10-K: CEVA Reports Record Q4, Full-Year Revenue Growth in Physical AI

CEVA, Inc. reported a 2.5% increase in total revenue to $109.6 million for fiscal year 2025, driven by strong licensing activity in AI and connectivity, despite a slight dip in overall royalty revenue.

Summary

• Total revenue for fiscal year 2025 increased by 2.5% to $109.6 million, up from $106.9 million in 2024.
• Licensing and related revenue grew by 6% to $63.6 million in 2025, compared to $60.0 million in 2024.
• Royalty revenue decreased by 2% to $46.0 million in 2025, from $46.9 million in 2024, primarily due to smartphone softness and memory supply shortages.
• CEVA signed 54 IP licensing agreements in 2025, including 10 NPU licensing agreements, with AI accounting for over 20% of total licensing revenue.
• Record 2.1 billion CEVA-powered devices shipped in 2025, a 6% year-over-year increase, driven by record Wi-Fi (266 million units, up 48%) and cellular IoT (241 million units, up 42%) shipments.
• Bluetooth shipments were 1.1 billion units (down 2%) and handset shipments were 280 million units (down 18%) in 2025.
• The company estimates an aggregate lifetime royalty potential of $125 million from licensing agreements signed in 2025.
• Net loss for 2025 was $10.6 million, compared to a net loss of $8.8 million in 2024.
• Operating loss increased to $11.3 million in 2025 from $7.5 million in 2024.
• Research and development expenses, net, increased to $74.8 million in 2025 from $71.6 million in 2024.
• Cash and cash equivalents, short-term bank deposits, and marketable securities totaled $222.0 million at year-end 2025, up from $163.6 million in 2024.
• Net proceeds of $63.3 million were received from a follow-on offering in Q4 2025, issuing 3,450,000 common shares.
• Sales to UNISOC accounted for 15% of total revenues in both 2025 and 2024.
• Two royalty-paying customers each represented 10% or more of total royalty revenues for 2025, collectively accounting for 39% of total royalty revenues.
• Revenues from Asia Pacific (APAC) region increased to $84.0 million (76.7% of total) in 2025 from $73.8 million (69.0% of total) in 2024, with China alone accounting for 61.9% of total revenues in 2025.
• The company recorded a valuation allowance of $1.0 million in 2025 for certain deferred tax assets of its French subsidiary due to uncertainty regarding future taxable income.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing as moderately positive. While the company achieved record revenue and strong licensing momentum, particularly in AI, and significantly boosted its cash reserves through a capital raise, the slight decline in royalty revenue and widening net loss indicate ongoing challenges in certain end markets and increased operating expenses. The long-term royalty potential from new agreements is a strong positive, but geopolitical and macroeconomic risks remain pertinent.

Positives

• Record fourth-quarter revenue and strongest royalty quarter in over four years, indicating strong exit momentum for 2025.
• Total revenue increased by 2.5% year-over-year to $109.6 million in 2025.
• Licensing and related revenue grew by 6% in 2025, driven by strong AI-related licensing activity.
• Signed 54 IP licensing agreements in 2025, including 10 NPU agreements, with AI accounting for over 20% of total licensing revenue.
• Secured Wi-Fi 7 agreements with two largest connectivity customers, expected to drive billions of units and tens of millions in royalties.
• Record 2.1 billion CEVA-powered devices shipped in 2025, up 6% year-over-year.
• Record Wi-Fi shipments (266 million units, up 48%) and cellular IoT shipments (241 million units, up 42%) in 2025.
• Estimated aggregate lifetime royalty potential of $125 million from 2025 licensing agreements, building long-term royalty trajectory.
• Strong cash position with $222.0 million in cash, cash equivalents, bank deposits, and marketable securities at year-end 2025.
• Successful follow-on offering in Q4 2025 raised $63.3 million in net proceeds.
• Diversified royalty streams across high-volume Bluetooth/Wi-Fi and higher-value inference engines/AI DSPs like NeuPro and SensPro.

Negatives

• Royalty revenue decreased by 2% in 2025, primarily due to smartphone softness and memory supply shortages.
• Net loss increased to $10.6 million in 2025 from $8.8 million in 2024.
• Operating loss widened to $11.3 million in 2025 from $7.5 million in 2024.
• Research and development expenses increased to $74.8 million in 2025, expected to continue increasing in 2026 due to higher currency exchange expenses.
• Lower revenues associated with advanced 5G cellular technologies partially offset licensing gains.
• Decrease in revenues from the United States and Europe/Middle East regions in 2025.
• Recorded a $1.0 million charge in 2025 for a valuation allowance against deferred tax assets of the French subsidiary due to uncertainty regarding future taxable income.
• The company adopted a more cautious outlook and lowered its revenue guidance for fiscal year 2025 from high-single-digit growth to low-single-digit growth over 2024 annual revenues.

