10-K: CEVA Reports 10% Revenue Growth in 2024, Driven by Wireless Connectivity and Edge AI

CEVA, Inc. announces a 10% increase in total revenue for 2024, fueled by strong performance in wireless connectivity and Edge AI technologies.

Summary

• CEVA, Inc. reported total revenue of $106.9 million for 2024, a 10% increase compared to 2023.
• The company attributes this growth to its leadership in wireless connectivity and expansion in sensing and Edge AI markets.
• Royalty revenue increased by 18% year-over-year, with a record 2 billion CEVA-powered units shipped.
• Licensing and related revenue saw a 4% increase, reaching $60.0 million.
• The company signed 43 licensing agreements, with a focus on consumer and industrial IoT markets.
• CEVA expects revenue to grow 7%-11% in 2025.
• The company's strategy focuses on connect, sense, and infer use cases in smart edge devices.
• Approximately 81% of total revenues for 2024 were derived from customers located outside of the United States.
• Customers in China accounted for 49% of total revenues for 2024.

Sentiment

Score: 7

Explanation: The document presents a positive outlook with revenue growth and strategic licensing deals, but also acknowledges risks and challenges in the market.

Positives

• Strong growth in royalty revenue, driven by record shipments of CEVA-powered units.
• Increase in licensing and related revenue, indicating successful expansion into new markets.
• Strategic licensing deals in cellular communication markets for satellite, base station and handset advanced technology use cases.
• Focus on high-growth markets like consumer and industrial IoT.
• Expectation of continued revenue growth in 2025.
• Record 343 million Bluetooth units and a record 66 million Wi-Fi units shipped.

Negatives

• Decrease in revenues in absolute dollars in APAC from 2023 to 2024 was partially attributed to China, were we witnessed slower design starts, continued geopolitical tensions and the continued impact of the prior years slowdown in the local macroeconomic environment.
• Reliance on a limited number of customers for a significant portion of revenue.
• Potential impact of geopolitical instability and trade restrictions on international operations.
• The war between Israel and Hamas that began on October 7, 2023 and escalated to conflicts with Lebanon and Hezbollah, and the attacks from Iran and Yeman may disrupt operations in Israel.

Risks

• Intense competition in the semiconductor IP market.
• Dependence on market acceptance of third-party semiconductor intellectual property.
• Cyclical nature of the semiconductor industry and potential for economic downturns.
• Lengthy sales cycle and potential delays in customer orders.
• Inability to adequately protect intellectual property.
• Cybersecurity threats and potential security breaches.
• Fluctuations in currency exchange rates.
• Inaccurate or understated royalty reporting by licensees.
• Credit and liquidity risk of customers.
• Potential impairment of goodwill and intangible assets.

Future Outlook

CEVA expects revenue to grow 7%-11% in 2025, driven by expansion in industrial and consumer IoT markets and strength in connectivity products.

Management Comments

• The company intends to continue to capitalize on the semiconductor momentum with our portfolio of technologies to enable three main use cases associated with smart edge devices: connect, sense and infer.
• We focus on four main markets, which are consumer IoT, automotive, industrial and infrastructure, which we believe are large, diversified and represent the greatest opportunities for long-term growth.

Industry Context

CEVA competes with other IP licensors like Verisilicon, Cadence, Synopsys, Arm, and Mindtree. The company's focus on wireless connectivity and Edge AI positions it to capitalize on the growing demand for smart edge devices in various markets.

Comparison to Industry Standards

• The document mentions IPnest data indicating CEVA commanded 67% of the wireless connectivity market share based on IP design revenues in 2023.
• The document references ABI Research estimates that the addressable market size for Bluetooth, Wi-Fi, UWB and cellular IoT is expected to be more than 16.5 billion devices annually by 2029.
• The document references Bloomberg Intelligence forecasts that hardware revenue associated with computer vision AI products and conversational AI devices will reach $58 billion and $110 billion, respectively by 2032.
• The document references Research and Markets estimates that more than 6 billion Edge AI hardware units will ship annually by 2030.
• The document references ABI Research estimates that by 2030, over 50% of TinyML shipments will be powered by dedicated embedded AI hardware such as NeuPro-Nano, representing billions of devices annually.

Legal Proceedings

• The company is involved in several legal proceedings and claims that have arisen in the ordinary course of business and remain unresolved.
• As of December 31, 2024, the outcome of these matters was anticipated to be more likely than not.
• Consequently, the company has recorded a provision amounting to approximately $300 on the consolidated balance sheet.

Related Party Transactions

• Jaclyn Liu, a director of CEVA, is a partner at Morrison & Foerster LLP, which provides legal counsel to CEVA.
• Fees paid to Morrison & Foerster LLP during 2024 were $390.
• The accounts payable balance with Morrison & Foerster LLP at December 31, 2024 was $0.

Stakeholder Impact

• The company's performance and strategic direction impact shareholders, employees, customers, and suppliers.
• The company is committed to social responsibility, values of preservation and consciousness towards these purposes.

Next Steps

• Develop and enhance NPU product lines for Edge AI.
• Develop and enhance DSP platforms with additional features, performance, and capabilities.
• Develop and expand short-range wireless IP and customer base.
• Continue to develop new generations of high-performance platforms incorporating processors NPUs, wireless connectivity standards and embedded application software to pursue opportunities and grow our footprint in the smart edge markets.
• Go up the value chain by adding and charging for software for our wireless, AI, voice, spatial audio and Inertial Measurement Unit (IMU) products.
• Continue to prudentially invest in strategic technologies that enable us to strengthen our presence in existing market or enter new addressable markets.
• Capitalize on our relationships and leadership position within our worldwide community of semiconductor and OEM licensees who are developing Ceva-based solutions.
• Capitalize on our technology leadership in the development of advanced processor technologies, connectivity IP and sensor fusion software to create and develop new, strategic relationships with OEMs and semiconductor companies to replace their internal solutions with Ceva-based solutions.
• Capitalize on our IP licensing and royalty business model which we believe is the best vehicle for a pervasive adoption of our technology and allows us to focus our resources on research and development of new licensable technologies and applications.

Key Dates