CEVA(CEVA) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Unaudited interim financial statements are presented, highlighting reduced net loss, increased revenues, and improved gross margins Interim Condensed Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $207,267 | $209,371 | | Total Assets | $300,402 | $304,085 | | Total Current Liabilities | $24,982 | $26,887 | | Total Liabilities | $36,616 | $39,744 | | Total Stockholders' Equity | $263,786 | $264,341 | Interim Condensed Consolidated Statements of Loss Q2 Performance Comparison (in thousands, except per share data) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $28,437 | $22,922 | +24.1% | | Gross Profit | $25,504 | $19,398 | +31.5% | | Operating Loss | ($35) | ($5,343) | +99.3% | | Net Loss | ($291) | ($5,818) | +95.0% | | Diluted EPS | ($0.01) | ($0.25) | +96.0% | H1 Performance Comparison (in thousands, except per share data) | Metric | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $50,509 | $49,184 | +2.7% | | Gross Profit | $45,073 | $42,152 | +6.9% | | Operating Loss | ($4,995) | ($7,963) | +37.3% | | Net Loss | ($5,739) | ($10,690) | +46.3% | | Diluted EPS | ($0.24) | ($0.45) | +46.7% | Interim Condensed Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Category | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($4,970) | ($9,863) | | Net cash provided by investing activities | $8,184 | $14,373 | | Net cash (used in) provided by financing activities | ($1,722) | $1,673 | | Increase in cash and cash equivalents | $1,415 | $6,226 | Notes to the Interim Condensed Consolidated Financial Statements The notes provide detailed disclosures on acquisitions, revenue recognition, stock-based compensation, and share repurchases - In January 2024, the company completed an asset acquisition of a Greek-based R&D company for approximately $750k paid at closing and up to $2.1M subject to continued employment and performance milestones[43] - The sale of the Intrinsix subsidiary in October 2023 is accounted for as a discontinued operation, with its financial results retroactively separated from continuing operations in all presented periods[45] Revenue by Geography - Six Months Ended June 30 (in thousands) | Region | 2024 | 2023 | | :--- | :--- | :--- | | United States | $3,903 | $4,100 | | Europe and Middle East | $8,954 | $4,893 | | Asia Pacific | $37,639 | $39,689 | | Total | $50,509 | $49,184 | - In H1 2024, the company repurchased 157,303 shares of common stock for an aggregate price of $3.276 million. As of June 30, 2024, 542,697 shares remained available for repurchase under the program[123] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2024 revenue growth, full-year projections, improved gross margin, and the company's strong liquidity position Business Overview and Current Trends - The company's strategy focuses on enabling three main use cases for smart edge devices: connect, sense, and infer, targeting the consumer, automotive, industrial, and infrastructure markets[143] - Management projects full-year 2024 revenue growth of 4% to 8% over 2023, with the majority of this growth expected in the second half of the year[144] - In Q2 2024, the company signed 11 IP licensing agreements, including strategic deals for next-generation wireless infrastructure and a significant Bluetooth portfolio deal with a leading U.S. analog semiconductor company[131][151] Results of Operations Q2 2024 vs. Q2 2023 Revenue Performance (in millions) | Revenue Stream | Q2 2024 | Q2 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Licensing & Related | $17.3 | $13.6 | +28% | | Royalties | $11.2 | $9.4 | +19% | | Total Revenues | $28.4 | $22.9 | +24% | - Chipset shipments incorporating Ceva's technologies increased by 24% year-over-year to 461 million units in Q2 2024, driven by market share gains in Bluetooth, Wi-Fi, and cellular IoT[152][153] - Gross margin improved to 90% in Q2 2024 from 85% in Q2 2023, reflecting lower cost of revenues and higher total revenues[157] - Customer concentration increased, with the top three customers accounting for 66% of total revenues in Q2 2024, compared to 49% in Q2 2023[147] Liquidity and Capital Resources - As of June 30, 2024, the company had a total of $158.4 million in cash, cash equivalents, bank deposits, and marketable securities[177] - Cash used in operating activities for H1 2024 was $5.0 million, a significant improvement from the $9.9 million used in H1 2023[181][182] - During H1 2024, the company used $3.3 million to repurchase 157,303 shares of its common stock[177][185] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risks are foreign currency fluctuations and interest rate risk on its investment portfolio - The company is exposed to foreign currency risk as the majority of its expenses are denominated in currencies other than the U.S. dollar, primarily the Israeli New Shekel (NIS) and the Euro[188] - A foreign currency cash flow hedging program is in place to protect against volatility in forecasted payroll expenses for non-U.S. employees[190] - The company's investment portfolio, consisting mainly of corporate bonds, had unrealized losses of approximately $3.3 million as of June 30, 2024, due to changes in the interest rate environment[192] Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2024, with no material changes - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report[195] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not involved in any legal proceedings expected to materially affect its business or financial condition - The company is not currently involved in any legal proceedings that are expected to have a material impact[196] Item 1A. Risk Factors No material changes have been identified in the risk factors previously disclosed in the company's 2023 Annual Report - No material changes to the Risk Factors disclosed in the 2023 Form 10-K have been identified[197] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's Q2 2024 share repurchase activity, including shares repurchased and remaining available Share Repurchases in Q2 2024 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2024 | 0 | N/A | | May 2024 | 77,359 | $19.86 | | June 2024 | 23,072 | $20.02 | | Total Q2 | 100,431 | $19.89 | - As of the end of Q2 2024, 542,697 shares remained available for repurchase under the company's publicly announced share repurchase program[200][201]