Risks

• Highly competitive markets could lead to loss of sales, lower prices, and reduced revenues, especially with new product introductions and evolving AI architectures.
• Dependence on market acceptance of third-party semiconductor IP and the success of customer end products.
• Inability to meet changing needs of end-users or address evolving market demands, potentially limiting market expansion and new product acceptance.
• Operating results are affected by the highly cyclical nature and general economic conditions of the semiconductor industry, including supply chain disruptions.
• Quarterly operating results fluctuate due to factors like lengthy sales cycles, dependence on a limited number of customers, and royalty pricing pressures.
• Significant concentration of revenues in China (61.9% in 2025) makes the company susceptible to political, economic, and trade conditions in the region, including U.S.-China trade tensions and restrictions on technology transfers.
• Operations in Israel may be adversely affected by instability in the Middle East region, including the war between Israel and Hamas, potentially disrupting operations due to employee reserve duty.
• Research and development expenses may increase if grants from the Israeli government are reduced or withheld.
• Highly competitive employment market and dependence on a limited number of key personnel, making replacement difficult.
• Lengthy sales cycle for IP and related solutions, with structured payment terms, makes forecasting difficult.
• Potential for errors, defects, or bugs in complex IP solutions, harming credibility and market acceptance.
• Inability to adequately protect IP, or being sued for infringement of third-party IP rights, could lead to substantial expenses and business disruption.
• Cybersecurity threats or other security breaches could compromise sensitive information and harm business/reputation.
• Changes in tax rates or exposure to additional income tax liabilities, including those related to French and Greek tax benefits, GILTI, and IRC Section 174 amortization, could adversely impact cash flow and results.
• Exposure to fluctuations in currency exchange rates, particularly NIS and Euro against the U.S. dollar, affecting expenses and operating results.
• Royalty reporting by licensees may be inaccurate, understated, or untimely, impacting revenue recognition.
• Exposure to credit and liquidity risk of customers, especially new customers or those in financially distressed markets.
• Potential for goodwill and intangible asset impairment charges, negatively impacting operating results.
• Anti-takeover provisions in corporate documents could prevent or discourage third-party acquisitions.
• Stock price volatility due to business developments, competitor announcements, financial results, and general economic conditions.

Future Outlook

CEVA anticipates sustained, long-term growth in both shipments and royalty revenues, driven by its leadership in Physical AI across connectivity, sensing, and inference layers. The company expects to capture higher royalty revenues as customers transition to newer Wi-Fi standards (Wi-Fi 6/7) and expand its customer base in Europe and the U.S. Research and development expenses are projected to increase in 2026 due to higher currency exchange expenses. The company will continue to evaluate the impact of the OBBBA on its consolidated financial statements for 2026. While macroeconomic conditions and memory chip shortages impacted royalty revenue growth in 2025, the company expects these factors to continue into 2026.

Management Comments

• "2025 was a landmark year for Ceva and ended on a high note with record fourth-quarter revenue and our strongest royalty quarter in more than four years, and the highest ever in terms of overall revenue."
• "A key milestone in 2025 was a strategic NeuPro NPU licensing agreement for our high-performance NeuPro NPUs with one of the worlds leading PC OEMs. This win is a powerful validation of our AI strategy and reinforces our belief that dedicated NPUs will become a standard requirement across personal computing platforms and increasingly across intelligent devices."
• "As AI increasingly moves into real-world devices, we believe the industry is entering the era of Physical AI."
• "With leadership across connectivity, sensing and inference, record Wi-Fi and cellular IoT shipments, and more than 20 billion Ceva-powered devices shipped to date, we enter 2026 in a position of strength."
• "Strategically, the licensing agreements we signed during 2025 are building long-term royalty trajectory and visibility."
• "The magnitude of this opportunity relative to our current royalty base underscores the strength, durability and accelerating momentum of the licensing and royalty flywheel we are building."
• "Our operations in Israel remain largely unaffected by the war between Israel and Hamas that began on October 7, 2023 and escalated to conflicts with Lebanon, Hezbollah and Iran. Despite the evolving geopolitical situation, we continue to drive our business and support our customers globally."
• "We finished fiscal year 2025 with total revenues of $109.6 million, which was in line with this more cautious approach."

Industry Context

StockSavvy.ai notes that CEVA's focus on 'Physical AI' represents a strategic alignment with the broader industry trend of embedding advanced AI capabilities directly into edge devices, moving beyond traditional cloud-centric AI. The company's strong market share in wireless connectivity IP (68% in 2024) and its expanding portfolio in AI DSPs and NPUs position it well to capitalize on the projected $170 billion Physical AI and Edge AI market by 2030. The increasing complexity of wireless standards (5G/5GAdvanced, WiFi 7/8, Bluetooth 6/7, UWB) and AI/ML workloads is driving semiconductor companies to rely more on licensable IP, which plays directly into CEVA's business model. However, the industry faces challenges from macroeconomic conditions, geopolitical tensions (especially U.S.-China trade relations), and supply chain disruptions, which CEVA acknowledges have impacted its royalty revenues and overall guidance.

