE%2010:%20NET%20LOSS%20PER%20SHARE%20OF%20COMMON%20STOCK) This note presents the calculation of basic and diluted net loss per share of common stock Net Loss Per Share of Common Stock | Metric | 9 Months Sep 30, 2021 | 9 Months Sep 30, 2020 | 3 Months Sep 30, 2021 | 3 Months Sep 30, 2020 | | :----- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Net Loss | $(3,482) | $(3,014) | $(167) | $(739) | | Basic Net Loss Per Share | $(0.15) | $(0.14) | $(0.01) | $(0.03) | | Diluted Net Loss Per Share | $(0.15) | $(0.14) | $(0.01) | $(0.03) | - **830,384 shares** related to outstanding equity-based awards were excluded from diluted EPS calculation for both the three and nine months ended September 30, 2021, due to the net loss making them anti-dilutive[94](index=94&type=chunk) [NOTE 11: COMMON STOCK AND STOCK-BASED COMPENSATION PLANS](index=25&type=section&id=NOTE%2011:%20COMMON%20STOCK%20AND%20STOCK-BASED%20COMPENSATION%20PLANS) This note details CEVA's stock option, SAR, RSU, and PSU activities, along with total equity-based compensation expense Stock Option and SAR Activities (9 Months Ended Sep 30, 2021) | Metric | Number of options and SAR units | Weighted average exercise price | Weighted average remaining contractual term (years) | Aggregate intrinsic value | | :----- | :------------------------------ | :------------------------------ | :-------------------------------------------------- | :------------------------ | | Outstanding as of Dec 31, 2020 | 289,069 | $22.42 | 3.6 | $6,673 | | Granted | — | — | | | | Exercised | (158,069) | $24.47 | | | | Forfeited or expired | — | — | | | | Outstanding as of Sep 30, 2021 | 131,000 | $19.94 | 2.8 | $2,978 | | Exercisable as of Sep 30, 2021 | 131,000 | $19.94 | 2.8 | $2,978 | RSU and PSU Activities (9 Months Ended Sep 30, 2021) | Metric | Number of RSUs and PSUs | Weighted Average Grant-Date Fair Value | | :----- | :---------------------- | :------------------------------------- | | Unvested as of Dec 31, 2020 | 842,948 | $29.30 | | Granted | 388,447 | $47.26 | | Vested | (471,870) | $26.72 | | Forfeited or expired | (60,141) | $35.49 | | Unvested as of Sep 30, 2021 | 699,384 | $40.49 | - As of September 30, 2021, there was **$21.542 million** of unrecognized compensation expense related to unvested RSUs and PSUs, expected to be recognized over a weighted-average period of **1.7 years**[107](index=107&type=chunk) Total Equity-Based Compensation Expense (in thousands) | Expense Category | 9 Months Sep 30, 2021 | 9 Months Sep 30, 2020 | 3 Months Sep 30, 2021 | 3 Months Sep 30, 2020 | | :--------------- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Cost of revenue | $509 | $473 | $247 | $159 | | Research and development, net | $5,435 | $5,115 | $2,007 | $1,770 | | Sales and marketing | $1,185 | $1,496 | $400 | $533 | | General and administrative | $2,378 | $2,986 | $749 | $1,084 | | **Total** | **$9,507** | **$10,070** | **$3,403** | **$3,546** | [NOTE 12: DERIVATIVES AND HEDGING ACTIVITIES](index=28&type=section&id=NOTE%2012:%20DERIVATIVES%20AND%20HEDGING%20ACTIVITIES) This note explains CEVA's use of foreign exchange derivative contracts as cash flow hedges to mitigate currency risks - CEVA uses foreign exchange forward or option contracts as cash flow hedges to offset risks from foreign currency exchange rate fluctuations, particularly for non-U.S. dollar denominated payroll[112](index=112&type=chunk) Net (Gains) Losses Reclassified from Accumulated Other Comprehensive Gain (Loss) into Income (in thousands) | Metric | 9 Months Sep 30, 2021 | 9 Months Sep 30, 2020 | 3 Months Sep 30, 2021 | 3 Months Sep 30, 2020 | | :----- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Foreign exchange option contracts | $0 | $11 | $0 | $0 | | Foreign exchange forward contracts | $(65) | $(525) | $(29) | $(352) | | **Total** | **$(65)** | **$(514)** | **$(29)** | **$(352)** | - The company recorded a net gain of **$29 thousand** and **$65 thousand** in cost of revenues and operating expenses for the three and nine months ended September 30, 2021, respectively, related to Hedging Contracts[117](index=117&type=chunk) [NOTE 13: ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)](index=30&type=section&id=NOTE%2013:%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME%20(LOSS)) This note details the changes