CEVA(CEVA) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's interim financial statements, management's analysis of operations, market risk disclosures, and internal controls Item 1. FINANCIAL STATEMENTS This section presents the unaudited interim condensed consolidated financial statements and their detailed explanatory notes Interim Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates | ASSETS (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $29,082 | $18,498 | | Marketable securities | $125,568 | $143,117 | | Total current assets | $208,808 | $216,341 | | Total assets | $302,842 | $308,948 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $24,342 | $30,529 | | Total long-term liabilities | $12,608 | $11,863 | | Total stockholders' equity | $265,892 | $266,556 | | Total liabilities and stockholders' equity | $302,842 | $308,948 | Interim Condensed Consolidated Statements of Loss This section details the company's revenues, gross profit, operating loss, and net loss over specific periods | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $25,678 | $28,437 | $49,923 | $50,509 | | Gross profit | $22,129 | $25,504 | $42,887 | $45,073 | | Operating loss | $(4,482) | $(35) | $(8,864) | $(4,995) | | Net loss | $(3,704) | $(291) | $(7,031) | $(5,739) | | Basic and diluted net loss per share | $(0.15) | $(0.01) | $(0.30) | $(0.24) | Interim Condensed Consolidated Statements of Comprehensive Loss This section presents the company's net loss and other comprehensive income or loss, leading to total comprehensive loss | (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Net loss | $(7,031) | $(5,739) | $(3,704) | $(291) | | Other comprehensive income (loss), net of taxes | $1,674 | $(565) | $1,452 | $(174) | | Comprehensive loss | $(5,357) | $(6,304) | $(2,252) | $(465) | Interim Condensed Consolidated Statements of Changes in Stockholders' Equity This section outlines changes in the company's stockholders' equity, including net loss, comprehensive income, and stock transactions | (in thousands) | Balance as of Jan 1, 2025 | Net loss | Other comprehensive income, net | Equity-based compensation | Purchase of treasury stock | Issuance of common stock | Issuance of treasury stock | Balance as of Jun 30, 2025 | | :------------- | :------------------------ | :------- | :---------------------------- | :------------------------ | :------------------------- | :----------------------- | :------------------------- | :------------------------- | | Total stockholders' equity | $266,556 | $(7,031) | $1,674 | $9,225 | $(6,162) | $1,358 | $272 | $265,892 | - The company purchased 300,000 shares of treasury stock for $6.162 million during the six months ended June 30, 2025[23] Interim Condensed Consolidated Statements of Cash Flows This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities | (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(6,221) | $(4,970) | | Net cash provided by investing activities | $20,786 | $8,184 | | Net cash used in financing activities | $(4,532) | $(1,722) | | Increase in cash and cash equivalents | $10,584 | $1,415 | | Cash and cash equivalents at the end of the period | $29,082 | $24,702 | Notes to the Interim Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the interim condensed consolidated financial statements NOTE 1: BUSINESS This note describes Ceva's business as a leader in silicon and software IP solutions for smart edge products - Ceva is a leader in silicon and software IP solutions, enabling smart edge products to connect, sense, and infer data. Its IP powers connectivity, sensing, and inference in consumer IoT, automotive, industrial, infrastructure, mobile, and PC markets[28] - The company's comprehensive portfolio includes advanced wireless connectivity solutions (Bluetooth, Wi-Fi, UWB, cellular IoT, 5G-Advanced) and scalable Edge AI capabilities (NPU IP, sensor fusion processors, embedded application software)[30][34] - Since 2003, over 20 billion smart edge products have shipped with Ceva IP, with approximately 2 billion shipped in 2024 alone[28] NOTE 2: BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the basis of financial statement preparation and summarizes the company's significant accounting policies - The interim condensed consolidated financial statements are prepared in accordance with U.S. GAAP and are consistent with the Company's Annual Report on Form 10-K for December 31, 2024[31][32][33] - The Company's financial instruments, including cash, bank deposits, marketable securities, and trade receivables, are subject to credit risk, with the majority of trade receivables in the Asia Pacific region[35][37] - New FASB ASUs (2023-09, 2025-05) related to income tax disclosures, expense disaggregation, and credit loss measurement for accounts receivable are effective for fiscal years beginning after December 15, 2024, or later, and are currently being evaluated for impact[40][41][42] NOTE 3: ACQUISITION This note