CEVA(CEVA) - 2023 Q2 - Quarterly Report

Revenue Performance - Total revenues for Q2 2023 were $26.2 million, a decrease of 21$54.9 million for the first half of 2023, down 19% year-over-year [142]. - Licensing, NRE, and related revenues were $16.8 million for Q2 2023, a 24$37.5 million for the first half of 2023, down 16% year-over-year [145]. - Royalty revenues were $9.4 million for Q2 2023, a 15$17.4 million for the first half of 2023, down 25% year-over-year [146]. - Total revenues for the first half of 2023 were $39.7 million, a decrease from$50.0 million in the first half of 2022, reflecting a 20% decline [150]. - The five largest customers accounted for 43% of total revenues in Q2 2023, up from 36% in Q2 2022, indicating increased customer concentration [143]. Product and Market Insights - Connectivity products represented 77% of total revenues for the first half of 2023, compared to 74% in the same period of 2022 [145]. - CEVA shipped 1.7 billion devices in 2022, averaging over 50 devices per second, showcasing strong market presence [128]. - The addressable market for Bluetooth, Wi-Fi, UWB, and cellular IoT is projected to exceed 15 billion devices annually by 2027 [136]. - CEVA's technologies have been incorporated into over 16 billion chips shipped to date, highlighting the extensive reach of its product offerings [128]. Financial Metrics - CEVA's royalty revenues accounted for 36% of total revenues in Q2 2023, slightly up from 33% in Q2 2022, indicating a stable revenue stream [146]. - Cost of revenues for the second quarter of 2023 was $5.6 million, accounting for 21$6.8 million and 21% in the second quarter of 2022 [151]. - Gross margin for the first half of 2023 remained stable at 80%, consistent with the same period in 2022 [152]. - Research and development expenses for the first half of 2023 were $40.4 million, representing 74$26.9 million, slightly higher than $26.6 million in the second quarter of 2022 [153]. Cash Flow and Investments - Financial income, net, for the first half of 2023 was$2.58 million, significantly higher than $0.69 million in the first half of 2022 [159]. - The company recorded a foreign exchange gain of$0.36 million for the first half of 2023, compared to a loss of $0.26 million in the first half of 2022 [160]. - General and administrative expenses for the first half of 2023 were$8.2 million, up from $7.3 million in the first half of 2022, with a percentage of total revenues increasing from 11$135.6 million in cash, cash equivalents, short-term bank deposits, and marketable securities, a decrease from $147.7 million at December 31, 2022 [172]. - Cash used in operating activities for the first six months of 2023 was$9.9 million, consisting of a net loss of $10.7 million and adjustments for non-cash items of$10.7 million [176]. - The company invested $2.5 million in marketable securities during the first half of 2023, while cash inflow from marketable securities amounted to$21.7 million [174]. - Net cash provided by investing activities for the first six months of 2023 was $14.4 million, compared to a net cash outflow of$12.3 million for the same period in 2022 [179]. - The company had a cash outflow of $3.6 million for the acquisition of the VisiSonics business during the first half of 2023 [179]. - Interest income and gains from marketable securities for the second quarter of 2023 were$1.03 million, up from $0.58 million in the same period of 2022 [189]. - The unrealized losses associated with the company's investments were approximately$6.0 million as of June 30, 2023, due to changes in the interest rate environment [188]. - The company received $1.7 million from the exercise of stock-based awards during the first six months of 2023, consistent with the same period in 2022 [181]. - As of June 30, 2023, the company had 278,799 shares available for repurchase under its share repurchase program [180]. - The company expects its cash and cash equivalents, along with cash from operations, to be sufficient to fund operations for at least the next 12 months [181]. Workforce and Taxation - The number of research and development personnel increased to 339 as of June 30, 2023, from 333 a year earlier [155]. - The company is applying the Technological Preferred Enterprise tax track for its Israeli subsidiary, which is taxed at a rate of 12% on profits from intellectual property [168].