CEVA, Inc. (CEVA) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with record shipments in cellular IoT and Wi-Fi, improved gross margins, and optimistic guidance for future royalty revenue growth. Despite a GAAP net loss, the company shows a positive trend in non-GAAP metrics. Q&A insights reveal promising partnerships, particularly with Microchip, and strong customer interest in new technologies. The lack of specific guidance details is a minor concern, but overall, the positive financial metrics and strategic developments indicate a likely positive stock reaction.
Key Financial Performance
Revenue $28.4 million, up 4% year-over-year from $27.2 million and up 11% sequentially. Growth attributed to strong traction in AI and multiple significant design wins for MPUs and AI DSPs.
Licensing and Related Revenue $16 million, representing 56% of total revenue. This reflects a 3% year-over-year increase and a 7% sequential increase. Growth driven by AI processor licensing, contributing roughly 1/3 of licensing revenue.
Royalty Revenue $12.4 million, reflecting 44% of total revenue, a 16% sequential increase and a 6% year-over-year increase. Growth driven by Consumer IoT (9% year-over-year growth), record shipments in cellular IoT and Wi-Fi, and strong performance in 5G RAN infrastructure (91% year-over-year growth).
Gross Margin 88% on GAAP basis and 89% on non-GAAP basis, compared to 85% and 87% respectively a year ago. Improvement attributed to better financial results and operational efficiency.
Non-GAAP Operating Margins and Net Income 11% of revenue and $3.1 million, higher than 8% and $2.1 million recorded in the third quarter of last year. Improvement due to better financial results and higher employee benefit provisions.
GAAP Operating Loss $2.1 million, compared to $2.6 million for the same period in 2024. Reduction in loss attributed to improved financial performance.
GAAP Net Loss $2.5 million, with diluted loss per share of $0.10, compared to a net loss of $1.3 million and diluted loss per share of $0.06 for the same period last year. Increase in loss attributed to higher operating expenses.
Non-GAAP Net Income and Diluted Income Per Share $2.7 million and $0.11, respectively, compared to $3.4 million and $0.14 for the same period last year. Decrease attributed to higher operating expenses.
Shipped Units by Licensees 559 million units, up 19% sequentially and 11% year-over-year. Of these, 69 million units were mobile handset volumes, and 510 million units were for IoT (up 13% year-over-year).
Bluetooth Shipments 303 million units, down 1% year-over-year from 306 million units.
Cellular IoT Shipments 69 million units, up 41% year-over-year, reaching an all-time record high.
Wi-Fi Shipments 82 million units, up 73% year-over-year, reaching an all-time record high. Wi-Fi 6 shipments also set a new record, up 194% year-over-year.
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Operating Highlights
NeuPro NPU portfolio adoption: Microchip adopted the full NeuPro NPU portfolio for its future roadmap, enabling AI capabilities across industrial, consumer, automotive, and other markets.
AI DSP integration: A leading global electronics brand integrated AI DSP into next-gen edge SoC for home appliances, enabling vision, voice, and contextual awareness.
Automotive AI DSP expansion: A high-profile automotive customer expanded use of AI DSPs for centralized compute platforms and ADAS solutions.
Wireless connectivity wins: Secured licensing for Wi-Fi 7 and Bluetooth high data throughput IP, targeting advanced audio, wearables, robotics, and Physical AI use cases.
Consumer IoT growth: Consumer IoT royalties grew 9% YoY, driven by record shipments in cellular IoT and Wi-Fi.
5G RAN infrastructure growth: Revenues from 5G RAN infrastructure customers increased by 91% YoY.
Revenue growth: Revenue for Q3 2025 was $28.4M, up 4% YoY and 11% sequentially.
Royalty revenue increase: Royalty revenue grew 6% YoY and 16% sequentially, driven by IoT and 5G RAN infrastructure.
AI licensing contribution: AI processor licensing contributed roughly 1/3 of licensing revenue in Q2 and Q3 2025.
AI-led licensing momentum: AI agreements now carry higher royalty potential, enhancing long-term value.
