CEVA, Inc. Announces Fourth Quarter and Year End 2009 Financial Results

Multiple design wins for LTE, including a new CEVA-XC licensee

SAN JOSE, Calif., Jan. 28, 2010 -- CEVA, Inc. (NASDAQ: CEVA); (LSE: CVA), the leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for the mobile handset, portable and consumer electronics markets, today announced its financial results for the fourth quarter and year ended December 31, 2009.

Fourth Quarter 2009

Total revenue for the fourth quarter of 2009 was $10.2 million, an increase of 2% compared to $10 million reported for the fourth quarter of 2008. Fourth quarter 2009 licensing revenue was $4.7 million, an increase of 2% when compared to $4.6 million reported for the fourth quarter of 2008. Royalty revenue for the fourth quarter of 2009 was a record $4.8 million, an increase of 13% compared to $4.3 million reported for the fourth quarter of 2008. Revenue from services for the fourth quarter of 2009 was $0.7 million, down 41% from $1.1 million reported for the fourth quarter of 2008.

U.S. GAAP net income for the fourth quarter of 2009 was $2.9 million, an increase of 203% over $1.0 million reported for the same period in 2008. U.S. GAAP diluted earnings per share for the fourth quarter of 2009 was $0.14, an increase of 180% compared to $0.05 for the fourth quarter of 2008.

Non-GAAP net income and diluted earnings per share for the fourth quarter of 2009 was $2.4 million and $0.11, respectively, representing an increase of 53% and 38%, respectively, over the $1.6 million and $0.08 reported for the fourth quarter of 2008. Non-GAAP net income and diluted earnings per share for the fourth quarter of 2009 exclude an aggregate equity-based compensation expense of $0.7 million, a pre-tax capital gain of $1.8 million related to the divestment of the Company's equity interest in GloNav Inc. and its related tax expense of $0.6 million. Non-GAAP net income and diluted earnings per share for the fourth quarter of 2008 excluded equity-based compensation expense of $0.8 million, a pre-tax capital gain of $0.9 million related to the divestment of the Company's equity interest GloNav Inc., its related tax expense of $0.1 million, a loss of $0.1 million related to disposal of fixed assets and an reorganization expense of $0.6 million related to certain cost reduction measures taken to reduce ongoing expenses associated with the Company's SATA/SAS activities.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated, "Our strong fourth quarter results were driven by strategic licensing agreements for next generation wireless products and the continued expansion of our DSPs in the wireless handset space. Our value proposition with a diversity of product offerings and strong customer relationships led to our worldwide DSP market share in handsets to increase to a record high of 27%, based on worldwide quarterly shipments in the third quarter of 2009."

Mr. Wertheizer continued, "Our licensing agreements for the fourth quarter of 2009 included three design wins for long term evolution (LTE), the next generation wireless standard for mobile Internet. Notably, one of the LTE agreements was with a first tier original equipment manufacturer (OEM) who will use CEVA's technologies across its product lines for the first time. Needless to say, we are excited about the long-term prospects of this relationship. Another LTE agreement was for our newest CEVA-XC DSP core adopted by a leading company in the fourth generation cellular space. Overall, despite the challenging environment in 2009, we managed to significantly increase our profitability and execute on our long term business and technology goals. We believe CEVA is well positioned to exploit the stabilized and improving business environment in 2010 as DSPs become the critical technology for the digital era."

During the fourth quarter of 2009, the Company concluded nine new license agreements. Six agreements were for CEVA DSP cores, platforms and software, two agreements were for CEVA Serial Attached SCSI (SAS) technology and one agreement was for phase-locked loops (PLL) technology.

Target applications for customer deployment are LTE and 3G data cards and handsets, wireless machine-to-machine applications, broadband residential gateways, solid-state drives (SSDs) and SAS-based storage equipment. Geographically, three of the agreements signed were in the U.S., five were in Europe and one in Asia.

Full Year 2009 Review

Total revenue for 2009 was $38.5 million, a decrease of 5% compared to $40.4 million reported for 2008. Royalty revenue for 2009 was a record high of $16.2 million, representing an increase of 13% compared to $14.3 million reported for 2008. Licensing revenue for 2009 was $18.8 million, a decrease of 14% compared to $21.7 million reported a year ago. A total of 34 new licensing agreements were signed in 2009, compared to 30 agreements in 2008. Shipped units by licensees increased 9% to a record 334 million in 2009, compared to 307 million units in 2008.

US GAAP net income and diluted earnings per share for 2009 was $8.3 million and $0.41, a slight decrease of 3% and 2%, respectively, compared to $8.6 million and $0.42 reported in 2008.

Non-GAAP net income and diluted earnings per share for 2009 was $8.7 million and $0.42, representing an increase of 29% and 31%, respectively, over the $6.7 million and $0.32 reported for 2008. Non-GAAP net income and diluted earnings per share for 2009 excludes an aggregate equity-based compensation expense of $2.9 million, a pre-tax capital gain of $3.7 million related to the divestment of the Company's equity interest in GloNav Inc. and the related tax expense of $1.1 million. Non-GAAP net income and diluted earnings per share for 2008 excluded equity-based compensation expenses of $2.9 million, a pre-tax capital gain of $12.1 million related to the divestment of the Company's equity interest in GloNav Inc., and its related tax expense of $3.1 million, an expense of $3.5 million associated with the exit of the Dublin long-term lease during the first quarter of 2008, and a restructuring expense of $0.6 million associated with the company's SATA/SAS activities in the fourth quarter of 2008.

Yaniv Arieli, Chief Financial Officer of CEVA, stated, "During the fourth quarter of 2009, CEVA was able to generate record high royalty revenue. This continued royalty revenue progress is clearly reflected in the Company's record full year 2009 financials with total royalty revenue up 13% year-over-year, combined with significant profitability and net income per share improvements. Despite a slight revenue decrease in 2009, non-GAAP net income and diluted EPS for the full year grew by 29% and 31%, respectively. We also managed to generate positive cash flow of $16 million during 2009, thereby strengthening our balance sheet considerably. As of December 31, 2009, CEVA's cash balances and marketable securities were $100.6 million."

CEVA Conference Call

On January 28, 2010, 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, 2009.

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 +44-800-051-3806 (Access Code: CEVA)

The conference call will also be available live via the Internet at the following link: http://www.videonewswire.com/event.asp?id=65003. Please go to the website 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: 49615290) for US domestic callers and +44-800-917-2646 (passcode: 49615290) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on February 4, 2010. The replay will also be available at CEVA's web site www.ceva-dsp.com.

Financial tables

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About CEVA, Inc.

Headquartered in San Jose, Calif., CEVA is the leading licensor of silicon intellectual property (SIP) DSP Cores and platform solutions for the mobile handset, portable and consumer electronics markets. CEVA's IP portfolio includes comprehensive technologies for cellular baseband (2G / 3G / 4G), multimedia, HD audio, voice over packet (VoP), Bluetooth, Serial Attached SCSI (SAS) and Serial ATA (SATA). In 2009, CEVA's IP was shipped in over 330 million devices, including handsets from all top five handset OEMs - Nokia, Samsung, LG, Motorola and Sony Ericsson. Today, more than one in every four handsets shipped worldwide is powered by a CEVA DSP core. For more information, visit www.ceva-dsp.com.