details Ceva's acquisition of a Greece-based radio frequency design company in January 2024 - In January 2024, Ceva acquired a Greece-based radio frequency design company for approximately $0.753 million at closing and an additional $2.1 million contingent on employment and performance milestones. The acquisition was accounted for as an asset acquisition[45] NOTE 4: SALE OF INTRINSIX CORP. This note describes the sale of Ceva's subsidiary, Intrinsix Corp., and the subsequent release of escrow funds - On October 2, 2023, Ceva sold its wholly-owned subsidiary, Intrinsix Corp., to Cadence Design Systems, Inc. for $35.0 million in cash. During Q2 2025, $3.47 million was released from escrow and paid to the Company[46] NOTE 5: REVENUE RECOGNITION This note explains the company's policies for recognizing revenue from IP licenses, services, and royalties, including disaggregated data - Revenue from IP licenses is recognized at a point in time upon delivery, while customization and implementation services are recognized over time using cost inputs. Post-contract support services revenue is recognized ratably over the service period[47] - Royalty revenues, derived from sales of licensee products incorporating Ceva's IP, are recognized in the quarter of product sale, based on actual or estimated sales data[48] | Disaggregated Revenue (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | By Geography: | | | | | | United States | $9,163 | $3,903 | $5,544 | $1,365 | | Europe and Middle East | $3,494 | $8,954 | $2,010 | $7,442 | | Asia Pacific | $37,266 | $37,639 | $18,124 | $19,630 | | By Use Case: | | | | | | Connect | $36,722 | $43,055 | $16,277 | $25,049 | | Sense & Infer | $13,201 | $7,454 | $9,401 | $3,388 | | By Timing: | | | | | | Products transferred at a point in time | $42,005 | $46,540 | $21,412 | $26,429 | | Products and services transferred over time | $7,918 | $3,969 | $4,266 | $2,008 | NOTE 6: LEASES This note details the company's operating lease arrangements for office space and vehicles, including lease costs and commitments - The Company leases office space and vehicles under operating leases, with a weighted average remaining lease term of 4.79 years and a weighted average discount rate of 3.84% as of June 30, 2025[55] | Lease Costs (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Operating lease cost | $1,426 | $1,357 | $716 | $694 | | Cash payments for operating leases | $1,826 | $1,309 | $837 | $687 | - A new operating lease agreement for offices in Israel was signed in March 2025, adding approximately $9.9 million in lease commitment, expected to commence in 2025 and run until December 30, 2035[55] NOTE 7: MARKETABLE SECURITIES This note provides information on the company's available-for-sale marketable securities, including amortized cost and fair value | Available-for-sale Marketable Securities (in thousands) | June 30, 2025 (Unaudited) | | :-------------------------------------- | :------------------------ | | Amortized cost | $126,057 | | Gross unrealized gains | $440 | | Gross unrealized losses | $(929) | | Fair value | $125,568 | - As of June 30, 2025, investments with unrealized losses totaled $47.762 million, with gross unrealized losses of $(0.929) million. The Company intends to hold these securities until maturity or recovery of cost basis[36][57] NOTE 8: FAIR VALUE MEASUREMENT This note describes the company's fair value measurements for financial instruments, categorized by a three-tier hierarchy - The Company measures marketable securities, investments in marketable equity securities, and foreign currency derivative contracts at fair value, classifying them within a three-tier hierarchy (Level I, II, III)[59][60] - Investments in marketable equity securities are Level I, while marketable securities and foreign currency derivative contracts are Level II, based on observable market data[60] | Assets Measured at Fair Value (in thousands) | June 30, 2025 | Level I | Level II | Level III | | :----------------------------------------- | :------------ | :------ | :------- | :-------- | | Marketable securities: Corporate bonds | $125,568 | $— | $125,568 | $— | | Foreign exchange contracts | $785 | $— | $785 | $— | | Investments in marketable equity securities | $50 | $50 | $— | $— | NOTE 9: GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER DATA This note presents revenue data disaggregated by geographic region and identifies major customer contributions - Ceva operates as one operating segment, with financial performance evaluated on a consolidated basis by the CEO[63] | Revenues by Customer Location (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :----------------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | United States | $9,163 | $3,903 | $5,544 | $1,365 | | Europe and Middle East | $3,494 | $8,954 | $2,010 | $7,442 | | Asia Pacific | $37,266 | $37,639 | $18,124 | $19,630 | | China (subset of Asia Pacific) | $29,844 | $29,025 | $13,778 | $15,433 | - Customer A accounted for 17% of total revenues for the first half of 2025 and 23% of total trade receivables as of June 30, 2025[66][67] NOTE 10: FINANCIAL INCOME, NET This note details the components of the company's financial income, net, including interest income and foreign exchange gains or losses | Financial Income, Net (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Interest income | $2,571 | $2,546 | $1,320 | $1,291 | | Foreign exchange gain (loss), net | $1,174 | $(279) | $574 | $(86) | | Total | $4,221 | $2,663 | $2,121 | $1,406 | NOTE 11: NET LOSS PER SHARE OF COMMON STOCK This note provides the calculation of basic and diluted net loss per share, along with relevant share counts | Net Loss Per Share | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :----------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Net loss | $(7,031) | $(5,739) | $(3,704) | $(291) | | Basic and diluted weighted average common stock outstanding (in thousands) | 23,832 | 23,568 | 23,898 | 23,628 | | Basic and diluted net loss per share | $(0.30) | $(0.24) | $(0.15) | $(0.01) | - 1,943,497 shares related to outstanding equity-based awards were excluded from diluted net loss per share calculation for the three and six months ended June 30, 2025, due to the net loss[69] NOTE 12: COMMON STOCK AND STOCK-BASED COMPENSATION PLANS This note describes the company's equity-based compensation plans and the associated expense recognition - The Company grants stock options, Restricted Stock Units (RSUs), and Performance-based Stock Units (PSUs) under its equity plans. RSUs generally vest in three equal annual installments, while PSUs have performance goals related to license revenue and total shareholder return[70][72][74] | Equity-based Compensation Expense (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :--------------------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Cost of revenue | $325 | $394 | $166 | $191 | | Research and development, net | $5,139 | $4,445 | $2,673 | $2,438 | | Sales and marketing | $1,164 | $816 | $598 | $451 | | General and administrative | $2,597 | $1,816 | $1,465 | $820 | | Total equity-based compensation expense | $9,225 | $7,471 | $4,902 | $3,900 | - As of June 30, 2025, there was $29.728 million of unrecognized compensation expense related to unvested RSUs and PSUs, expected to be recognized over a weighted-average period of 1.6 years[78] NOTE 13: DERIVATIVES AND HEDGING ACTIVITIES This note explains the company's use of derivative instruments for foreign currency hedging and their fair value - Ceva uses foreign exchange forward and option contracts as cash flow hedges to mitigate foreign currency exposure, primarily for non-U.S. dollar denominated payroll[81] - As of June 30, 2025, the notional principal amount of Hedging Contracts to sell U.S. dollars was $9.65 million, with a total fair value of derivative assets at $0.785 million[82][83] | Unrealized Gains (Losses) on Derivatives (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :---------------------------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Foreign exchange option contracts | $282 | $16 | $378 | $16 | | Foreign exchange forward contracts | $864 | $(355) | $1,054 | $(160) | | Total | $1,146 | $(339) | $1,432 | $(144) | NOTE 14: ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) This note details the components of accumulated other comprehensive income or loss, including unrealized gains and losses | Accumulated Other Comprehensive Income (Loss) (in thousands) | Beginning balance (Jan 1, 2025) | Net current period other comprehensive income (loss) | Ending balance (Jun 30, 2025) | | :--------------------------------------------------------- | :------------------------------ | :--------------------------------------------------- | :---------------------------- | | Unrealized gains (losses) on available-for-sale marketable securities | $(1,330) | $889 | $(441) | | Unrealized gains (losses) on cash flow hedges | $— | $785 | $785 | | Total | $(1,330) | $1,674 | $344 | - Reclassifications out of accumulated other comprehensive income (loss) for the six months ended June 30, 2025, totaled $0.376 million, primarily impacting cost of revenues and operating expenses[87] NOTE 15: SHARE REPURCHASE PROGRAM This note provides information on the company's share repurchase activities and remaining authorization - During the six months ended June 30, 2025, the Company repurchased 300,000 shares of common stock at an average price of $20.54 per share, totaling $6.162 million[88] - As of June 30, 2025, 724,781 shares of common stock remained available for repurchase under the Company's share repurchase program[88] NOTE 16: SUBSEQUENT EVENTS This note discloses significant events occurring after the balance sheet date, such as new tax legislation - On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, introducing changes to U.S. federal tax law. The Company is assessing