CEVA, Inc. (NASDAQ:CEVA) is the leading licensor of silicon and software IP that enables smart edge devices to connect, sense, and infer data more reliably and efficiently. With an industry-leading portfolio of wireless communications and scalable edge AI technologies, CEVA is at the forefront of the smart edge revolution, empowering its global customer base to bring cutting-edge products to market faster, more reliably, and more cost-effectively.
Company History and Evolution
Established in 1999 and headquartered in Rockville, Maryland, CEVA has a rich history of innovation and market leadership. The company's origins trace back to the development of digital signal processor (DSP) technology at DSP Group in the 1980s and 1990s. In 1999, CEVA spun out from DSP Group as an independent company focused on licensing its DSP cores and related technologies. Over the early years, CEVA built a strong base of customers incorporating its DSP IP into their system-on-chip designs across mobile, consumer electronics, and other markets.
In the 2000s, the company expanded its IP portfolio beyond just DSP cores, adding wireless communications, audio/voice, and other technologies to address the growing needs of its customer base. This diversification strategy proved successful, as CEVA's IP was adopted across a wide range of applications. In the 2010s, CEVA faced a major challenge as the smartphone market, a key driver of its business, began to slow. The company responded by further broadening its technology offerings, including the acquisition of Hillcrest Labs in 2015 to add motion processing and sensor fusion capabilities. This enabled CEVA to expand into new growth markets like the Internet of Things (IoT) and automotive.
Despite the shifts in the semiconductor industry, CEVA has maintained its position as a leading IP provider by continually innovating and adapting its technology portfolio. Key milestones include the introduction of its 5G modem platform in 2019 and the development of its NeuPro family of AI processors for edge devices. Through strategic partnerships and a diversified customer base, CEVA has weathered industry changes and continues to be a trusted supplier of connectivity, sensing, and inference solutions for smart edge products worldwide. In 2023, the company divested its Intrinsix custom design services business to focus solely on its IP licensing model.
Technology Portfolio and Market Opportunities
CEVA's comprehensive suite of technologies addresses some of the most critical megatrends shaping the technology landscape, including 5G, generative AI, embedded AI, industrial automation, and vehicle electrification. The company's Bluetooth, Wi-Fi, Ultra-Wideband (UWB), and cellular IoT IPs allow it to address the high-volume IoT industrial, consumer, and smart home markets, which are expected to exceed 15 billion devices annually by 2027, according to research from ABI Research.
In the area of wireless connectivity, CEVA has solidified its market leadership, with a dominant position in Bluetooth and Wi-Fi. The company's Wi-Fi 6 and Wi-Fi 7 IPs have been licensed by over 40 customers, and its Bluetooth solutions power more than 1.1 billion devices annually. As the shift towards Wi-Fi 6 and Wi-Fi 7 continues, CEVA is well-positioned to capitalize on the growing demand for advanced wireless connectivity across a wide range of applications.
CEVA's strength in connectivity is further enhanced by its PentaG2 platform and digital signal processors (DSPs) for 5G mobile broadband and 5G RedCap. This comprehensive baseband IP platform provides a customizable solution for addressing the need for 5G, 5G Advanced, and other communications in data centers and infrastructure, enabling both newcomers and incumbents to address this rapidly evolving market.
In the realm of sensing and edge AI, CEVA has made significant strides with its SensPro2 sensor hub AI DSP family and its newest generation of AI neural processing units (NPUs). These solutions enable efficient, high-performance signal processing and AI inference in a wide range of applications, from smartphones and drones to automotive ADAS and industrial IoT. Research from Bloomberg Intelligence forecasts that hardware revenue associated with computer vision AI products and conversational AI devices will reach $61 billion and $108 billion, respectively, by 2030, underscoring the immense market opportunity for CEVA's edge AI technologies.
Business Model and Growth Strategy
CEVA's collaborative business model and focus on enabling the smart edge ecosystem have positioned the company for long-term growth. In 2024, the company delivered strong financial results, with 10% top-line growth, reaching $106.9 million in revenue. Licensing and related revenue grew 4% to $60 million, with the company signing 43 licensing agreements, 11 of which were with original equipment manufacturers (OEMs) integrating CEVA's IPs into their end products.
