CEVA, Inc. Announces Third Quarter 2010 Financial Results

• New license agreement for CEVA-XC with a major semiconductor company
• Q3 revenue up 11% year-over-year; royalty revenue increased 42% year-over-year
• Record high GAAP and non-GAAP operating margins of 21% and 26%, respectively

MOUNTAIN VIEW, Calif., Oct. 26, 2010 -- CEVA, Inc. (Nasdaq: CEVA); (LSE: CVA), the leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for the mobile handsets, portable and consumer electronics markets, today announced its financial results for the third quarter ended September 30, 2010.

Total revenue for the third quarter of 2010 was a record $10.7 million, an increase of 11% compared to $9.7 million reported for the third quarter of 2009. Third quarter of 2010 licensing revenue was $4.5 million, a decrease of 15% compared to $5.2 million reported for the third quarter of 2009. Royalty revenue for the third quarter of 2010 was $5.2 million, an increase of 42% over $3.7 million reported for the third quarter of 2009. Revenue from services for the third quarter of 2010 was $1 million, an increase of 35% from $0.7 million reported for the third quarter of 2009.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "We are pleased with our solid performance in the third quarter, including a strategic agreement for the CEVA-XC DSP with a leading semiconductor company, a new power house in the wireless space. Our royalty revenue continues to grow, and we reached a new record high market share of 33% for the worldwide handset cellular baseband market."

"Furthermore, due to projections for stronger than expected shipments of products incorporating our technologies by a few of our customers in the third quarter, we currently anticipate significant sequential increase our fourth quarter royalty revenue," continued Mr. Wertheizer.

U.S. GAAP net income for the third quarter of 2010 was $3.0 million, an increase of 71% compared to $1.8 million reported for the same period in 2009. U.S. GAAP diluted earnings per share for the third quarter of 2010 was $0.13, an increase of 44% compared to $0.09 reported for the third quarter of 2009.

Non-GAAP net income and diluted earnings per share for the third quarter of 2010 reached all-time highs of $3.0 million and $0.14, respectively, representing an increase of 24% and 17%, respectively, over the $2.4 million and $0.12 reported for the third quarter of 2009.

Non-GAAP net income and diluted earnings per share for the third quarter of 2010 and 2009, excluded an aggregate equity-based compensation expense of $0.5 million and $0.7 million, respectively.  

During the quarter, the Company concluded six new licensing agreements. Five agreements were for CEVA DSP cores, platforms and software, and one agreement was for CEVA Bluetooth technology. Target applications for customer deployment are 3G/4G handset and mobile broadband processors, smart metering systems, and Android-based application processors for smartphones, tablets and ereaders. Geographically, two of the agreements signed were in the U.S., three were in Asia and one was in Europe.

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "Our third quarter financial performance demonstrated continued progress towards our long term profitability milestones. We reached a new record high royalty revenue for the fourth consecutive quarter and also recorded all-time highs for GAAP and non-GAAP operating margins, which was driven by solid top line growth aligned with on-going expense management. In addition, we continued to generate significant positive cash flow during the quarter which further enhances our already strong balance sheet. As of September 30, 2010, CEVA's cash balance, marketable securities and bank deposits were $117.2 million, an increase of 8% from the second quarter of 2010."

Financial Tables

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CEVA Conference Call

On October 26, 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 quarter.

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

• US Participants: Dial 1-877-493-9121 (Access Code: CEVA or 15781514)
• UK/Rest of World: Dial +44-800-051-3806 (Access Code: CEVA or 15781514)

The conference call will also be available live via the Internet at the following link:  http://www.videonewswire.com/event.asp?id=72879.  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: 15781514) for US domestic callers and +44-800-917-2646 (passcode: 15781514) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on November 2, 2010. The replay will also be available at CEVA's web site www.ceva-dsp.com.

About CEVA, Inc.

CEVA is the world's leading licensor of silicon intellectual property (SIP) DSP cores and platform solutions for the mobile handsets, portable and consumer electronics markets. CEVA's IP portfolio includes comprehensive technologies for cellular baseband (2G / 3G / 4G), multimedia, HD video and 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, powering handsets from 7 out of the top 8 handset OEMs, including LG, Motorola, Nokia, Samsung, Sony Ericsson and ZTE. Today, one in every three handsets shipped worldwide is powered by a CEVA DSP core. For more information, visit www.ceva-dsp.com.