Comparison to Industry Standards

• CEVA holds the #1 worldwide market share in wireless connectivity IP in 2024 with 68% global share, reflecting unmatched scale and multiprotocol expertise, significantly outperforming competitors like Mindtree in short-range wireless IP.
• Approximately 30% of worldwide Bluetooth IoT devices are powered by CEVA, demonstrating strong penetration in a key IoT segment.
• About 50% of all True Wireless Stereo (TWS) earbuds (non-Apple) integrate CEVA's Bluetooth and audio IP, indicating a dominant position in this high-volume consumer market.
• Approximately 40% of worldwide cellular IoT devices are built on CEVA's modem and DSP platforms, showcasing leadership in critical IoT infrastructure.
• Around 30% of global 5G networks use CEVA's DSP technology for RAN baseband processing, highlighting its foundational role in next-generation communication infrastructure.
• CEVA competes with major DSP, NPU, and processor IP vendors such as Arm, Cadence, Imagination Technologies, VeriSilicon, and SiFive, as well as internal design teams at large semiconductor companies like Marvell, Broadcom, ST, and NXP. Its ability to secure significant NPU licensing agreements, like with a global PC and smart-device leader, indicates competitive strength against these established players.
• In the Spatial Audio and Motion Sensing software market, CEVA competes with companies like Waves, Dolby, and CyweeMotion, with its MotionEngine software already shipped in over 500 million devices, demonstrating significant market adoption.

Management Changes

Corporate Governance

Legal Proceedings

• As of December 31, 2025, the company is subject to legal proceedings and claims arising in the ordinary course of business, resulting in a provision of approximately $300,000 on the consolidated balance sheet.

Related Party Transactions

• Jaclyn Liu, an independent member of the Board since February 16, 2021, is a partner of Morrison & Foerster LLP, which served as outside legal counsel to the company.
• Fees attributed to Morrison & Foerster LLP during the year ended December 31, 2025, were $811, with an accounts payable balance of $3 at year-end 2025.
• The company ended its engagement with Morrison & Foerster LLP as its outside legal counsel for Corporate and Securities Law during the fourth quarter of 2025.

Stakeholder Impact

• Shareholders: Impacted by increased net loss, but also by the long-term royalty potential from new licensing agreements and the capital raise which strengthened the balance sheet. Stock price volatility is a noted risk.
• Employees: Affected by the competitive employment market, potential disruptions in Israeli operations due to reserve duty, and the company's commitment to employee welfare and development as outlined in its Sustainability Policy.
• Customers: Benefit from CEVA's broad IP portfolio, integrated solutions, and technical support, enabling faster time-to-market and reduced development costs. However, they face risks from supply chain disruptions and macroeconomic conditions affecting end-product demand.
• Suppliers/Partners: The company's reliance on third-party vendors for IT systems and specialized external contractors for R&D indicates ongoing engagement, but also screening processes for cybersecurity risks.
• Creditors: Benefit from the company's strong cash and marketable securities position, which provides liquidity and financial stability.

Next Steps

• Expand customer base and revenues in Europe and the U.S. to complement strong presence in Asia-Pacific.
• Continue disciplined investment in high-leverage technologies aligned to Physical AI trends, including multiprotocol RF architectures, generative AI NPUs, sensor-rich perception engines, and standards-driven wireless platforms.
• Accelerate deployment of NeuProNano for embedded ML and NeuProM for high-performance generative AI, ADAS, and multimodal workloads.
• Expand roadmap and customer engagements across WiFi 6/7, Bluetooth 6/7, UWB, 5GAdvanced, and non-terrestrial networks.
• Begin commercial licensing of the Ceva-Waves Links new product offering for Bluetooth and Wi-Fi radio technologies in 2026.
• Continue to evaluate the impact of the One Big Beautiful Bill Act (OBBBA) on consolidated financial statements for the year ending December 31, 2026.
• Monitor and manage potential disruptions to Israeli operations due to regional instability and employee reserve duty.
• The 2026 annual meeting of stockholders is anticipated to be held virtually on June 2, 2026.

Key Dates

Recommendation

CEVA's 2025 performance presents a mixed picture. While the company demonstrated strong strategic execution in licensing, particularly in the high-growth AI segment, and achieved record device shipments for Wi-Fi and cellular IoT, the overall royalty revenue declined due to softness in key markets like low-end smartphones. The widening net loss and increased operating expenses are concerns. The successful capital raise significantly bolsters liquidity, providing a buffer for continued R&D investment and strategic expansion. However, the heavy concentration of revenue in China and ongoing geopolitical and macroeconomic uncertainties introduce significant risks. Given the strong long-term potential from its Physical AI strategy and new licensing agreements, balanced against current profitability challenges and external market headwinds, a 'hold' recommendation is appropriate. Investors should monitor the realization of the projected lifetime royalties and the company's ability to improve its net income while navigating competitive and geopolitical landscapes.

Keywords

Physical AI, Edge AI, Semiconductor IP, Wireless Connectivity, AI Processors, NPUs, DSPs, IoT, Automotive, Industrial, Mobile, PC, Bluetooth, Wi-Fi, UWB, 5G, Sensor Fusion, Licensing, Royalties, Intellectual Property