CEVA(CEVA) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q4 2024 increased by 21% to $29.2 million compared to$ 24.2 million in Q4 2023 [35] - Licensing and related revenue rose by 33% to $15.7 million, accounting for 54% of total revenues [36] - Royalty revenue increased by 9% to$ 13.5 million, representing 46% of total revenues [36] - Non-GAAP operating income for Q4 was $4.5 million, with non-GAAP operating margins at 15% [39] - GAAP net loss for Q4 was$ 1.7 million, a significant improvement from a net loss of $8.1 million in Q4 2023 [39] Business Line Data and Key Metrics Changes - Licensing agreements signed in 2024 totaled 43, with 11 deals involving OEMs integrating CEVA's IPs into their products [21] - Royalty shipments reached 623 million units in Q4, marking a 38% increase year-over-year [40] - Wi-Fi shipments grew by 110% year-over-year, while Bluetooth shipments increased by 41% [18][41] - Annual royalties grew by 18%, with total unit shipments reaching 2 billion, a 22% increase year-over-year [22][42] Market Data and Key Metrics Changes - Consumer IoT accounted for 53% of annual royalties, followed by mobile at 32% and industrial IoT at 16% [23] - Smartphone shipments increased by 27% year-over-year, driven by demand for low-end 4G and 5G smartphones [19] - The market for Wi-Fi connectivity is expected to grow significantly, with CEVA's technology being integrated into various IoT applications [12] Company Strategy and Development Direction - CEVA's growth strategy focuses on partnering with customers to address critical technology challenges through a comprehensive IP portfolio [8] - The company aims to maintain leadership in wireless connectivity while expanding its AI product offerings [9] - CEVA is positioned to benefit from the AI super-cycle, with a focus on enabling AI inference processing at the edge [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing shift from cloud-based AI processing to edge devices, which is expected to drive demand for CEVA's technologies [31] - The company anticipates continued growth in Wi-Fi, Bluetooth, and cellular IoT shipments, supported by new licensing agreements [24] - For 2025, CEVA projects revenue growth of 7% to 11%, with a stronger second half of the year [48] Other Important Information - CEVA achieved an all-time high in royalty shipments, surpassing 600 million units for the first time in a single quarter [18] - The company repurchased approximately 375,000 shares for about$ 8.5 million in 2024 [45] - CEVA's cash and cash equivalents were approximately $164 million as of December 31, 2024 [44] Q&A Session Summary Question: Opportunities for MPU integration in MCUs - Management confirmed that there is a growing trend for MCU players to integrate AI capabilities alongside wireless technology [56] Question: Details on U.S. mobile OEM's 5G modem royalty revenues - Management indicated that the timing and ramp-up of royalty revenues depend on the customer, and they are excited about the opportunity [59] Question: Impact of AI developments in China on CEVA's opportunities - Management noted that innovations in AI, including smaller models, are expected to enhance the demand for edge devices [66] Question: Growth expectations for Wi-Fi penetration - Management expects significant growth in Wi-Fi as customers transition to Wi-Fi 6, with strong demand across various IoT markets [72] Question: Relative growth rates of cell phone modem revenue versus Wi-Fi - Management stated that while they are optimistic about growth across all product lines, specific growth rates are difficult to predict [84] Question: Customization in new licensing deals - Management clarified that current licensing deals do not involve customization, focusing on off-the-shelf technology [99] Question: NeuPro solution deals in the quarter - Management confirmed that there were two deals related to AI applications involving NeuPro and DSP technologies [102]