its effect on consolidated financial statements but does not expect a material impact on its financial position[90][128] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, operational results, and future outlook BUSINESS OVERVIEW This section describes Ceva's market position, IP solutions, and strategic focus on key technology trends - Ceva is a leader in silicon and software IP solutions for smart edge products, holding 68% of the wireless connectivity market share based on IP design revenues in 2024[92] - The company's IP portfolio addresses megatrends like 5G expansion, generative AI, embedded AI, industrial automation, and vehicle electrification, with a total addressable market of $5 billion by 2027[92][96] - In Q2 2025, Ceva concluded thirteen IP licensing deals, including four for NeuPro family of NPUs, marking a pivotal moment for its Edge AI business's broad adoption phase[96] CURRENT TRENDS This section discusses current market trends, Ceva's strategic focus, and updated revenue guidance due to macroeconomic conditions - Ceva focuses on three main use cases for smart edge devices (connect, sense, infer) across consumer IoT, automotive, industrial, and infrastructure markets, aiming for long-term growth[100] - The company expects licensing and related revenues to expand into new IIoT and consumer IoT markets in 2025, with strong IP expansion into AI, evidenced by four AI-related deals in Q2 2025[101] - Due to macroeconomic conditions and lower-than-anticipated Q1 revenues, Ceva lowered its 2025 revenue guidance from a high-single digits range to a low-single digits range for growth over 2024 annual revenues[102] RESULTS OF OPERATIONS This section provides a detailed analysis of the company's revenues, costs, and expenses for the reported periods Total Revenues This section analyzes the company's total revenues, highlighting changes and customer concentration | Total Revenues (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------------------- | :------ | :------ | :------ | :------ | | Total Revenues | $25.7 | $28.4 | $49.9 | $50.5 | - Total revenues decreased by 10% in Q2 2025 and 1% in H1 2025 compared to the corresponding periods in 2024[104] - The five largest customers accounted for 42% of total revenues for both Q2 and H1 2025, a decrease from 66% and 50% in comparable 2024 periods, indicating reduced customer concentration[105] Licensing and Related Revenues This section details revenues from IP licensing and related services, noting key technology drivers and strategic deals | Licensing and Related Revenues (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------------- | :------ | :------ | :------ | :------ | | Licensing and related revenues | $15.0 | $17.3 | $30.1 | $28.7 | - Licensing revenues decreased by 13% in Q2 2025 but increased by 5% in H1 2025, driven by Edge AI technologies and new Wi-Fi 7 and Bluetooth 7 solutions[107] - Q2 2025 marked a pivotal moment for the AI business with four strategic NPU customer agreements, including two NeuPro-Nano deals for audio and two NeuPro-M deals for communications/data processing acceleration and LLM compute support[107] Royalty Revenues This section analyzes royalty revenues, attributing changes to market conditions and product shipments | Royalty Revenues (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------- | :------ | :------ | :------ | :------ | | Royalty revenues | $10.7 | $11.2 | $19.9 | $21.8 | - Royalty revenues decreased by 5% in Q2 2025 and 9% in H1 2025, primarily due to softness in the lower end of the smartphone market[109][110] - Consumer IoT shipments showed strong sequential (21%) and year-over-year (16%) growth, driven by record high cellular IoT and Wi-Fi 6 shipments[110] Geographic Revenue Analysis This section presents a breakdown of revenues by geographic region, identifying major contributors | Geographic Revenue (in millions, except percentages) | H1 2025 | % | H1 2024 | % | Q2 2025 | % | Q2 2024 | % | | :------------------------------------------------- | :------ | :- | :------ | :- | :------ | :- | :------ | :- | | United States | $9.2 | 18% | $3.9 | 8% | $5.6 | 22% | $1.4 | 5% | | Europe and Middle East | $3.5 | 7% | $9.0 | 18% | $2.0 | 8% | $7.4 | 26% | | Asia Pacific | $37.2 | 75% | $37.6 | 74% | $18.1 | 70% | $19.6 | 69% | | China (subset of Asia Pacific) | $29.8 | 60% | $29.0 | 57% | $13.8 | 54% | $15.4 | 54% | - Asia Pacific remains the largest revenue contributor, accounting for 75% of total revenues in H1 2025, with China representing 60% of total revenues[112] Cost of Revenues This section discusses the cost of revenues and factors influencing its changes, such as customization work | Cost of Revenues (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------- | :------ | :------ | :------ | :------ | | Cost of revenues | $3.5 | $2.9 | $7.0 | $5.4 | - Cost of revenues increased for both Q2 and H1 2025, primarily due to higher customization and implementation