Full Transcript: CEVA Q2 2026 Earnings Call

CEVA (NASDAQ: CEVA ) held its second-quarter earnings conference call on Monday. Below is the complete transcript from the call. This content is powered APIs. For comprehensive financial data and transcripts, visit View the webcast at Summary CEVA Inc.

reported a 13% year-over-year revenue increase to $29 million, driven by a 21% rise in licensing and related revenue. The company signed 10 licensing agreements, including significant AI licensing with a global computing platform company, enhancing long-term royalty prospects. CEVA highlighted industry trends including the migration of intelligence to the smart edge and customer preference for platform solutions over individual IP blocks. Royalty revenues improved, driven by wireless connectivity, automotive AI, and smartphone market share gains.

CEVA raised its full-year revenue growth outlook to 13-15%, with expectations of stronger second-half performance and a 70% increase in non-GAAP operating income. Full Transcript OPERATOR Good day and welcome to the CEVA Inc. second quarter 2026 earnings conference call. All participants will be in listen-only mode.

Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. Please note today's event is being recorded.

I'd now like to turn the conference over to Richard Kingston, Vice President, Market Intelligence, Investor and Public Relations. Please go ahead, sir. Richard Kingston, Vice President, Market Intelligence, Investor and Public Relations Thank you, Rocco. Good morning everyone and welcome to CEVA's second quarter 2026 earnings conference call.

Joining me today are Amir Panoush, Chief Executive Officer, and Yaniv Ariely, Chief Financial Officer. Before handing the call over to Amir, I'd like to remind everyone that today's discussion contains forward-looking statements that involve risks and uncertainties as well as assumptions that, if they materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such statements. We will also discuss certain non-GAAP financial measures which we believe provide investors with additional insight into our core operating performance.

Reconciliations between our GAAP and non-GAAP results are included in the earnings release issued this morning and available on the Investor Relations section of our website. With that, I'll turn the call over to Amir. Amir. Amir Panoush, Chief Executive Officer Thank you, Richard.

And good morning everyone. We delivered another strong quarter with revenue increasing 13% year over year to $29 million, fueled by licensing and related revenue growing 21% to its highest level in three years. The quarter also benefited from a sequential recovery in royalty revenue driven by continuing momentum across wireless connectivity, ramping automotive AI programs, and market share gains in smartphones. During the quarter, we signed 10 licensing agreements, including two with first-time customers and two directly with OEMs.

More important than the number of agreements is the quality of those agreements. Increasingly, customers are adopting broader platforms and deeper collaborations that strengthens both our near-term licensing business and our long-term royalty opportunity. I would like to focus today on two themes that we believe highlight an important shift in the semiconductor industry and explain why CEVA and our technologies are increasingly well positioned for long-term growth. The first is the continual migration of intelligence from the cloud to the smart edge.

This is a trend we have discussed for several years and one that is increasingly driving demands for our higher-performance connectivity, sensing and AI technologies. During the quarter, we announced what we believe is one of the most strategically significant AI licensing agreements in CEVA's history. A leading global AI and computing platform company selected our new NPU IP for its next-generation custom AI silicon. This agreement is significant for several reasons.

First, it represents a new category of AI customers for CEVA. Historically, our AI licensing activity has primarily been with semiconductor companies and device OEMs. This customer develops both the hardware platform and the operating system, allowing us to collaborate at a much deeper level by optimizing not only the NPU hardware but also the AI software stack for its model applications and workloads. The expertise we gain through this engagement extends well beyond a single customer program.

Co-optimizing AI hardware and software at the platform level will strengthen both our hardware and software roadmaps and further enhance our AI offering for future customers. More broadly, we believe these agreements reflect an important industry trend where companies with some of the world's large engineering organizations are increasingly choosing to leverage proven AI IP rather than developing every component internally. For these companies, the question is no longer whether they have the engineering capability to build an NPU, but whether doing so represents the best use of their engineering resources.

