CEVA(US:CEVA)2025-11-10 21:16Revenue Performance - Total revenues for Q3 2025 were $28.4 million, representing a 4% increase compared to Q3 2024, while revenues for the first nine months of 2025 were $78.3 million, reflecting a 1% increase year-over-year [114]. - The company achieved a year-over-year revenue growth of 10% in 2024, surpassing initial expectations of 4% to 8% [109]. - The five largest customers accounted for 45% of total revenues in Q3 2025, down from 48% in Q3 2024, indicating a slight diversification in customer base [115]. - The "Connect" segment (baseband for devices, Bluetooth, Wi-Fi, and NB-IoT) represented 71% of total revenues for the first nine months of 2025, down from 83% in the same period of 2024 [116]. - The "Sense & Infer" segment (sensor fusion, audio, sound, imaging, vision, and AI) accounted for 29% of total revenues for the first nine months of 2025, up from 17% in the same period of 2024 [116]. Licensing and Royalties - The company signed twelve IP licensing agreements in Q3 2025, including a comprehensive deal with Microchip for the NeuPro NPU portfolio and multiple agreements for SensPro AI DSPs [104]. - Licensing and related revenues were $16.0 million and $46.1 million for Q3 and the first nine months of 2025, representing increases of 3% and 4% compared to the same periods in 2024 [117]. - Licensing revenues accounted for 56% and 59% of total revenues for Q3 and the first nine months of 2025, compared to 57% for the same periods in 2024 [119]. - Royalty revenues were $12.4 million and $32.2 million for Q3 and the first nine months of 2025, reflecting increases of 6% and decreases of 4% year-over-year, respectively [120]. - Consumer IoT drove a 9% year-over-year growth in royalties, supported by record shipments in cellular IoT and Wi-Fi [120]. - The five largest royalty-paying customers accounted for 54% of total royalty revenues for Q3 and the first nine months of 2025, down from 61% and 60% in the comparable periods of 2024 [121]. Financial Outlook and Guidance - The company anticipates continued growth in royalties from connectivity platforms, particularly Bluetooth, Wi-Fi, and cellular IoT, which achieved record shipments in 2024 [110]. - The company has adopted a more cautious outlook for 2025, lowering revenue guidance from a high-single digits range to a low-single digits range for growth over 2024 annual revenues [112]. - The total addressable market for Physical AI and Edge AI is projected to reach $170 billion by 2030 [100]. Operating Expenses and Margins - Gross margin for Q3 and the first nine months of 2025 was 88% and 87%, respectively, compared to 85% and 88% for the same periods in 2024 [124]. - Total operating expenses were $27.1 million and $78.8 million for Q3 and the first nine months of 2025, compared to $25.9 million and $75.9 million for the same periods in 2024 [125]. - Research and development expenses were $19.5 million and $55.9 million for Q3 and the first nine months of 2025, compared to $18.0 million and $54.7 million for the same periods in 2024 [126]. Cash Flow and Investments - As of September 30, 2025, the company had approximately $152.1 million in cash, cash equivalents, bank deposits, and marketable securities, a decrease from $163.6 million at December 31, 2024 [149]. - Cash used in operating activities for the first nine months of 2025 was $12.1 million, consisting of a net loss of $9.5 million and adjustments for non-cash items of $15.7 million [153]. - The company repurchased 340,295 shares of common stock for an aggregate consideration of approximately $7.2 million during the first nine months of 2025 [158]. - The company invested $52.5 million in bank deposits and marketable securities with maturities up to 36 months during the first nine months of 2025 [151]. - Net cash provided by investing activities for the first nine months of 2025 was $14.6 million, compared to a net cash outflow of $1.1 million for the same period in 2024 [156]. Taxation and Financial Position - The company’s Irish subsidiary qualified for a 12.5% tax rate on its trade, while interest income is taxed at 25% [142]. - The French subsidiary benefits from a 10% tax rate under the French IP Box regime, applicable to specific revenues [143]. - The Israeli subsidiary is taxed at a rate of 12% on profits deriving from IP as a Technological Preferred Enterprise [145]. - The company believes its cash and cash equivalents, along with cash from operations, will provide sufficient capital to fund operations for at least the next 12 months [160]. Market and Currency Risks - The company expects to continue experiencing fluctuations in operating results due to currency fluctuations on an annual and quarterly basis [164]. - The company is primarily exposed to fluctuations in U.S. interest rates, which may impact fixed interest investments negatively if rates rise [168]. - The company follows a foreign currency cash flow hedging program to mitigate risks associated with non-U.S. dollar payroll expenses [164]. - The company anticipates that fluctuations in interest rates will not have a material effect on its financial position on an annual or quarterly basis [168].