Unified software framework: CEVA provides a unified software framework for scalable AI deployments, strengthening its position in the AI ecosystem.
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Risk or Challenges
Forward-looking statements: The company acknowledges risks and uncertainties in forward-looking statements, which could lead to material differences in results. These include assumptions about market position, industry trends, and financial goals.
AI processor licensing: While AI processor licensing is a growing part of the business, there is a risk of over-reliance on this segment. The company’s success depends on continued adoption and higher royalty potential, which may not materialize as expected.
Wireless connectivity: The company’s growth strategy heavily relies on wireless connectivity standards like Wi-Fi 7 and Bluetooth. Any delays or failures in customer adoption of these standards could impact revenue and royalty ramps.
Royalty revenue: Although royalty revenue grew, it is subject to market conditions, including the performance of consumer IoT and automotive markets. Any downturn in these sectors could negatively affect royalty income.
Operating expenses: Higher operating expenses, including employee benefit provisions, could pressure margins if revenue growth does not keep pace.
Seasonal momentum: The company expects seasonal momentum in Q4, but any deviation from this trend could impact financial performance.
Customer concentration: Dependence on key customers, such as a U.S. OEM smartphone customer, poses a risk. Any loss or reduced business from these customers could significantly impact revenue.
Supply chain and production: The company’s reliance on semiconductor and connectivity providers like Microchip introduces risks related to supply chain disruptions or production delays.
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Guidance & Outlook
Revenue Guidance: Total revenue for the fourth quarter is expected to be in the range of $29 million to $33 million. Full-year revenue guidance remains aligned with Street estimates.
Gross Margin: Gross margin is expected to remain high at approximately 88% on a GAAP basis and 89% on a non-GAAP basis for the fourth quarter.
Operating Expenses: GAAP operating expenses for the fourth quarter are expected to range between $27 million and $28 million. Non-GAAP operating expenses are expected to range between $22 million and $23 million.
Royalty Revenue Growth: Continued seasonal momentum is expected in the fourth quarter, driven by share gains at a U.S. OEM smartphone customer using CEVA technology in its in-house 5G modem, as well as strong ramps in Wi-Fi and cellular IoT.
Licensing Business Outlook: The licensing business remains strong, supported by a robust pipeline and deal flow across the core pillars of connect, sense, and infer. CEVA has delivered six consecutive quarters with licensing revenue above $15 million.
AI Processor Licensing: AI processor licensing is a growing part of the business, contributing roughly one-third of licensing revenue in recent quarters. These agreements typically carry higher royalty potential, enhancing long-term value.
Wireless Connectivity: CEVA expects multiyear royalty growth driven by the adoption of next-generation connectivity standards, including Wi-Fi 7 and Bluetooth high data throughput IP.
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Shareholder Return Plan
Share Repurchase Program: In the third quarter, CEVA repurchased about 40,000 shares for approximately $1 million. For the entirety of 2025, the company purchased approximately 340,000 shares for approximately $7.2 million. As of now, around 684,000 shares are available for repurchase under the repurchase program, which was extended in November of last year.
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Key Q&A
Q:Can you describe the segments driving royalty growth and any upcoming ramp-ups?
A:Growth momentum in royalty is driven by multiple opportunities, including mobile (large U.S. OEM and low-tier customers), Wi-Fi shipment volume growth (transition to Wi-Fi 6 with higher ASP per unit), cellular IoT (record high this quarter), automotive ADAS systems (two customers ramping in volume production), and V2X (customer acquired by Qualcomm).
Q:Is there any change in the timeline for development and market entry for the Microchip partnership and other NPU deals?
A:The timeline for development and market entry remains similar to other technologies, typically 18-24 months from design start to production and ramp-up.
Q:When can we expect Microchip MPU shipments to impact CEVA's royalty revenue, and what is the license timeframe?
A:The license agreement is multiyear, and royalty revenue from Microchip MPU shipments is expected within 2-3 years, following the typical design cycle and ramp-up period.
Q:Which Microchip product family or verticals will be prioritized initially, and what is the attractiveness of those markets?