in accumulated other comprehensive income (loss) and reclassifications out of it Changes in Accumulated Other Comprehensive Income (Loss), Net of Taxes (in thousands) | Metric | 9 Months Sep 30, 2021 | 9 Months Sep 30, 2020 | 3 Months Sep 30, 2021 | 3 Months Sep 30, 2020 | | :----- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Beginning balance | $478 | $94 | $239 | $433 | | Net current period other comprehensive loss | $(414) | $267 | $(175) | $(72) | | **Ending balance** | **$64** | **$361** | **$64** | **$361** | Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (in thousands) | Component | Affected Line Item in Statements of Income (Loss) | 9 Months Sep 30, 2021 | 9 Months Sep 30, 2020 | 3 Months Sep 30, 2021 | 3 Months Sep 30, 2020 | | :-------- | :------------------------------------------------ | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Unrealized gains (losses) on available-for-sale marketable securities | Financial income (loss), net | $13 | $(11) | $(2) | $0 | | Unrealized gains (losses) on cash flow hedges | Cost of revenues, R&D, S&M, G&A | $65 | $514 | $29 | $352 | [NOTE 14: SHARE REPURCHASE PROGRAM](index=32&type=section&id=NOTE%2014:%20SHARE%20REPURCHASE%20PROGRAM) This note provides information on CEVA's share repurchase program, including shares available and repurchases made - No shares of common stock were repurchased during the three and nine months ended September 30, 2021[125](index=125&type=chunk) - As of September 30, 2021, **497,608 shares** remained available for repurchase under the share repurchase program[125](index=125&type=chunk) - During the nine months ended September 30, 2020, **202,392 shares** were repurchased for an aggregate of **$4.780 million**[125](index=125&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on CEVA's financial condition and results of operations, highlighting strategic drivers and performance metrics [Business Overview](index=33&type=section&id=BUSINESS%20OVERVIEW) This section provides an overview of CEVA's core business, strategic acquisitions, and key growth drivers in various market segments - CEVA licenses wireless connectivity and smart sensing technologies, including DSPs, AI processors, and software for sensor fusion, image enhancement, computer vision, voice input, and AI[130](index=130&type=chunk) - The Intrinsix acquisition expands CEVA's market reach to aerospace and defense, offering integrated IP solutions and design capabilities in mixed signal, RF, security, and heterogeneous SoC interfaces[130](index=130&type=chunk)[133](index=133&type=chunk) - Diversification beyond handset baseband is driving significant growth in base station and IoT product categories, with unit shipments up **103% year-over-year** and royalty revenues up **6% year-over-year** in the third quarter[144](index=144&type=chunk) - Key growth drivers include 5G platforms (PentaG for handsets and cellular IoT, 5G RAN), broad IoT IPs (Bluetooth, Wi-Fi, UWB, NB-IoT), TWS earbuds/smartwatches/AR/VR (WhisPro, ClearVox, BlueBud platform), SensPro2 sensor hub DSP family for ADAS/drones/robotics/AR/VR, NeuPro-S AI processors for edge deep learning, and Hillcrest Labs sensor fusion[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) [COVID-19](index=36&type=section&id=COVID-19) This section discusses the operational and financial impacts of the COVID-19 pandemic on CEVA, including ongoing uncertainties - CEVA continued operations with precautionary health and safety measures for employees during the COVID-19 outbreak[145](index=145&type=chunk) - The impact of COVID-19 on financial results for the nine months ended September 30, 2021, was not material[146](index=146&type=chunk) - Prolonged measures to contain the virus, supply chain disruptions (semiconductor demand surpassing supply), and severe pandemic infections in large markets (India, Brazil) pose uncertainties for economic activities and future financial performance[146](index=146&type=chunk) [Results of Operations](index=36&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes CEVA's financial performance, detailing revenue streams, cost of revenues, gross margin, and operating expenses [Total Revenues](index=36&type=section&id=Total%20Revenues) This section analyzes CEVA's total revenues, highlighting growth drivers and contributions