Ceva (NASDAQ:CEVA) reported second-quarter revenue of $29 million, up 13% from a year earlier and 7% sequentially, as licensing activity reached its strongest level in three years and royalty revenue recovered from the prior quarter.
Chief Executive Officer Amir Panush said licensing and related revenue rose 21% year over year to $18.2 million, representing 63% of total revenue. Royalty revenue totaled $10.8 million, up from $10.7 million a year earlier and 17% sequentially.
Broader platform agreements drive licensing activity
CEVA signed 10 licensing agreements during the quarter, including two with first-time customers and two directly with original equipment manufacturers. Panush said the company is increasingly seeing customers adopt broader platforms and deeper technology collaborations instead of individual intellectual-property blocks.
Among the quarter’s agreements, a global AI and computing platform company selected CEVA’s NeuPro-M neural processing unit IP for next-generation custom AI silicon. Panush called the arrangement one of the company’s most strategically significant AI licensing agreements, saying the customer develops both hardware and an operating system, enabling CEVA to work on AI hardware and software-stack optimization.
CEVA also cited two U.S. customer agreements as examples of wider platform adoption. One high-volume semiconductor company selected a complete chip based on CEVA’s Wi-Fi 6 and Bluetooth Low Energy IP, rather than licensing the underlying IP blocks separately. Another U.S. customer expanded from a single baseband component to CEVA’s complete baseband processing subsystem.
During the question-and-answer session, Panush said the baseband subsystem relates to a wireless-access subsystem supporting satellite constellations and includes MAC and baseband hardware and software, but excludes RF technology.
Panush said more complete and customized offerings can increase licensing deal sizes and future royalties, while also making CEVA’s technology more embedded in customer products. CFO Yaniv Arieli added that wireless technologies are regularly updated with new standards and features, which can generate recurring licensing opportunities.
Royalty shipments reflect connectivity and smartphone trends
Customers shipped 567 million CEVA-powered devices during the quarter, a 16% increase from the second quarter of 2025. Mobile handset modem shipments rose to 61 million units from 55 million units a year earlier, while consumer IoT shipments increased to 487 million from 409 million. Industrial IoT shipments declined to 19 million from 24 million, though industrial royalty revenue increased 7% due to a mix of higher-value products, including automotive AI and wireless infrastructure.
- Bluetooth shipments declined 16% year over year to 295 million units.
- Cellular IoT shipments reached a quarterly record of 68 million units, up 3%.
- Wi-Fi shipments increased 28% to 80 million units.
Management said smartphone royalties benefited from stronger share in entry-level devices and continuing expansion in premium-tier devices. Arieli said Chinese customer UNISOC is shifting more of its handset business toward 5G, which carries higher average selling prices for CEVA, and has secured recent design wins with brands including Vivo and Xiaomi.
Management acknowledged memory pricing and supply constraints as industry risks, particularly for handsets. Arieli said lower-cost smartphones generally require less memory than higher-end devices, and CEVA had not seen significant problems over the previous two quarters. Panush said the company expects normal seasonal expansion from its mobile customers during the second half, while recognizing the difficulty of quantifying the effects of memory shortages.
Panush also said the company expects Bluetooth High Data Throughput technology to carry higher royalty rates than legacy Bluetooth offerings, particularly when combined with CEVA RF IP. He said volume ramps are expected to begin toward the end of 2026, with more significant ramping through 2027 and 2028.
Profitability improves and outlook rises
GAAP gross margin was 87%, while non-GAAP gross margin was 88%, in line with guidance. GAAP operating loss narrowed to $2.1 million from $4.5 million a year earlier. Non-GAAP operating income increased to $3.1 million from $800,000, and non-GAAP operating margin expanded to 11% from 3%.
GAAP net loss was $2.9 million, or 10 cents per diluted share, compared with a loss of $3.7 million, or 15 cents per share, in the prior-year period. Non-GAAP net income rose 28% to $2.3 million, while non-GAAP diluted earnings per share increased to 8 cents from 7 cents.
CEVA ended the quarter with approximately $221 million in cash equivalents, marketable securities and cash deposits. It generated $5.8 million in operating cash flow and employed 406 people, including 327 engineers, at quarter-end.
The company raised its full-year 2026 revenue outlook, now expecting growth of 13% to 15% over 2025, compared with its previous forecast for 12% growth. CEVA continues to expect the second half to be stronger than the first half.
It maintained its expectation that total non-GAAP cost of revenues and operating expenses will rise about 8% for the year. Based on the higher revenue outlook and expense discipline, CEVA now expects non-GAAP operating income to increase about 70% year over year and non-GAAP net income to rise about 50%.
For the third quarter, CEVA forecast revenue of $30.5 million to $34.5 million, GAAP gross margin of about 87%, and non-GAAP gross margin of about 88%. The company expects non-GAAP operating expenses of $22.5 million to $23.5 million.
About Ceva (NASDAQ:CEVA)
Ceva, Inc (NASDAQ: CEVA) is a leading licensor of signal processing IP cores and platforms that enable intelligent, connected devices. The company designs a broad portfolio of digital signal processing (DSP) and AI processors, software development toolkits and reference frameworks for applications ranging from 5G wireless communications and Bluetooth connectivity to audio, computer vision, sensor fusion and edge AI. Its solutions target a variety of end markets including smartphones, automotive, IoT devices, smart home, industrial automation and wearable electronics.
Founded in 1999 as a spin-off from DSP Group, Ceva has built its reputation on delivering modular, power-efficient IP that can be customized to meet stringent performance, area and power requirements.