work associated with strategic 5G-Advanced deals[113] Gross Margin This section analyzes the company's gross margin and the factors contributing to its fluctuations | Gross Margin | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------- | :------ | :------ | :------ | :------ | | Gross margin | 86% | 90% | 86% | 89% | - Gross margin decreased for both Q2 and H1 2025, mainly reflecting higher cost of revenues and lower total revenues[114] Operating Expenses This section details the company's total operating expenses and the primary drivers of their changes | Total Operating Expenses (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Total operating expenses | $26.6 | $25.5 | $51.8 | $50.1 | - Total operating expenses increased for both Q2 and H1 2025, primarily due to higher salaries, employee-related costs, and non-cash equity-based compensation expenses[115] Research and Development Expenses, Net This section analyzes R&D expenses, their proportion of revenues, and personnel changes | R&D Expenses (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------- | :------ | :------ | :------ | :------ | | R&D expenses, net | $18.8 | $18.8 | $36.4 | $36.7 | - R&D expenses as a percentage of total revenues were 73% for both Q2 and H1 2025, up from 66% in Q2 2024, mainly due to lower revenues[116] - The number of R&D personnel decreased slightly to 323 at June 30, 2025, from 332 at June 30, 2024[117] Sales and Marketing Expenses This section discusses sales and marketing expenses, attributing changes to personnel and compensation | Sales and Marketing Expenses (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------ | | Sales and marketing expenses | $3.3 | $3.1 | $6.8 | $5.9 | - Sales and marketing expenses increased due to higher salaries, more personnel (34 at June 30, 2025 vs. 30 at June 30, 2024), and increased equity-based compensation[118][119] General and Administrative Expenses This section details general and administrative expenses, noting increases due to compensation and professional services | G&A Expenses (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------- | :------ | :------ | :------ | :------ | | G&A expenses | $4.4 | $3.5 | $8.3 | $7.1 | - G&A expenses increased primarily due to higher non-cash equity-based compensation expenses and professional services costs[120] - The number of G&A personnel increased to 47 at June 30, 2025, from 45 at June 30, 2024[121] Amortization of Intangible Assets This section explains amortization charges related to intangible assets from past acquisitions | Amortization Charges (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------------------------- | :------ | :------ | :------ | :------ | | Amortization charges | $0.2 | $0.1 | $0.3 | $0.3 | - Amortization charges remained consistent, related to intangible assets from the acquisitions of Hillcrest Labs and VisiSonics[122] Financial Income, Net This section analyzes financial income, net, including interest income and foreign exchange gains or losses | Financial Income, Net (in millions) | H1 2025 | H1 2024 | Q2 2025 | Q2 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Financial income, net | $4.22 | $2.66 | $2.12 | $1.40 | | Interest income and gains/losses from marketable securities, net | $3.05 | $2.94 | $1.55 | $1.49 | | Foreign exchange gain (loss) | $1.17 | $(0.28) | $0.57 | $(0.09) | - Financial income, net, increased due to higher interest yields and a foreign exchange gain of $1.17 million in H1 2025 (compared to a loss of $0.28 million in H1 2024)[124][125] Remeasurement of Marketable Equity Securities This section discusses losses from the remeasurement of marketable equity securities | Remeasurement Loss (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Loss from remeasurement | $208 | $58 | $262 | $118 | - The Company recorded higher losses from the remeasurement of marketable equity securities in Q2 and H1 2025 compared to 2024[126] Provision for Income Taxes This section details income tax expense, explaining changes and benefits from preferential tax regimes | Income Tax Expense (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------- | :------ | :------ | :------ | :------ | | Income tax expense | $1.1 | $1.6 | $2.1 | $3.3 | - Income tax expense decreased for both Q2 and H1 2025, primarily due to lower withholding tax expenses in Israel and lower tax expenses under the French IP Box regime[127] - The Israeli subsidiary benefits from a 12% tax rate on IP-derived profits, and the French subsidiary qualifies for a preferential 10% CIT rate on qualifying IP income under the French IP Box regime[131][133] Critical Accounting Policies and Estimates This section highlights critical accounting policies and estimates, noting any material changes - Critical accounting policies and estimates include revenue recognition, equity-based compensation, and credit losses. No material changes have occurred since the December 31, 2024, Annual Report