CEVA(US:CEVA)2022-11-09 17:38Financial Data and Key Metrics Changes - Revenue for Q3 2022 was $33.7 million, up 3% year-over-year from $32.8 million [18] - Licensing revenue was $22.3 million, reflecting 66% of total revenues, up 3% from $21.6 million [19] - Royalty revenue was $11.4 million, reflecting 34% of total revenues, up 2% from $11.2 million [19] - GAAP operating loss for Q3 was $4 million, down from a GAAP operating profit of $1.7 million in the same quarter a year ago [20] - Non-GAAP operating profit was $6.9 million, up 4% from Q3 2021 [21] - GAAP loss for the quarter was $21.3 million, with a diluted loss per share of $0.96 [21] Business Line Data and Key Metrics Changes - Licensing environment outperformed, with 18 licensing agreements across various market segments including ADAS and wireless audio devices [7][8] - Handset baseband royalties were up 16% year-over-year but down 20% sequentially due to inventory adjustments [9] - Base station IoT royalties were down 3% year-over-year but up 16% sequentially, driven by growing 5G RAN shipments [9][10] Market Data and Key Metrics Changes - China and the U.S. were the largest drivers of business, with Japan emerging as an important market due to automotive and industrial activities [8] - Shipped units by CEVA's licensees during Q3 2022 were 357 million units, down 23% from Q3 2021 [22] - Base station and IoT product shipments were 279 million units, down 20% sequentially and down 31% year-over-year [22] Company Strategy and Development Direction - The company aims to increase IP content by moving up the value chain and licensing software IP to OEMs [11][13] - The Penta-G RAN platform was announced to extend the portfolio for the 5G RAN market, reducing entry barriers for new entrants [12][49] - Focus on diversifying revenue through software IP for wearables and other devices, with over 50 licensees using CEVA technologies [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted the further deterioration of consumer demand and extended COVID-19 restrictions in China affecting inventory levels [11] - The company expects royalty revenue to be lower by about 10% sequentially in Q4 due to softer demand in smartphones and consumer electronics [24] - Annual revenue is expected to be in the range of $132.5 million to $135 million, representing 8% to 10% annual growth over 2021 [24] Other Important Information - CEO Gideon Wertheizer announced retirement effective December 31, 2022, with Amir Panush set to take over [16][17] - The company has a strong cash position of $144 million and continues its buyback program [23] Q&A Session Summary Question: Comparison of 5G rollout in India to China - Management highlighted that India is an untapped area for 5G, with significant opportunities as they start from scratch [30][31] Question: Differences in licensing software IP contracts - Licensing software IP is royalty-based, allowing for optimization due to the company's understanding of its IP [32][34] Question: Changes in customer demand across verticals - Management noted a combination of supply easing and reduced demand leading to higher inventory levels, particularly in mobile and consumer products [38][40] Question: M&A environment and future acquisitions - No immediate M&A plans, but the company is open to exploring interesting technologies and add-ons in the future [43] Question: Update on automotive business and revenue timing - Revenue from automotive customers is expected to materialize around 2024-2025 due to the lengthy qualification process [64]