CEVA, Inc. Q4 FY2025 earnings call

• 2025 was a landmark year for CEVA, strengthening foundation, leadership in wireless connectivity, and expanding into AI for the Smart Edge.
• Continued executing on long-term strategy, partnering with customers through comprehensive IP portfolio enabling smart edge devices to connect, sense, and infer data locally.
• Shift of AI inference to edge and hybrid AI accelerating, CEVA uniquely positioned for physical AI era with comprehensive IP portfolio.
• Fourth quarter delivered highest quarterly revenue, 18 licensing agreements signed including 3 NPU deals.
• Full year 2025 saw total revenue increase 2%, licensing and related revenue grow 6%, royalty revenue down 2% but grew sequentially each quarter. CEVA-powered devices shipped reached record 2.1 billion units.
• Signed 54 licensing agreements in 2025, including 10 OEM agreements, 12 customers licensed multiple technologies.
• Reached 20,000,000,000 cumulative CEVA-powered devices by end of fourth quarter.

For the fourth quarter, CEVA delivered the highest quarterly revenue in history, 7% higher year over year excluding the Intrinsix design services business. Licensing revenue increased 11%, with 18 licensing agreements signed including 3 NPU deals. Royalty revenue was up 2% year over year. For the full year 2025, total revenue increased 2%. Licensing and related revenue grew 6%, royalty revenue was down 2% but grew sequentially each quarter. CEVA-powered devices shipped in 2025 reached a record 2.1 billion units. Smart Edge applications generated 86% of total revenue. Fourth quarter revenue increased 7% year over year and 10% sequentially. Licensing and related revenue was $17.5 million, 56% of total revenue. Royalty revenue was $13.8 million, 44% of total revenue. Quarterly gross margin was 88% on GAAP basis and 89% on non-GAAP basis. Annual revenue was $109.6 million, non-GAAP net income increased 20% year over year, diluted EPS increased 17% year over year. Wi-Fi shipments were a record 86 million units in the fourth quarter, up 30% year over year. Cellular IoT shipments were a quarterly record 60 million units, up 30% year over year. Wi-Fi royalties were up 70% year over year, cellular IoT royalties were up 20% year over year.

• Annual total revenue expected to grow 8% to 12% over 2025, lower growth in first half, higher in second half, subject to memory pricing fluctuation and supply challenge.
• 2026 non-GAAP expense base including cost of goods and operating expenses expected to increase 1% to 3%, significantly below top-line growth. Non-US dollar-based expenses expected to increase ~10% year over year due to FX headwinds, incremental impact ~$5,000,000.
• Total non-GAAP expenses in 2026 expected to be $104.4 million to $108.4 million. Equity-based compensation expenses forecasted $22,000,000 to $23,500,000. Amortization of acquired intangibles and business acquisition costs $400,000 to $500,000 each.
• 2026 revenue forecasted $24,000,000 to $28,000,000 sequentially lower than fourth quarter but still higher than 2025 midpoint. Gross margin expected ~86% on GAAP and ~87% on non-GAAP basis. GAAP OpEx for first quarter expected $27.6 million to $28.6 million. Non-GAAP OpEx expected $22.2 million to $23.2 million.

• Foreign exchange headwinds due to strengthening of euro and Israeli shekel against US dollar creating challenges for companies with globally distributed engineering teams. Impact on non-US dollar-based expenses.
• Uncertainty in precise timing of royalty growth, influenced by factors such as memory pricing and broader market conditions.

Q: For your NPU pipeline, can you give an idea of the scale? How many more engagements do you have right now compared to this time last year and what the end market exposures are?

A: Amir Panush said very encouraged by penetration into AI in 2025, built complete NPU portfolio for different Smart Edge markets, pipeline keeps growing across consumer, computing devices, embedded MCU-type applications, industrial, automotive submarkets.

Q: For the PC OEM, is it a separate chip or integrated in a CPU package?

A: Amir Panush said it is a separate chip for NPU, OEM is building SoC platform and integrating CEVA's NPU functionality into it.

Q: Talk about competitive dynamics for the PC NPU win. Are there going to be multiple NPUs in PCs going forward?

A: Amir Panush said need for best-in-class performance in high-end compute devices, OEM looked for core architecture with best PPA, CEVA well positioned competitively, potential for others to follow suit.

Q: On fiscal 2026 guidance, what needs to improve to trend toward high end of guidance range?

A: Richard Kingston said stronger licensing, royalty ramp up, normal events like memory effect, timing of product ramp-ups; Amir Panush added strong leadership in wireless communication, momentum in AI, gaining market share in mobile and Wi-Fi.

Q: With recent equity capital raise, are you thinking about M&A today and thoughts on current valuations?

A: Richard Kingston said raised cash to strengthen balance sheet, looking for non-organic growth to grow faster, goal to find right fit technology-wise, market-wise, business-wise; Amir Panush said strongly believe in extending excellent IP enterprise