on Form 10-K[135][136] LIQUIDITY AND CAPITAL RESOURCES This section discusses the company's liquidity position, cash flow activities, and capital adequacy | Liquidity (in millions) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Cash and cash equivalents | $29.1 | $18.5 | | Short-term bank deposits | $2.8 | $2.0 | | Marketable securities | $125.6 | $143.1 | | Total liquidity | $157.5 | $163.6 | - Total liquidity decreased by $6.1 million in H1 2025, primarily due to cash used in operations and share repurchases, partially offset by $3.5 million from the Intrinsix sale escrow release[137] | Cash Flow Activities (in millions) | H1 2025 | H1 2024 | | :--------------------------------- | :------ | :------ | | Net cash used in operating activities | $(6.2) | $(5.0) | | Net cash provided by investing activities | $20.8 | $8.2 | | Net cash used in financing activities | $(4.5) | $(1.7) | - The Company believes its current cash, deposits, and marketable securities, along with cash from operations, will provide sufficient capital for at least the next 12 months[148] Contractual Obligations and Commitments This section states that contractual obligations have not materially changed from previous disclosures - The Company states that its contractual obligations and commitments have not materially changed from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024[150] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section details the company's exposure to market risks, including foreign currency and interest rate fluctuations, and hedging strategies - The Company is exposed to foreign currency exchange rate fluctuations, particularly for expenses denominated in NIS and Euro. It uses a foreign currency cash flow hedging program for non-U.S. dollar payroll[151][153] - A foreign exchange gain of $1.17 million was recorded for H1 2025, compared to a loss of $0.28 million for H1 2024, partly due to French research tax credits increasing Euro cash balances[151][152] - As of June 30, 2025, unrealized losses on marketable securities were approximately $0.5 million due to interest rate changes, but the Company intends to hold these investments to maturity or recovery[155] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures and the absence of material internal control changes - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025[158] - There have been no material changes in internal control over financial reporting during the most recent fiscal quarter[159] PART II. OTHER INFORMATION This section provides additional information, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings This section discloses ongoing legal proceedings and claims, including any provisions made - As of June 30, 2025, the Company's interim condensed consolidated balance sheet includes a provision of approximately $0.3 million for legal proceedings and claims[160] Item 1A. Risk Factors This section updates previously disclosed risk factors, emphasizing new or heightened risks related to trade and geopolitics - No material changes to previously disclosed risk factors were identified, except for those related to the U.S. trade environment, global tariffs, and economic uncertainty associated with geopolitics[162][163] - Trade restrictions and rising political tensions could reduce trade volume and investment, potentially causing customers to delay projects or resulting in lower licensing and royalty revenues[163] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchases under its share repurchase program | Period (Q2 2025) | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | | :--------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------- | :----------------------------------------------------------------------------- | | Month 1 (April) | — | — | — | 1,024,781 | | Month 2 (May) | 235,000 | $20.70 | 235,000 | 789,781 | | Month 3 (June) | 65,000 | $19.96 | 65,000 | 724,781 | | TOTAL | 300,000 | $20.54 | 300,000 | 724,781 | - During Q2 2025, Ceva repurchased 300,000 shares of common stock at an average price of $20.54 per share[166] Item 3. Defaults Upon Senior Securities This item is not applicable to the Company for the reporting period Item 4. Mine Safety Disclosures This item is not applicable to the Company for the reporting period Item 5. Other Information This section confirms no director or officer trading arrangements were adopted or terminated during the period - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the six months ended June 30, 2025[169] Item 6. Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q - Exhibits include Amended and Restated 2011 Stock Incentive Plan, Amended and Restated 2002 Employee Stock Purchase Plan, Rule 13a-14(a)/15d-14(a) Certifications of CEO and CFO, Section 1350 Certification, and iXBRL formatted financial statements[171] SIGNATURES This section confirms the official signing of the report by the Chief Executive Officer and Chief Financial Officer