from major customers and product lines Total Revenues (in millions) | Period | 2021 | 2020 | YoY Change | | :----- | :--- | :--- | :--------- | | Q3 | $32.8 | $24.96 | +31% | | 9 Months | $88.6 | $72.18 | +23% | - The increase in revenues was attributed to CEVA's continuous success in the digital transformation era and the Intrinsix acquisition expanding market reach and enriching the business model[147](index=147&type=chunk) Major Customer Contribution to Total Revenues | Customer | Q3 2021 | 9 Months 2021 | Q3 2020 | 9 Months 2020 | | :------- | :------ | :------------ | :------ | :------------ | | UNISOC | 32% | 25% | 18% | 12% | Products and Services as Percentages of Total Revenues | Category | 9 Months 2021 | 9 Months 2020 | Third Quarter 2021 | Third Quarter 2020 | | :------- | :------------ | :------------ | :----------------- | :----------------- | | Connectivity products | 75% | 79% | 73% | 74% | | Smart sensing products | 25% | 21% | 27% | 26% | [Licensing, NRE and Related Revenues](index=37&type=section&id=Licensing,%20NRE%20and%20Related%20Revenues) This section analyzes CEVA's licensing, NRE, and related revenues, highlighting growth drivers and agreement details Licensing, NRE and Related Revenues (in millions) | Period | 2021 | 2020 | YoY Change | | :----- | :--- | :--- | :--------- | | Q3 | $21.6 | $12.42 | +74% | | 9 Months | $51.5 | $40.445 | +27% | - Growth was attributed to strong IP licensing execution, high demand for Bluetooth, and the full quarter contribution from Intrinsix NRE related services[151](index=151&type=chunk) - Twenty-five license and NRE agreements were concluded in Q3 2021 (**14 connectivity, 11 smart sensing**), with **13 deals** from first-time customers[152](index=152&type=chunk) - Licensing and related revenues accounted for **66%** of total revenues in Q3 2021 (up from **50%** in Q3 2020) and **58%** for the first nine months of 2021 (up from **56%** in 9M 2020)[153](index=153&type=chunk) [Royalty Revenues](index=37&type=section&id=Royalty%20Revenues) This section analyzes CEVA's royalty revenues, detailing changes due to base station, handset, Bluetooth, and sensor fusion product shipments Royalty Revenues (in millions) | Period | 2021 | 2020 | YoY Change | | :----- | :--- | :--- | :--------- | | Q3 | $11.2 | $12.54 | -11% | | 9 Months | $37.1 | $31.736 | +17% | - Q3 decrease due to lower 5G base station RAN visibility and handset baseband royalties, offset by higher Bluetooth shipments[154](index=154&type=chunk) - 9-month increase driven by secular growth in Bluetooth and sensor fusion products, offset by lower base station shipments[154](index=154&type=chunk) - Customers reported sales of **438 million chipsets** in Q3 2021 (up **26% YoY**) and **1,231 million** for 9 months 2021 (up **46% YoY**)[155](index=155&type=chunk) [Geographic Revenue Analysis](index=38&type=section&id=Geographic%20Revenue%20Analysis) This section provides a detailed breakdown of CEVA's revenue distribution across various geographic regions Geographic Revenue Distribution (in millions, with percentages of total revenues) | Region | 9 Months 2021 | % | 9 Months 2020 | % | Q3 2021 | % | Q3 2020 | % | | :----- | :------------ | :- | :------------ | :- | :------ | :- | :------ | :- | | United States | $19.3 | 22% | $13.8 | 19% | $8.8 | 27% | $3.1 | 12% | | Europe and Middle East | $3.4 | 4% | $10.0 | 14% | $1.4 | 4% | $0.8 | 3% | | Asia Pacific | $65.9 | 74% | $48.4 | 67% | $22.6 | 69% | $21.1 | 85% | | China | $54.5 | 61% | $37.7 | 52% | $18.0 | 55% | $16.1 | 64% | [Cost of Revenues](index=38&type=section&id=Cost%20of%20Revenues) This section analyzes the cost of revenues, highlighting the impact of service costs and equity-based compensation Cost of Revenues (in millions) | Period | 2021 | 2020 | | :----- | :--- | :--- | | Q3 | $4.8 | $2.5 | | 9 Months | $10.9 | $8.3 | - Increase primarily reflected higher service costs for customers, mainly due to incorporating salary and related NRE costs associated with the Intrinsix business[159](index=159&type=chunk) - Non-cash equity-based compensation expense included in cost of revenues was **$247 thousand** for Q3 2021 and **$509 thousand** for 9 months 2021[159](index=159&type=chunk) [Gross Margin](index=38&type=section&id=Gross%20Margin) This section analyzes CEVA's gross margin