Record Royalty Revenues and Cash Increase; Strong Technology Adoption by Major OEMs
SAN JOSE, Calif. -- Jan. 31, 2008 -- CEVA, Inc. (NASDAQ: CEVA)(LSE: CVA), a leading licensor of silicon intellectual property (SIP) DSP cores and platform solutions for the handset, consumer electronics and mobile PC markets, today announced its financial results for the fourth quarter and year ended December 31, 2007. Fourth Quarter 2007
Total revenue for the fourth quarter of 2007 was $8.2 million, as compared to $8.1 million reported in the fourth quarter of 2006, an increase of 2%. Fourth quarter of 2007 royalty revenue was a record high of $3.0 million, an increase of 84% as compared to $1.7 million reported in the fourth quarter of 2006 and a 40% sequential increase as compared to $2.2 million reported in the third quarter of 2007. Fourth quarter of 2007 licensing revenue was $4 million, as compared to $5.3 million for the fourth quarter of 2006, a decrease of 24%. Revenue from services was $1.2 million for the fourth quarter of 2007, compared to $1.1 million for the fourth quarter of 2006.
Net loss for the fourth quarter of 2007 was $0.3 million, compared to net income of $0.6 million reported in the fourth quarter of 2006. Diluted net loss per share for the fourth quarter of 2007 was $0.01 cents, compared to diluted net income of $0.03 per share for the fourth quarter of 2006.
The financial results for the fourth quarter of 2007 include equity-based compensation expense of $0.6 million and tax expense of $0.1 million related to disposal of an investment.
Full Year 2007 Review
Total revenue for 2007 was $33.2 million, representing a slight increase of 2%, as compared to $32.5 million reported in 2006. Royalty revenue for 2007 was a record high of $9.1 million, representing an increase of 44% compared to $6.3 million reported in 2006. Licensing revenue in 2007 was $19.5 million, compared to $22.2 million reported in 2006, a decrease of 12%. A total of 36 new licensing agreements were signed in 2007, compared to 38 agreements in 2006. Shipped units by licensees increased 19% to a record 227 million in 2007, compared to 190 million units shipped in 2006. In the fourth quarter of 2007, 86 million units were shipped, as compared to 50 million units during the same period in the prior year.
2007 net income was $1.3 million or $0.06 per share, compared to net loss of $98,000 or $0.01 per share in 2006.
In 2007, the Company recorded equity-based compensation expense of $2.1 million, a gain of $0.4 million reported in interest and other income related to the disposal of an investment and the related tax expense of $0.1 million.
During the quarter, the Company concluded nine new license agreements. Seven were for CEVA DSP cores and platforms and two for CEVA SATA technology, including a strategic $2.5 million agreement with a tier one semiconductor company, the revenues of which will be recognized in future periods.
Target applications for the licenses concluded during the fourth quarter are Smartphones, Portable Multimedia Players (PMP), Personal Navigation Devices (PND), wireless network infrastructure equipment and Solid State Drives (SSD). Geographically, three of the nine deals were signed in the U.S., two in Europe and four in the Asia Pacific region, including Japan.
Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "In 2007, we saw strong adoption of our technology by major suppliers in the handset market, including Nokia, Sony Ericsson, Samsung, LG, ZTE, Sharp, Panasonic, Reliance Communications and China Unicom. These results are indicative of our strength and presence in the DSP market and specifically within its largest segments, the handset, mobile and home consumer electronics segments. From a technology standpoint, we introduced a new DSP core, the CEVA-TeakLite-III, which was successfully licensed to market leaders in the handset and home entertainment markets. We also expanded our market reach and customer base in applications such as DTV, Blu-ray/HD-DVD, surveillance, network infrastructure equipment and Solid State Drives (SSD)."
Wertheizer, continued: "The company continued on its path of growth in the fourth quarter, as reflected in our record royalty revenue, key strategic licensing agreements and strong sales pipeline. The deferral of our income under the new $2.5 million agreement signed in the fourth quarter understates our substantial progress. We will see the full economic benefit from these deferred revenues over future quarters and our business fundamentals are on track."
Yaniv Arieli, Chief Financial Officer of CEVA, stated: "Fourth quarter 2007 royalty revenue was a record high of $3.0 million. The Company's positive cash flow reached record highs in the fourth quarter, and we increased our cash and marketable securities by approximately $12.1 million in 2007 ($10.4 million of it in the fourth quarter). As of December 31, 2007, CEVA's cash balances and marketable securities were $76.4 million and its quarterly DSO levels at year end reached a record low of 28 days. We also surrendered and terminated in 2007 and 2008 two long term property leases in Ireland, thereby improving our future cash flow and significantly reducing our future lease obligations. All these achievements enable us to put new targets and goals in place for CEVA's continued growth, profitability improvement and financial strength in 2008. We have a good start in 2008 by successfully divesting our equity investment in GloNav, Inc. for a meaningful return of approximately $10 million (pre-tax) only eighteen months after the divestment of our GPS business line to GloNav."
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CEVA Conference Call
On January 31, 2007, CEVA management will conduct a conference call at 8:30 a.m. Eastern Time / 1:30p.m. London time, to discuss the operating performance for the fourth quarter and year ended December 31, 2007.
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 will also be available live via the Internet by accessing the CEVA web site at http://www.ceva-dsp.com/. 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: 30294263) for US domestic callers and +44-800-917-2646 (passcode: 30294263) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on February 7, 2008. 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) DSP cores and platform solutions for the handset, consumer electronics and mobile PC markets. 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 2007, CEVA's IP was shipped in over 227 million devices. For more information, visit http://www.ceva-dsp.com/