Royalty revenue, which accounts for a significant portion of CEVA's business, grew 18% year-over-year, driven by record unit shipments of 2 billion CEVA-powered devices. This milestone achievement underscores the widespread adoption of CEVA's technologies across a diverse range of end markets, including consumer IoT, mobile, and industrial IoT.
Future Outlook and Competitive Positioning
Looking ahead, CEVA is well-positioned to capitalize on the growing demand for smart edge devices. The company's connectivity solutions, sensor fusion capabilities, and edge AI offerings are highly synergistic, enabling it to deliver comprehensive solutions that address the needs of its customers across multiple industries. As the shift from AI inference processing in the cloud to the edge continues to accelerate, CEVA's innovative IP portfolio and collaborative approach are poised to drive long-term growth and shareholder value.
Financials and Liquidity
CEVA's financial performance and operational milestones in 2024 demonstrate the company's ability to execute its strategy and capitalize on the smart edge revolution. The company reported total revenue of $106.9 million for the fiscal year 2024, representing a 10% increase from the previous year. However, CEVA recorded a net loss of $8.8 million for the year. Operating cash flow (OCF) was $8 million, and free cash flow (FCF) was $7 million.
In the fourth quarter of 2024, CEVA's revenue reached $29.2 million, marking a 21% year-over-year increase. This growth was driven by higher licensing and related revenue, which grew 33% year-over-year, as well as a 9% increase in royalty revenue. The company reported a net loss of $1.7 million for the quarter. OCF and FCF for Q4 2024 were both $8 million and $7 million, respectively.
CEVA's financial position remains strong, with a debt-to-equity ratio of 0.021, indicating a very low level of debt relative to equity. As of the end of Q4 2024, the company had $164 million in cash, cash equivalents, marketable securities, and bank deposits. CEVA's current ratio and quick ratio were both 7.09, demonstrating a robust liquidity position.
The company operates in two main product segments: Connectivity and Edge AI. In the Connectivity segment, CEVA has achieved significant milestones, including combined unit shipments for its connectivity IPs surpassing 400 million units for the first time in Q3 2024. CEVA commands over 30% of the Bluetooth market share worldwide, excluding mobile, and has signed licensing deals for its full range of wireless connectivity IPs, including its recently released Bluetooth 6.0 IP.
In the Edge AI segment, CEVA's PentaG2 platform continues to gain traction, with three deals signed in Q3 2024 for 5G and 5G-Advanced use cases. The company's SensPro2 sensor hub AI DSP family is well-positioned to address the growing demand for efficient, high-performance signal processing in sensor-based applications across various industries.
Looking forward, CEVA has provided guidance for 2025, expecting total revenue to grow 7% to 11% over 2024 levels. The company plans to increase its overall expense levels at a significantly lower growth rate than its top line growth, in the range of 2% to 6%. CEVA anticipates non-GAAP operating income and operating margins, as well as non-GAAP net income and fully diluted EPS, to grow significantly year-over-year by approximately 48% to 52%.
For the first quarter of 2025, CEVA expects revenue to be between $25.5 million and $27.5 million. Gross margin is anticipated to be slightly lower than Q4 2024 at 87% on a GAAP basis and 88% on a non-GAAP basis. GAAP operating expenses are expected to range from $25.1 million to $26.1 million, while non-GAAP operating expenses are projected to be between $21 million and $22 million. Interest income is expected to be approximately $1.3 million, and taxes are estimated at around $1.2 million. The share count for Q1 2025 is expected to be 25.4 million shares.
With a strong balance sheet, a diverse customer base, and a robust pipeline of innovative technologies, CEVA is well-equipped to navigate the evolving technology landscape and solidify its position as the leading IP provider enabling the next generation of smart, connected, and intelligent devices. The company's focus on key growth areas such as 5G, AI, and IoT, combined with its strong market position in wireless connectivity and edge processing, positions CEVA for continued success in the rapidly expanding smart edge market.