CEVA, Inc. Announces Fourth Quarter and Year End 2008 Financial Results

Achieves Record Quarterly and Annual Royalty Revenue of $4.3 million and $14.3 million, up 41% and 58% on year over year basis; Company's Technology Now in Mass Production in 4 out of the 5 Largest Handset Manufacturers

SAN JOSE, Calif. -- Feb. 3, 2009 -- CEVA, Inc. , a leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for the handset, consumer electronics and portable device markets, today announced its financial results for the fourth quarter and year ended December 31, 2008.

Fourth Quarter 2008

Total revenue for the fourth quarter of 2008 was $10.0 million, an increase of 21% compared to $8.2 million reported for the fourth quarter of 2007. Licensing revenue for the fourth quarter of 2008 was $4.6 million, an increase of 15% from $4.0 million reported for the fourth quarter of 2007. Royalty revenue for the fourth quarter of 2008 was a record high $4.3 million, an increase of 41% from $3.0 million reported for the fourth quarter of 2007 and a 30% sequential increase from the third quarter of 2008. Revenue from services and support for the fourth quarter of 2008 was $1.1 million, compared to $1.2 million for the fourth quarter of 2007.

US GAAP net income was $1.0 million for the fourth quarter of 2008, compared to a net loss of $0.3 million for the same quarter of 2007. US GAAP diluted net income per share for the fourth quarter of 2008 increased to $0.05 per share, compared to diluted loss per share of $0.01 for the fourth quarter of 2007.

The financial results for the fourth quarter of 2008 include equity-based compensation expense of $0.8 million; a pre-tax capital gain of $0.9 million associated with our equity divestment of GloNav Inc to NXP Semiconductors and a one-time reorganization expense of $0.6 million related to the recent cost reduction measures taken to reduce the on-going expenses associated with the Company's SATA activities.

Non-GAAP net income and diluted net income per share for the fourth quarter of 2008, excluding the items described above, were $1.6 million and $0.08 per share, respectively, an increase of 246% and 300%, respectively, compared to the fourth quarter of 2007.

During the fourth quarter, CEVA continued to implement its previously-announced one million share buy-back program. As of February 2, 2009, the Company repurchased approximately 753,000 shares at an average price of $7.70 per share for a total amount of approximately $5.8 million and has an additional 247,000 shares available for repurchase under the existing plan.

During the fourth quarter of 2008, the Company concluded six new license agreements, all of which are for CEVA DSP cores, platforms and software. Target applications for customer deployment are 2G and 3G handsets, smartphones and mobile multimedia products. Geographically, four of the six deals concluded were in Europe, one in the U.S. and one in the Asia Pacific region. Of the license deals concluded, two are with strategic customers. One of the strategic agreements is with a large merchant chip supplier in the handset market who signed a comprehensive agreement for the use of CEVA DSP cores in low-end and mid-range handset products. The second strategic agreement is with a leading Asia-based semiconductor company in the consumer market who is expanding into the handset market targeting the 3G segment.

Gideon Wertheizer, Chief Executive Officer of CEVA, said, "I am very proud of CEVA's progress during 2008. It was an outstanding year for the Company from both a strategic and a business perspective. Not only have we gained considerable market traction in the handset, portable and consumer electronics markets, but as a result of the industry-wide migration to CEVA DSP cores, our technologies are now in mass production at Nokia, Samsung, LG Electronics, Sony Ericsson, Sony Electronics and many others. I believe that our market position and strong business fundamentals will allow us to keep growing, even in the midst of uncertain economic times."

Full Year 2008 Review

Total revenue for 2008 was $40.4 million, representing an increase of 22% compared to $33.2 million reported for 2007. Royalty revenue for 2008 was a record high of $14.3 million, representing an increase of 58% compared to $9.1 million reported for 2007. Licensing revenue for 2008 was $21.7 million, an increase of 11% compared to $19.5 million a year ago. A total of 30 new licensing agreements were signed in 2008, compared to 36 agreements in 2007. Shipped units by licensees increased 36% to a record 307 million in 2008, compared to 227 million units shipped in 2007.

US GAAP net income and diluted net income per share for 2008 was $8.6 million and $0.42, an increase of 563% and 600%, respectively, compared to $1.3 million and $0.06 per share reported for 2007.

In 2008, the Company recorded equity-based compensation expenses of $2.9 million, a pre-tax capital gain of $12.1 million associated with its equity divestment of GloNav to NXP Semiconductors; an expense of $3.5 million associated with the exit of the Dublin long-term lease in the first quarter of 2008, and a restructuring expense of $0.6 million associated with SATA activities in the fourth quarter of 2008.

Non-GAAP net income and diluted net income per share for 2008, excluding the items described above, were $6.7 million and $0.32 per share, respectively, an increase of 118% and 113%, respectively, compared to 2007.

Yaniv Arieli, Chief Financial Officer of CEVA, stated, "The fourth quarter of 2008 delivered another significant milestone for CEVA with record high royalty revenue of $4.3 million. This continued royalty progress is clearly reflected in the Company's record full year 2008 financials with total revenue up 22% year-over-year to $40.4 million, combined with significant profitability and net income per share improvements. The Company also managed to generate positive cash flow of $8.3 million during 2008, strengthening our balance sheet considerably. As of December 31, 2008, CEVA's cash balances and marketable securities were $84.6 million. "In the context of the current economic downturn, we recently made adjustments to our 2009 expense levels to ensure the sustainability of our financial progress by reducing overall expenses by approximately $1.0 million," concluded Arieli.

Financial Tables

Click here to read financial tables

CEVA Conference Call

On February 3, 2009, 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 fourth quarter and year ended December 31, 2008.

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=54398. 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 1-800-642-1687 (passcode: 79622372) for US domestic callers and +44-800-917-2646 (passcode: 79622372) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on February 10, 2009. 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 handsets, consumer electronics and portable devices. CEVA's IP portfolio includes comprehensive solutions for multimedia, audio, voice over packet (VoP), Bluetooth and Serial ATA (SATA), and a wide range of programmable DSP cores and subsystems with different price/performance metrics serving multiple markets. In 2008, CEVA's IP was shipped in over 300 million devices. For more information, visit http://www.ceva-dsp.com/