CEVA(US:CEVA)2025-11-10 14:30Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $28.4 million, up 4% year-over-year from $27.2 million and up 11% sequentially [12] - Non-GAAP EPS for the quarter was $0.11, exceeding expectations [4] - Gross margin improved to 88% on a GAAP basis and 89% on a non-GAAP basis, compared to 85% and 87% respectively a year ago [13] Business Line Data and Key Metrics Changes - Licensing and related revenue totaled $16 million, representing 56% of total revenue, reflecting a 3% year-over-year increase and a 7% sequential increase [12] - AI processor licensing contributed roughly one-third of licensing revenue in both Q2 and Q3 2025, marking a significant impact on the licensing mix [8][12] - Royalty revenue for Q3 was $12.4 million, reflecting 44% of total revenue, a 16% sequential increase, and a 6% year-over-year increase [13] Market Data and Key Metrics Changes - Consumer IoT posted 9% year-over-year growth, supported by record shipments in cellular IoT and Wi-Fi [13] - 5G WAN infrastructure revenues increased by 91% compared to last year [10] - Mobile royalties grew 4% year-over-year and 7% sequentially, driven by recovering low-end smartphone segments [10] Company Strategy and Development Direction - The company is focused on expanding its market-leading position in wireless connectivity and accelerating growth in AI [4] - CEVA aims to lead the transition to NPUs as a foundational technology for AI inference, similar to the licensing model of CPUs and GPUs [5][6] - The strategy includes leveraging a unified software framework and tools to enhance customer differentiation and experience [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth in AI-led licensing momentum and wireless connectivity, highlighting a robust pipeline and deal flow [18] - The company expects seasonal momentum in Q4, driven by share gains at a US OEM smartphone customer and strong ramps in Wi-Fi and cellular IoT [18] - The guidance for Q4 total revenue is expected to be in the range of $29-$33 million [19] Other Important Information - CEVA's cash and cash equivalents were approximately $152 million as of September 30, 2025 [17] - The company repurchased approximately 340,000 shares for about $7.2 million in 2025 [17] - Shipped units by CEVA's licensees during Q3 2025 were 559 million units, up 19% sequentially and 11% year-over-year [15] Q&A Session Summary Question: Can you describe the performance of other segments besides smartphones? - Management noted growth momentum in mobile, Wi-Fi shipments, cellular IoT, and automotive ADAS solutions, all contributing to royalty growth [22][24] Question: What is the timeline for Microchip NPU shipments to impact CEVA's royalty revenue? - Typical licensing agreements last a few years, with royalties expected to materialize within two to three years after productization [31] Question: What does the competitive landscape look like for the Microchip deal? - The competitive landscape includes other potential IP vendors, but CEVA's comprehensive NPU portfolio and advanced software stack provided a competitive advantage [44][45]