CEVA(US:CEVA)2022-11-09 21:15Financial Performance - Total revenues for Q3 2022 were $33.7 million, representing a 3% increase year-over-year, while revenues for the first nine months of 2022 reached $101.2 million, up 14% compared to the same period in 2021[132]. - Licensing, NRE, and related revenues were $22.3 million for Q3 2022, a 3% increase year-over-year, and $66.8 million for the first nine months of 2022, reflecting a 30% increase compared to the same period in 2021[136]. - Royalty revenues were $11.4 million for Q3 2022, a 2% increase year-over-year, and $34.5 million for the first nine months, a 7% decrease year-over-year[139]. - Customers reported sales of 357 million chipsets for Q3 2022, a 19% decrease year-over-year, and 1,320 million for the first nine months, a 7% increase year-over-year[140]. - The company recorded a net loss of $398,000 and $1,140,000 for the third quarter and first nine months of 2022, respectively, related to forward and options contracts[185]. Revenue Composition - CEVA's connectivity products accounted for 71% of total revenues for the first nine months of 2022, while smart sensing products made up 29%[135]. - The company’s five largest customers accounted for 38% of total revenues in Q3 2022, down from 51% in Q3 2021, indicating a diversification in the customer base[133]. Market Trends - Shipments of devices enabled by Bluetooth, Wi-Fi, and cellular IoT IPs increased by 19% year-over-year to 945 million units for the first nine months of 2022[124]. - Unit shipments for non-handset products increased by 14% year-over-year to 1.06 billion units for the first nine months of 2022, with expectations for continued royalty growth in this category[130]. - The addressable market size for Bluetooth, Wi-Fi, UWB, and cellular IoT is expected to exceed 15 billion devices annually by 2026, indicating significant growth potential[124]. - The company is experiencing exceptional interest in its wireless connectivity platforms, with 11 out of 18 IP licensing deals in Q3 2022 focused on this area[121]. Operating Expenses - Total operating expenses were $29.7 million for Q3 2022, an increase from $26.3 million in Q3 2021, mainly due to an impairment charge of $3.6 million[145]. - Research and development expenses were $18.5 million for Q3 2022, representing 55% of total revenues, compared to 57% in Q3 2021[146]. - General and administrative expenses were $3.6 million for Q3 2022, consistent with 11% of total revenues, compared to 11% in Q3 2021[149]. Financial Position - The total cash, cash equivalents, short-term bank deposits, and marketable securities amounted to $144.4 million, a decrease from $154.9 million at December 31, 2021[170]. - Cash provided by operating activities for the first nine months of 2022 was $3.5 million, with a net loss of $25.1 million[174]. - The company has significant operations in Israel, France, and the Republic of Ireland, with a substantial portion of taxable income generated in these jurisdictions[163]. Taxation and Valuation - Income tax expenses increased to $17.9 million for Q3 2022, compared to $1.8 million in Q3 2021, primarily due to a valuation allowance charge[156]. - As of September 30, 2022, the company recorded a valuation allowance of $15.6 million against deferred tax assets due to uncertainty regarding future taxable income[160]. - The French subsidiary is entitled to a new tax benefit of 10% under the French IP Box regime, applicable to specific revenues[164]. - The Israeli subsidiary is taxed at a rate of 12% on profits from intellectual property under the Technological Preferred Enterprise tax track[166]. Investment Activities - The company invested $41.3 million in bank deposits and marketable securities with maturities up to 48 months during the first nine months of 2022[172]. - The cash outflow from investing activities for the first nine months of 2022 was $3.3 million, compared to $4.6 million for the same period in 2021[179]. - The company has not recognized any credit loss during the third quarter and first nine months of 2022 despite holding bonds with unrealized losses[187]. Market Risks - The company expects to continue experiencing fluctuations in operating results due to currency fluctuations on an annual and quarterly basis[185]. - The company anticipates that fluctuations in interest rates will not have a material effect on its financial position on an annual or quarterly basis[189]. - The company has not experienced any loss of principal or lack of access to invested cash or cash equivalents to date, but future access may be affected by financial institution failures[186].