By licensing production-proven IP, they can focus their investments on the hardware, software and AI experiences that differentiate their platforms while reducing development risk and accelerating time to market. The second trend we are seeing is customers increasingly adopting other platform solutions rather than individual IP blocks. Two agreements from the quarter illustrate this well. S.

semiconductor company chose to adopt the complete chip build of our Wi—Fi 6 and Bluetooth Low Energy IP originally developed in partnership with another CEVA customer, rather than licensing the underlying IP blocks individually. The decision reflects the same preference for production-proven complete solutions over developing internally or licensing component IP separately. S. customer expanded the relationship that began with a single baseband component by adopting our complete baseband processing subsystem.

As semiconductor development becomes increasingly complex, customers are recognizing that leveraging proven subsystem IP can significantly reduce engineering effort and execution risk, all while accelerating time to market, enabling them to concentrate their internal resources on the technologies that most differentiate their products. These are different customers and different technologies, but they demonstrate the same underlying trend. Companies are increasingly choosing production-proven hardware, software and system expertise delivered as a complete platform rather than assembling individual IP products themselves.

For CEVA, this expands both the scope and value of our engagement. Broader platform adoption increases our content per design, deepens our integration into customer products, and creates larger, longer-term customer relationships and increases the royalty opportunity associated with each customer platform as those products enter production. These successful outcomes also validate the strategy we have been executing over the past several years. We have invested in expanding our diverse portfolio beyond individual IP blocks to more complex hardware and software platforms across connectivity, sensing and AI.

As customers look to accelerate development while reducing execution risk, we believe this positions CEVA to capture a greater share of content in future designs. Beyond these strategic engagements, activity remains broad-based across our business. In addition to the AI and platform wins I just discussed, we signed multiple follow-on agreements with existing customers alongside our new customer engagement, demonstrating our ability to both expand long-term relationships and consistently win new business.

Across connectivity, we secured customer engagement spanning the United States, Europe, China and the broader Asia Pacific region, reinforcing the global demand for our technology. We also expanded our sensing portfolio with the launch of our Microsoft Certified RealSpace Elevate embedded application software, extending our spatial audio technology into the PC gaming market for the first time. Taken together, these achievements reinforce the strength of our Connect, Sense and Infer offering to enable physical AI use cases.

While AI is creating exciting new opportunities for CEVA, connectivity remains the foundation of physical AI and continues to be the entry point for many of our customer relationships. Increasingly those relationships expand over time as customers adopt additional technologies across our portfolio. Now, turning to royalties, we are beginning to see the benefits of the broader customer engagement we have been building over the past several years translate into an increasingly diversified royalty business.

Royalty revenues increased both sequentially and year over year, supported by continuous trends across our wireless connectivity portfolio, the growing contribution from automotive AI deployment, and share gains in smartphones. Wireless connectivity remained particularly strong, with healthy year-over-year growth in both Wi—Fi and Bluetooth shipments, while cellular IoT shipments reached another quarterly record, and automotive customer programs continue to ramp, reflecting increasing AI content in next-generation vehicles. Overall, the quarter demonstrates the continual evolution of CEVA's business and the continued market leadership of our IP.

We are expanding the breadth of our licensing engagement, increasing the value of every customer relationship through broader platform adoption, and building a more diversified royalty engine. Together these trends reinforce our confidence in both our near-term outlook and our long-term growth opportunity. With that, I'll turn the call over to Yaniv to review our financial results. Yaniv Ariely, Chief Financial Officer Thank you, Amir.

Good morning, everyone. I'll now review our financial results for the second quarter. Revenue for the second quarter increased 13% year over year and 7% sequentially to $29 million, reflecting another exceptionally strong licensing quarter and continued improvement in our royalty business. Our trailing twelve-month licensing and related revenue increased 13% to around $70 million.

The revenue breakdown is as follows. 2 million, reflecting 63% of our total revenue and our strongest licensing quarter in three years. Importantly, the strength of the quarter reflects the broader platform engagements Amir described earlier, which not only increase licensing and related revenues today, but also expand the future royalty opportunity associated with those customer programs. 7 million for the prior-year period and up 17% sequentially, reflecting continued strength across wireless connectivity and automotive AI and share gains in smartphones.

