CEVA, Inc. Reports Third Quarter 2007 Financial Results

Expanding licensee base to new markets and continued momentum in increased royalty revenue, profitability and EPS growth

SAN JOSE, Calif., Nov. 1, 2007 -- CEVA, Inc., a leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for mobile, consumer electronics and storage applications, today announced its financial results for the quarter ended September 30, 2007.

Total revenue for the third quarter of 2007 was $8.7 million, an increase of 11% compared to $7.9 million reported for the third quarter of 2006. Third quarter of 2007 licensing revenue was $5.3 million, a decrease of 4% from $5.5 million reported for the third quarter of 2006. Royalty revenue for the third quarter of 2007 was $2.2 million, an increase of 55% over $1.4 million for the third quarter of 2006. Revenue from services for the third quarter of 2007 was $1.2 million, an increase of 30% compared to $1.0 million reported for the third quarter of 2006.

Net income for the third quarter of 2007 was $1.1 million, an increase of 226% compared to net income of $0.3 million for the third quarter of 2006. Diluted net income per share for the third quarter of 2007 was $0.05 per share, an increase of 150% compared to diluted net income of $0.02 per share for the third quarter of 2006.

In the third quarter of 2007 and 2006, the Company recognized an equity- based compensation expense of $0.5 million pursuant to the adoption of SFAS 123R. In the third quarter of 2007, the Company also recorded a gain of $0.4 million in interest and other income related to the disposal of an investment. Non-GAAP net income and diluted net income per share for the third quarter of 2007, excluding the equity-based compensation expense and gain on disposal of the investment, was $1.2 million and $0.06, respectively, an increase of 42% and 50%, respectively, compared to $0.9 million of non-GAAP net income and $0.04 of non-GAAP diluted net income per share for the third quarter of 2006. Non-GAAP net income and net income per share for the third quarter of 2006 excluded an equity-based compensation expense of $0.5 million.

During the third quarter of 2007, the Company concluded ten new license agreements, bringing the total number of new license agreements signed during the first nine months of 2007 to 27. Eight agreements were for CEVA DSP cores and platforms and two were for CEVA SATA technology. Target applications for customer deployment are 2G/3G/4G phones, wireless headsets, solid state disk (SSD) devices, surveillance equipment and fingerprint recognition systems. Geographically, two of the ten deals signed were in the U.S., five were in Europe and three were in the Asia Pacific region.

During the third quarter, CEVA signed a strategic licensing agreement with one of the Company's largest customers who extended their use of CEVA-X DSP cores to products for wireless applications. In addition, one of Japan's largest, branded, original equipment manufacturers licensed the CEVA MM2000 multimedia platform for its development of next generation surveillance camera equipment. This license agreement represents a key design win for CEVA in the fast growing surveillance market as the underlying technology transitions from analog to digital IP network-based systems.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "The third quarter of 2007 was another solid quarter for CEVA in terms of expanding the licensee base, increasing the royalty revenue and building the pipeline. Our royalty revenue surpassed the $2.0 million mark for the first time in the Company's history, and we received during the third quarter the first royalty payment from one of the leaders in the 3G chipset market who is now shipping products incorporating our CEVA-X DSP cores in high volumes. We also are pleased with the recent traction our customers that incorporate our DSP core technologies have generated with leading mobile handset manufacturers."

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "In the third quarter we achieved a few important financial milestones: royalty revenue trend is positive, profitability continues to improve during the first three quarters of 2007 and net income and EPS increased sequentially during the same period. The Company's positive cash flow also continues to improve sequentially and in the third quarter reached approximately $1.1 million. As of September 30, 2007, CEVA's cash balances and marketable securities were $66.0 million."

Financial Tables

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CEVA Conference Call

On November 1, 2007, CEVA management will conduct a conference call at 8:30 a.m. Eastern Time / 1:30 p.m. London time, to discuss the operating performance for the quarter.

The conference call will be available via the following dial-in numbers:

• US Participants: Dial 1-877-493-9121 (Access Code: CEVA)
• UK/Rest of World: Dial +44-800-032-3836 (Access Code: CEVA)

The conference call also will be available live via the Internet at the following link: http://www.videonewswire.com/event.asp?id=43147. Please go to the web site at least fifteen minutes prior to the call to register, download and install any necessary audio software.

For those who cannot access the live broadcast, a replay will be available by dialing 1-877-519-4471 (passcode: 9337401) for US domestic callers and +44- 800-169-3875 (passcode: 9337401) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on November 8, 2007. The replay will also be available at CEVA's web site http://www.ceva-dsp.com/.

About CEVA, Inc.

Headquartered in San Jose, Calif., CEVA is a leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for mobile, consumer electronics and storage applications. CEVA's IP portfolio includes comprehensive solutions for multimedia, audio, voice over packet (VoP), Bluetooth, Serial Attached SCSI (SAS) and Serial ATA (SATA), and a wide range of programmable DSP cores and subsystems with different price/performance metrics serving multiple markets. In 2006, CEVA's IP was shipped in over 190 million devices. For more information, visit http://www.ceva-dsp.com/