percentage and the factors influencing its changes Gross Margin Percentage | Period | 2021 | 2020 | | :----- | :--- | :--- | | Q3 | 85% | 90% | | 9 Months | 88% | 89% | - Decrease mainly reflected higher cost of revenues due to NRE-related Intrinsix costs[160](index=160&type=chunk) [Operating Expenses](index=38&type=section&id=Operating%20Expenses) This section analyzes CEVA's total operating expenses, detailing the drivers behind increases, including personnel and project-related costs Total Operating Expenses (in millions) | Period | 2021 | 2020 | | :----- | :--- | :--- | | Q3 | $26.3 | $22.5 | | 9 Months | $75.8 | $67.1 | - Increase primarily due to higher salary and employee-related costs (including Intrinsix personnel, Holdback Merger Consideration, and higher currency exchange expenses) and higher project-related expenses[161](index=161&type=chunk) - For the nine months, also impacted by higher professional services cost associated with the Intrinsix transaction and lower Crédit Impôt Recherche (CIR)[161](index=161&type=chunk) [Research and Development Expenses, Net](index=38&type=section&id=Research%20and%20Development%20Expenses,%20Net) This section analyzes CEVA's research and development expenses, net, and the factors contributing to their changes, including personnel and tax credits Research and Development Expenses, Net (in millions) | Period | 2021 | 2020 | | :----- | :--- | :--- | | Q3 | $18.8 | $15.6 | | 9 Months | $53.8 | $45.7 | - Increase primarily due to higher R&D personnel (including Intrinsix employees), Holdback Merger Consideration costs, higher currency exchange expenses, and higher project-related expenses[162](index=162&type=chunk) - For the nine months, also impacted by lower Crédit Impôt Recherche (CIR) from French tax authorities[162](index=162&type=chunk) - Number of R&D personnel increased to **318** at September 30, 2021, from **304** at September 30, 2020[164](index=164&type=chunk) [Sales and Marketing Expenses](index=40&type=section&id=Sales%20and%20Marketing%20Expenses) This section analyzes CEVA's sales and marketing expenses, detailing changes driven by personnel costs and equity-based compensation Sales and Marketing Expenses (in millions) | Period | 2021 | 2020 | | :----- | :--- | :--- | | Q3 | $3.2 | $2.7 | | 9 Months | $9.4 | $8.8 | - Increase primarily due to higher salaries and related costs, partially offset by lower non-cash equity-based compensation expenses[165](index=165&type=chunk) - Sales and marketing personnel increased to **36** at September 30, 2021, from **35** at September 30, 2020[166](index=166&type=chunk) [General and Administrative Expenses](index=40&type=section&id=General%20and%20Administrative%20Expenses) This section analyzes CEVA's general and administrative expenses, detailing changes influenced by compensation, credit losses, and acquisition-related costs General and Administrative Expenses (in millions) | Period | 2021 | 2020 | | :----- | :--- | :--- | | Q3 | $3.5 | $3.6 | | 9 Months | $10.5 | $10.9 | - Q3 decrease primarily reflected lower non-cash equity-based compensation, partially offset by higher salaries and related costs[167](index=167&type=chunk) - 9-month decrease primarily reflected lower allowance for credit losses and lower non-cash equity-based compensation, partially offset by higher professional services cost associated with the Intrinsix transaction[167](index=167&type=chunk) - General and administrative personnel increased to **46** at September 30, 2021, from **32** at September 30, 2020[168](index=168&type=chunk) [Amortization of intangible assets](index=40&type=section&id=Amortization%20of%20intangible%20assets) This section analyzes the amortization charges for intangible assets, noting the impact of recent acquisitions Amortization Charges (in millions) | Period | 2021 | 2020 | | :----- | :--- | :--- | | Q3 | $0.8 | $0.6 | | 9 Months | $2.1 | $1.7 | - Increase due to amortization of intangible assets associated with the acquisition of Intrinsix in May 2021, as well as existing assets from Hillcrest Labs and Immervision[169](index=169&type=chunk) [Financial Income, Net](index=40&type=section&id=Financial%20Income,%20Net) This section analyzes CEVA's financial income, net, detailing the impact of interest income, marketable securities, and foreign exchange