Gross margin was 87% on a GAAP basis and 88% on a non-GAAP basis. 5 million, below the low end of our guidance range. 3 million, at the low end of our guidance. 5 million in the second quarter of last year.

8 million in the prior year, while non-GAAP operating margins expanded to 11%, up from 3% a year ago. Both measures also improved significantly on a sequential basis, demonstrating continued operating leverage. 7 million, primarily due to foreign exchange effects related to our Israeli shekel-denominated lease obligations. 8 million, slightly above the guidance, reflecting the geographic mix of licensing and royalty revenues recognized during the quarter.

15 per share, in the second quarter of 2025. 07 in the prior-year period. On a sequential basis, both non-GAAP net income and diluted earnings per share doubled. With respect to other related data, during the quarter, customers shipped 567 million CEVA-powered devices, an increase of 16% compared to the second quarter of 2025.

Of those shipments, 61 million units, or 11% of the total, were mobile handset modem shipments, compared with 55 million units in the prior-year period, reflecting improving smartphone royalties driven by stronger market share in entry-level smartphones together with continued expansion in the premium tier. Consumer IoT increased to 487 million units compared to 409 million units a year ago. Industrial IoT shipments were 19 million units compared to 24 million units in the prior year.

Despite the lower unit volume, industrial royalty revenues increased 7% year over year, reflecting a richer mix of higher-value products, including automotive, AI, and wireless infrastructure. Looking at our connectivity technologies, these shipment metrics continue to demonstrate the breadth and diversification of our royalty base across multiple end markets. Bluetooth shipments decreased 16% year over year to 295 million units. Cellular IoT shipments reached another quarterly record of 68 million units, up 3% year over year.

Wi—Fi shipments increased 28% year over year to 80 million units. As for the balance sheet items, we ended the quarter with approximately $221 million in cash, cash equivalents, marketable securities, and cash deposits, providing significant financial flexibility to support continued investments in our technology roadmap while maintaining a disciplined approach to capital allocation, including selective strategic M&A opportunities. Days sales outstanding were 70 days. 8 million of cash from operating activities.

6 million. At the end of the quarter we employed 406 people, including 327 engineers, reflecting our continued investments in innovation while maintaining disciplined expense management. Turning to the outlook, we delivered a strong first half of 2026 supported by strong licensing execution, improving royalty trends, and meaningful expansion in non-GAAP profitability. Just as importantly, the quality of the customer engagement we secured during the first half provides a strong foundation for future growth across both licensing and royalties.

Reflecting our first-half performance and current visibility, we are raising our full-year revenue outlook. We now expect 2026 revenue to increase between 13% and 15% over 2025, compared with our previous expectation of 12% growth that we shared at the end of the first quarter. We continue to expect the second half to be stronger than the first, consistent with our normal seasonal profile, while recognizing that memory pricing dynamics and broader supply constraints remain important industry variables. On the expenses, we maintain our previous guidance.

Total non-GAAP cost of revenues and operating expenses are still expected to increase by approximately 8% on an annual basis over 2025 as we continue to invest in our roadmap while carefully managing cost mitigation and foreign exchange headwinds. As a result of stronger revenue growth together with disciplined expense management, we now expect non-GAAP operating income to increase approximately 70% year over year, while non-GAAP net income is expected to increase approximately 50%, both above our previous expectations. 5 million. 1 million of amortization of acquired intangibles.

1 million for acquisition-related costs. 5 million. Net financial income is expected to be approximately $2 million. 2 million shares on a GAAP basis and 30 million shares on a non-GAAP basis.

Rocco, we're ready to take the questions now. OPERATOR Yes, sir. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad.

If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then two. And today's first question comes from Kevin Cassidy at Rosenblatt Securities. Please go ahead.

Kevin Cassidy, Analyst at Rosenblatt Securities Yeah, thanks for taking my question and congratulations on the strong result.