CEVA, Inc. Announces Fourth Quarter and Year End 2017 Financial Results

MOUNTAIN VIEW, Calif. -- Feb. 6, 2018 -- CEVA, Inc. (NASDAQ: CEVA), the leading licensor of signal processing platforms and artificial intelligence processors for smarter, connected devices, today announced its financial results for the fourth quarter and year ended December 31, 2017.

Total revenue for the fourth quarter of 2017 was $21.6 million, an increase of 2% compared to $21.2 million reported for the fourth quarter of 2016. Fourth quarter 2017 licensing and related revenue was $9.0 million, an increase of 9% when compared to $8.3 million reported for the same quarter a year ago. Royalty revenue for the fourth quarter of 2017 was $12.6 million, a decline of 2% when compared to $12.9 million reported for the fourth quarter of 2016.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "Our fourth quarter results marked a strong finish to the year, with thirteen licensing agreements concluded and a sequential increase in royalties. Notably, we signed a development agreement with a large automotive manufacturer for the next generation of our NeuPro AI processor targeting level 4 and 5 autonomous driving systems."

Mr. Wertheizer continued: "2017 was an outstanding year for CEVA, with record financial and business achievements, reflecting our traction in the smart and connected universe. Our licensing business continues to thrive, with forty-five agreements concluded, resulting in 35% licensing revenue growth. We entered into strategic engagements with multiple top tier players in 5G infrastructure, artificial intelligence and computer vision, all of which bode well for future royalty growth. We also further strengthened our technology leadership in a number of key growth areas with the introduction of new products, among which are: CEVA-XC12, the most advanced DSP for infrastructure and networking applications; Dragonfly, a complete end-to-end solution for narrowband IoT; NeuPro, the first self-contained processor architecture for AI at the edge; ClearVox, a complete front-end voice processing software suite for voice-enabled devices and AI assistants, and Bluetooth 5 dual mode, the key enabling technology for the proliferation of wireless headsets, hearables and earbuds. Our royalty revenue also reached an all-time high, growing 9% year-over-year, with close to 1.2 billion CEVA-powered devices shipped by our customers. Looking ahead, we will continue to relentlessly expand our customer base and market presence, leveraging our unique specialization and holistic product strategy to lower market entry barriers for complex technologies."

During the quarter, CEVA completed 13 license agreements. Nine of the agreements were for CEVA processors, platforms and software, and four were for CEVA connectivity IPs. All of the licensing agreements signed during the quarter were for non-handset baseband applications and five were with first-time customers of CEVA. Customers' target markets for the licenses include 5G cellular backhaul, cellular IoT, computer vision and AI for smartphones, consumer electronics and automotive, voice processing in headsets and Bluetooth connectivity for a variety of IoT-related products. Geographically, five of the deals signed were in China, two were in the U.S., one in Europe and five were in the APAC region, including Japan.

GAAP net income for the fourth quarter of 2017 decreased 39% to $3.2 million, compared to $5.2 million reported for the same period in 2016. GAAP diluted earnings per share for the fourth quarter of 2017 decreased 42%, to $0.14 from $0.24 a year ago.

Non-GAAP net income and diluted earnings per share for the fourth quarter of 2017 were $5.7 million and $0.25, respectively, representing a 18% and 22% decrease, respectively, over the $7.0 million and $0.32 reported for the fourth quarter of 2016. Non-GAAP net income and diluted earnings per share for the fourth quarter of 2017 excluded: (a) equity-based compensation expense, net of taxes, of $2.3 million, and (b) the impact of the amortization of acquired intangibles of $0.3 million associated with the acquisition of RivieraWaves. Net income and diluted earnings per share for the fourth quarter of 2016 excluded: (a) equity-based compensation expense, net of taxes, of $1.5 million, and (b) the impact of the amortization of acquired intangibles of $0.3 million associated with the acquisition of RivieraWaves.

Full Year 2017 Review

Total revenue for 2017 was $87.5 million, an increase of 20% compared to $72.7 million reported for 2016. Licensing and related revenue for 2017 was $42.9 million, representing an increase of 35% compared to $31.9 million reported for 2016. Royalty revenue for 2017 was $44.6 million, representing an increase of 9% compared to $40.8 million reported for 2016.

U.S. GAAP net income and diluted net income per share for 2017 were $17.0 million and $0.75, respectively, an increase of 30% and 23%, respectively, compared to $13.1 million and $0.61, respectively reported for 2016.

Non-GAAP net income and diluted earnings per share for 2017 were $26.6 million and $1.17, respectively, also representing an increase of 31% and 26%, respectively, over $20.4 million and $0.93 reported for 2016. Non-GAAP net income and diluted earnings per share for 2017 excluded (a) equity-based compensation expense, net of taxes, of $8.4 million, and (b) the impact of the amortization of acquired intangibles of $1.2 million associated with the acquisition of RivieraWaves. Non-GAAP net income and diluted earnings per share for 2016 excluded (a) equity-based compensation expense, net of taxes, of $6.0 million, and (b) the impact of the amortization of acquired intangibles of $1.2 million associated with the acquisition of RivieraWaves.

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "We are very proud of the company's performance over the past year. Among the numerous financial and business milestones reached in 2017 were record annual licensing revenue, royalty revenue, non-GAAP net income and earnings per share. We also generated $24.5 million over the course of the year from operating cash flows that continued to strengthen our balance sheet with our cash balance, marketable securities and bank deposits totaling approximately $183 million at year end, with no debt."

CEVA Conference Call

On February 6, 2018 CEVA management will conduct a conference call at 8:30 a.m. Eastern Time to discuss the operating performance for the quarter.

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

• U.S. Participants: Dial 1-844-435-0316 (Access Code: CEVA)
• International Participants: Dial +1-412-317-6365 (Access Code: CEVA)

The conference call will also be available live via webcast at the following link: https://www.webcaster4.com/Webcast/Page/984/24121. 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 1-877-344-7529 or +1-412-317-0088 (access code: 10115921) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on February 13, 2018. The replay will also be available at CEVA's web site www.ceva-dsp.com.

About CEVA, Inc.

CEVA is the leading licensor of signal processing platforms and artificial intelligence processors for a smarter, connected world. We partner with semiconductor companies and OEMs worldwide to create power-efficient, intelligent and connected devices for a range of end markets, including mobile, consumer, automotive, industrial and IoT. Our ultra-low-power IPs for vision, audio, communications and connectivity include comprehensive DSP-based platforms for LTE/LTE-A/5G baseband processing in handsets, infrastructure and machine-to-machine devices, advanced imaging and computer vision for any camera-enabled device, audio/voice/speech and ultra-low power always-on/sensing applications for multiple IoT markets. For artificial intelligence, we offer a family of AI processors capable of handling the complete gamut of neural network workloads, on-device. For connectivity, we offer the industry's most widely adopted IPs for Bluetooth (low energy and dual mode) and Wi-Fi (802.11 a/b/g/n/ac up to 4x4). Visit us at www.ceva-dsp.com