CEVA Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Revenue: Increased 13% year-over-year to $29 million; up 7% sequentially.

Licensing and Related Revenue: Grew 21% year-over-year to $18.2 million, representing 63% of total revenue.

Royalty Revenue: Reached $10.8 million, up 17% sequentially and slightly up year-over-year.

Gross Margin: 87% (GAAP), 88% (non-GAAP).

Operating Loss: Improved to $2.1 million from $4.5 million year-over-year (GAAP).

Non-GAAP Operating Income: Increased to $3.1 million, with margins expanding to 11%.

Net Income: Non-GAAP net income rose 28% year-over-year to $2.3 million; GAAP net loss was $2.9 million.

Device Shipments: 567 million CEVA-powered devices shipped, a 16% increase year-over-year.

2Strategic Updates and Business Highlights

Licensing Agreements: Signed 10 agreements, including two with first-time customers and two directly with OEMs, indicating a shift towards broader platform solutions rather than individual IP blocks.

AI Engagement: Secured a significant AI licensing agreement with a leading global AI company for its custom AI silicon, marking a new category of AI customers.

Market Trends: Noted a trend of customers preferring complete platform solutions, which enhances CEVA's engagement and potential royalty opportunities.

Product Launches: Introduced Microsoft-certified RealSpace Elevate software for spatial audio in PC gaming, expanding the sensing portfolio.

3Forward Guidance and Outlook

2026 Revenue Growth: Raised guidance to 13%-15% growth over 2025, up from a previous estimate of 12%.

Q3 Revenue Guidance: Expected between $30.5 million and $34.5 million, with continued strong gross margins.

Operating Income: Projected non-GAAP operating income to increase approximately 70% year-over-year, with net income expected to rise by about 50%.

Seasonal Trends: Anticipated stronger second half of the year, consistent with historical patterns, despite potential memory pricing dynamics and supply constraints.

4Challenges and Points of Concern

Market Risks: Ongoing component cost inflation and memory shortages could impact low-end smartphone markets, although CEVA has not seen significant issues yet.

Competition: The competitive landscape is evolving, particularly with the acquisition of ARC by GlobalFoundries, which may affect CEVA's market positioning.

Volatility in Shipments: Noted a sequential decline in Wi-Fi shipments, attributed to customer mix rather than overall market weakness.

5Notable Q&A Insights

Integration Trends: Customers are increasingly seeking complete solutions, which enhances the stickiness of CEVA's IP and allows for higher licensing deal sizes and future royalties.

Edge AI Opportunities: CEVA sees significant potential in high-end compute edge markets, particularly in automotive and robotics.

Smartphone Market Dynamics: CEVA is gaining market share in entry-level and premium smartphones, with expectations for continued growth in the second half of the year.

Royalty Rate Implications: Engagements involving custom solutions are expected to yield higher royalties per unit compared to standard offerings.

HDT Technology: The new HDT Bluetooth technology is anticipated to generate higher royalties, with volume ramp expected towards the end of 2026. This summary encapsulates CEVA's strong performance in Q2 2026, highlighting both the positive growth trajectory and potential challenges ahead.