CEVA(CEVA) - 2024 Q4 - Annual Report

Market Position and Growth - Company commands 67% of the wireless connectivity market share based on IP design revenues in 2023, with a total addressable market projected to reach $5 billion by 2027[192]. - In 2024, approximately 2 billion smart edge products shipped with the company's IP, contributing to a total of over 19 billion since 2003[192]. - Company achieved year-over-year revenue growth of 10% in 2024, exceeding the initial expectation of 4% to 8%[201]. - Licensing and related revenues are expected to expand into new markets and use cases for industrial IoT and consumer IoT devices in 2025, with overall revenue growth projected at 7%-11%[201]. - The company anticipates significant market share expansion in wireless communication IP due to a long-term licensing agreement with a leading U.S. OEM for a 5G modem[196]. - The addressable market for Bluetooth, Wi-Fi, UWB, and cellular IoT is expected to exceed 16.5 billion devices annually by 2029[197]. - The NeuPro-Nano family of AI NPUs is projected to power over 50% of TinyML shipments by 2030, representing billions of devices annually[202]. Revenue and Financial Performance - Total revenue for 2024 was reported at$ 106.9 million, a 10% increase compared to 2023[232]. - Royalty revenues grew by 18% year-over-year, with a record shipment of 2 billion Ceva-powered units in 2024[233]. - Licensing and related revenue for 2024 was $60.0 million, a 4% increase from 2023, with 43 licensing agreements signed, down from 53 in the previous year[237]. - Royalty revenues increased to$ 46.9 million in 2024, reflecting a 17.8% year-over-year growth, with a record shipment of 2 billion Ceva-powered units[240][241]. - The five largest royalty-paying customers contributed 61% of total royalty revenues in 2024, compared to 58% in 2023[243]. Cost and Expenses - The cost of revenues as a percentage of total revenues decreased from 12.5% in 2022 to 11.9% in 2024, resulting in a gross profit margin increase from 87.5% to 88.1%[230]. - Research and development expenses increased significantly to 67.0% of total revenues in 2024, up from 58.3% in 2022[230]. - Total operating expenses for 2024 were $101.7 million, a 2.5% increase from 2023, primarily due to higher allowances for credit losses[251]. - Sales and marketing expenses increased to$ 12.6 million in 2024, a 14.3% rise from 2023, driven by higher commission and salary expenses[256][257]. - General and administrative expenses for 2024 increased to $16.9 million, reflecting a year-on-year change of 13.2% compared to 2023[258]. Cash Flow and Investments - Cash provided by operating activities in 2024 was$ 3.5 million, consisting of a net loss of $8.8 million and adjustments for non-cash items of$ 20.0 million[282]. - Net cash used in investing activities in 2024 was $2.4 million, compared to net cash provided of$ 10.8 million in 2023 and net cash used of $15.1 million in 2022[286]. - The company invested$ 48.9 million in cash in bank deposits and marketable securities during 2024, compared to $42.0 million in 2023[280]. - The company believes its cash and cash equivalents, along with cash from operations, will be sufficient to fund operations for at least the next 12 months[290]. Market and Credit Risks - The company is primarily exposed to fluctuations in U.S. interest rates, which may impact fixed interest investments negatively if rates rise[300]. - The company monitors cash and cash equivalent balances systematically and adjusts as appropriate to mitigate credit risk[297]. - No credit loss was recognized during 2024 despite unrealized losses in the investment portfolio[298]. - The company holds corporate bonds and has the ability to hold these investments until recovery of temporary declines in market value[298]. Miscellaneous - The "Connect" technology segment accounted for 84% of total revenues in 2024, up from 78% in 2022[236]. - The company derived 15% of total revenues from UNISOC in 2024, indicating a concentration of revenue from a limited number of customers[234]. - The allowance for credit losses increased to$ 2,626 million in 2024 from $288 million in 2023, reflecting specific credit loss provisions[225]. - The company recorded tax expenses of$ 6.0 million in 2024, down from $10.2 million in 2023 and$ 18.1 million in 2022[266].