fluctuations Financial Income, Net (in millions) | Component | 9 Months 2021 | 9 Months 2020 | Q3 2021 | Q3 2020 | | :-------- | :------------ | :------------ | :------ | :------ | | Financial income, net | $0.34 | $2.69 | $(0.05) | $1.02 | | Interest income and gains/losses from marketable securities, net | $1.13 | $2.26 | $0.32 | $0.66 | | Foreign exchange income (loss) | $(0.79) | $0.43 | $(0.37) | $0.36 | - Decrease primarily reflected lower combined bank deposits and marketable securities balances (due to Intrinsix acquisition) and lower yields[172](index=172&type=chunk) - Foreign exchange loss increased due to devaluation of Euro cash balances as the U.S. dollar strengthened against the Euro[172](index=172&type=chunk) [Provision for Income Taxes](index=41&type=section&id=Provision%20for%20Income%20Taxes) This section analyzes CEVA's income tax expense, highlighting the impact of income earned in different jurisdictions and their respective tax rates Income Tax Expense (in millions) | Period | 2021 | 2020 | | :----- | :--- | :--- | | Q3 | $1.8 | $1.8 | | 9 Months | $5.8 | $2.5 | - Increase for the first nine months primarily reflected a significant increase in income earned in France, which has a relatively high corporate tax rate of **26.5%**[173](index=173&type=chunk)[175](index=175&type=chunk) - Israeli subsidiary qualifies for a **12% tax rate** on profits from intellectual property as a "Technological Preferred Enterprise" from 2020 onwards[177](index=177&type=chunk) [Critical Accounting Policies and Estimates](index=41&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section identifies CEVA's critical accounting policies and estimates, noting consistency with previous annual reports - Critical accounting policies and estimates include revenue recognition, fair value of financial instruments, equity-based compensation, and income taxes[178](index=178&type=chunk) - No changes in critical accounting policies compared to the Annual Report on Form 10-K for the year ended December 31, 2020[179](index=179&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses CEVA's liquidity position, capital resources, and cash flow activities from operations, investing, and financing Cash, Cash Equivalents, Bank Deposits, and Marketable Securities (in millions) | Metric | Sep 30, 2021 | Dec 31, 2020 | Change | | :----- | :----------- | :----------- | :----- | | Total | $145.2 | $159.7 | $(14.5) | | Cash and cash equivalents | $34.3 | $21.1 | +$13.2 | | Short-term bank deposits | $36.8 | $20.2 | +$16.6 | | Marketable securities | $74.1 | $88.8 | $(14.7) | | Long-term bank deposits | $0 | $29.5 | $(29.5) | - The decrease in total liquidity was principally due to **$29.9 million** cash used for the acquisition of Intrinsix, net of cash acquired[180](index=180&type=chunk) - **$134.6 million** of the total liquidity was held by foreign subsidiaries, with an intent to permanently reinvest earnings[181](index=181&type=chunk) - Management believes current capital resources will provide sufficient capital to fund operations for at least the next 12 months[189](index=189&type=chunk) [Operating Activities](index=42&type=section&id=Operating%20Activities) This section analyzes CEVA's net cash provided by operating activities, detailing key drivers such as non-cash adjustments and changes in operating assets and liabilities Net Cash Provided by Operating Activities (in millions) | Period | 2021 | 2020 | | :----- | :--- | :--- | | 9 Months | $14.8 | $8.3 | - Key drivers for 2021 included **$15.2 million** in non-cash adjustments (depreciation, amortization, equity-based compensation) and **$3.1 million** from changes in operating assets and liabilities (e.g., decrease in trade receivables, increase in deferred revenues)[184](index=184&type=chunk) [Investing Activities](index=43&type=section&id=Investing%20Activities) This section analyzes CEVA's net cash used in investing activities, highlighting the impact of the Intrinsix acquisition and changes in marketable securities Net Cash Used in Investing Activities (in millions) | Period | 2021 | 2020 | | :----- | :--- | :--- | | 9 Months | $(4.6) | $(7.3) | - Included a **$29.9 million** cash outflow for the acquisition of Intrinsix, net of cash acquired[187](index=187&type=chunk) - Net proceeds from bank deposits were **$13.0 million** in 2021, and net cash outflow for marketable securities was **$6.8 million**[187](index=187&type=chunk) [Financing Activities](index=43&type=section&id=Financing%20Activities) This section analyzes CEVA's net cash provided by (used in) financing activities, focusing on stock-based awards and share repurchases Net Cash Provided by (Used in) Financing Activities (in millions) | Period | 2021 | 2020 | | :----- | :--- | :--- | | 9 Months | $3.2 | $(1.9) | - Primarily driven by **$3.2 million** received from the exercise of stock-based awards[189](index=189&type=chunk) - No shares were repurchased in the first nine months of 2021, compared to **$4.8 million** in repurchases in the comparable 2020 period[188](index=188&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) CEVA is exposed to market risks primarily from foreign currency exchange rate fluctuations (NIS and Euro vs. USD) and interest rate changes - CEVA is exposed to foreign currency exchange rate fluctuations, primarily between the U.S. dollar and the NIS and Euro, as a majority of expenses are denominated in these foreign currencies[191](index=191&type=chunk) - The company uses foreign currency cash flow hedging programs (forward and option contracts) to mitigate risks associated with non-U.S. dollar denominated payroll expenses[192](index=192&type=chunk)[193](index=193&type=chunk) - Experienced foreign exchange losses of **$367 thousand** in Q3 2021 and **$783 thousand** for the first nine months of 2021 due to the devaluation of Euro cash balances as the U.S. dollar strengthened[191](index=191&type=chunk) - Fluctuations in interest rates within the investment portfolio are not anticipated to have a material effect on the financial position on an annual or quarterly basis[198](index=198&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) As of September 30, 2021, CEVA's Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective - Disclosure controls and procedures were evaluated and deemed effective as of September 30, 2021, by the CEO and CFO[199](index=199&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[199](index=199&type=chunk) [PART II. OTHER INFORMATION](index=45&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information including legal proceedings, risk factors, equity security sales, and exhibits [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) CEVA is not currently a party to any litigation or other legal proceedings that are expected to have a material effect on its business, results of operations, or financial condition - CEVA is not a party to any litigation or legal proceedings expected to have a material effect on its business, results of operations, and financial condition[200](index=200&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20RISK%20FACTORS) This section details numerous factors that could materially and adversely affect CEVA's business, financial condition, and results of operations - The COVID-19 pandemic could materially and adversely affect business, financial condition, and results of operations due to workforce and operational impacts, economic uncertainty, and supply chain disruptions[203](index=203&type=chunk)[204](index=204&type=chunk) - CEVA operates in highly competitive markets, facing competition from signal processing core providers, CPU IP providers, internal engineering teams, and niche semiconductor design companies, which could lead to loss of sales and lower prices[205](index=205&type=chunk)[206](index=206&type=chunk) - Quarterly operating results fluctuate due to factors like dependence on a limited number of customers, delays in IP licensing, revenue recognition timing, fluctuations in unit shipments, royalty pricing pressures, and lengthy sales cycles[209](index=209&type=chunk) - Significant reliance on revenues from a limited number of customers (e.g., UNISOC accounted for **32% of Q3 2021 total revenues**) poses a risk if any major customer is lost or consolidates[214](index=214&type=chunk) - Business is dependent on IP licensing and NRE revenues, which vary significantly period to period and are difficult to predict, especially with the expansion into non-handset baseband markets and government contracts[215](index=215&type=chunk)[216](index=216&type=chunk) - Royalty and NRE payment rates could