A:The deal provides full access to NPUs for all Microchip markets. Specific prioritization details were not disclosed, but it will cover a full spectrum, including embedded MCU product lines and infrastructure/data center solutions.
Q:What is the prospect of integrating NeuroPro with connectivity IPs, and is there customer interest?
A:There is strong customer interest in integrating NeuroPro with connectivity IPs, especially for embedded systems. This integration offers time-to-market advantages, cost and power efficiency, and aligns with CEVA's strengths. The trend of combining NPU and connectivity is expected to continue.
Q:What was the competitive landscape for securing the Microchip deal, and why now?
A:CEVA competed against other IP vendors and won due to its complete NPU portfolio, advanced software stack, and optimized architecture. The momentum has been building over the last few quarters, supported by a strong pipeline and market demand for AI solutions.
Q:Will there be changes in OpEx to support NeuPro AI growth?
A:No significant changes in OpEx are expected for Q4. Future investments will be planned based on opportunities and ROI, with a focus on disciplined spending while driving revenue growth.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on which Microchip product family or verticals would be prioritized initially, citing customer confidentiality. Additionally, while they discussed the sustainability of AI-related business, they did not provide concrete quarterly revenue projections or detailed OpEx plans beyond Q4.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ADAS
AI DSP
AI agreement
AI inference
AI licensing
CEVA technology
CPUs
Fi Bluetooth
GPUs
Investor Relations
IoT
MCUs
Microchip
NPU portfolio
NPUs AI
breadth
compute
connectivity AI
ecosystem
electronics
engagement
engine AI
foundation
industry trend
market position
market royalty
pillar
portfolio win
processor
product line
road map
role
royalty potential
scalability
sense infer
standard
system
throughput
transition
vendor
win AI
CEVA Transcript
CEVA, Inc. (CEVA) Q1 2026 Earnings Call Transcript
Positive5-11
The earnings call summary and Q&A session reveal strong financial performance, with significant growth in royalty revenues and a robust licensing pipeline. The company's strategic focus on AI, IoT, and wireless connectivity is gaining traction, and optimistic guidance for the second half suggests further growth. Despite some management ambiguity, the overall sentiment is positive, supported by strong WiFi performance and expansion plans. The absence of negative indicators and the positive outlook for the second half, driven by IoT and connectivity, suggest a stock price increase of 2% to 8% over the next two weeks.
CEVA, Inc. (CEVA) Q4 2025 Earnings Call Transcript
Positive2-17
The earnings call summary shows strong financial performance with record revenues and shipments, improved operating income, and increased EPS. The Q&A reveals a healthy NPU pipeline and potential for further OEM adoption, despite some uncertainties in memory pricing and royalties. The company's strategic focus on AI and connectivity, alongside a robust M&A strategy, suggests a positive outlook. Given these factors, the stock price is likely to see a positive movement in the short term.
CEVA, Inc. (CEVA) Q3 2025 Earnings Call Transcript
Positive11-10
The earnings call highlights strong financial performance with record shipments in cellular IoT and Wi-Fi, improved gross margins, and optimistic guidance for future royalty revenue growth. Despite a GAAP net loss, the company shows a positive trend in non-GAAP metrics. Q&A insights reveal promising partnerships, particularly with Microchip, and strong customer interest in new technologies. The lack of specific guidance details is a minor concern, but overall, the positive financial metrics and strategic developments indicate a likely positive stock reaction.
CEVA, Inc. (CEVA) Q2 2025 Earnings Call Transcript
Unknown8-11
The earnings call reveals a mixed performance with declining revenue and increasing losses, despite some positive trends in IoT shipments. The lowering of revenue guidance and higher-than-expected expenses contribute to a negative sentiment. While there is optimism in AI and NPU licensing, the lack of specific guidance and declining margins overshadow these positives. The Q&A section also highlights management's reluctance to provide detailed future guidance, adding uncertainty. Overall, the combination of financial underperformance and cautious outlook leads to a negative sentiment, likely resulting in a stock price decline.
CEVA Report
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