decrease due to market pressures, product price erosion, increased volume shipments, or renegotiations, materially affecting operating results[218](index=218&type=chunk)[222](index=222&type=chunk) - Success depends on penetrating new markets and achieving widespread market acceptance for new products, which requires significant R&D investment and faces competitive challenges[224](index=224&type=chunk)[225](index=225&type=chunk) - Difficulties in integrating Intrinsix's personnel, operations, and technologies, or in offering turnkey IP solutions, could prevent anticipated benefits from the acquisition[264](index=264&type=chunk) - Significant international operations (**78% of 9M 2021 revenues from outside U.S.**) expose CEVA to political, economic, and regulatory risks, including currency fluctuations, trade tensions (U.S.-China), and intellectual property protection challenges[233](index=233&type=chunk)[234](index=234&type=chunk)[235](index=235&type=chunk) - Reliance on contracts with U.S. government prime contractors (Intrinsix's business) exposes CEVA to risks from budgetary constraints, early contract termination, procurement regulations, and potential audits/investigations[243](index=243&type=chunk)[245](index=245&type=chunk) - Inability to adequately protect intellectual property (patents, copyrights, trade secrets) or being sued for infringement by third parties could harm the business[268](index=268&type=chunk)[270](index=270&type=chunk) - The highly cyclical nature of the semiconductor industry, including supply chain disruptions (e.g., chip shortages), can cause significant fluctuations or declines in revenues and operating results[273](index=273&type=chunk) - Cybersecurity threats or other security breaches could compromise sensitive information, leading to legal claims, operational disruptions, and reputational damage[278](index=278&type=chunk) - The corporate tax rate may increase due to changes in tax laws, challenges to profit recognition in foreign jurisdictions (Israel, Ireland, France), or changes in revenue mix, adversely impacting cash flow and results[280](index=280&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) There were no repurchases of CEVA's common stock during the three months ended September 30, 2021 - No repurchases of common stock occurred during the three months ended September 30, 2021[285](index=285&type=chunk) [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This item is not applicable to CEVA for the reporting period - Not applicable[285](index=285&type=chunk) [Item 4. Mine Safety Disclosures](index=47&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to CEVA for the reporting period - Not applicable[285](index=285&type=chunk) [Item 5. Other Information](index=47&type=section&id=Item%205.%20OTHER%20INFORMATION) This item is not applicable to CEVA for the reporting period - Not applicable[285](index=285&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20EXHIBITS) This section lists the exhibits filed as part of the Form 10-Q, including certifications from the CEO and CFO (Rule 13a-14(a)/15d-14(a) and Section 1350), and Interactive Data Files (iXBRL) for the financial statements - Includes Rule 13a-14(a)/15d-14(a) Certifications from CEO and CFO[285](index=285&type=chunk) - Includes Section 1350 Certification from CEO and CFO[285](index=285&type=chunk) - Interactive Data Files (iXBRL) for Condensed Consolidated Financial Statements are provided[285](index=285&type=chunk)[286](index=286&type=chunk) [Signatures](index=48&type=section&id=SIGNATURES) This section contains the official signatures of CEVA's Chief Executive Officer and Chief Financial Officer, certifying the report - Report signed by Gideon Wertheizer (CEO) and Yaniv Arieli (CFO) on November 9, 2021[288](index=288&type=chunk)

Call Start: 08:30 January 1, 0000 9:23 AM ET CEVA, Inc. (NASDAQ:CEVA) Q3 2021 Earnings Conference Call November 9, 2021 08:30 ET Company Participants Richard Kingston - Vice President of Market Intelligence, Investor & Public Relations Gideon Wertheizer - Chief Executive Officer Yaniv Arieli - Chief Financial Officer Conference Call Participants Matt Ramsay - Cowen Tavy Rosner - Barclays Suji DeSilva - ROTH Capital Partners Martin Yang - Oppenheimer Kevin Cassidy - Rosenblatt Securities Operator Good day, a ...