NEW YORK - CEVA, Inc. (NASDAQ: CEVA) reported a notable beat on its fourth-quarter earnings, despite a revenue shortfall, triggering an 18% surge in its stock price. The semiconductor company announced adjusted earnings per share (EPS) of $0.10, surpassing the analyst consensus of $0.06. However, fourth-quarter revenue fell short of expectations at $24.2 million, slightly below the estimated $24.32 million.
The company's revenue for the fourth quarter marked a 20% decline from the $30.3 million reported in the same quarter last year. Licensing and related revenue experienced a significant drop to $11.8 million from $19.4 million the previous year, while royalty revenue saw a 13% increase to $12.3 million, up from $10.9 million in the fourth quarter of 2022.
CEVA's GAAP gross margin improved slightly to 91% in the fourth quarter of 2023, up from 89% in the same period last year. However, the company reported a GAAP operating loss of $2.8 million, in contrast to the operating income of $1.0 million in the fourth quarter of 2022. The GAAP net loss was $8.1 million, a stark difference from the net income of $4.5 million reported for the same period the previous year.
On a non-GAAP basis, the gross margin was slightly better at 92%, compared to 90% in the prior year's quarter. Non-GAAP operating income was $1.9 million, down from $6.8 million in the fourth quarter of 2022. The non-GAAP net income, including the discontinued operation, was $2.4 million, with an adjusted EPS of $0.10, which is a decrease from the non-GAAP net income of $5.6 million and an adjusted EPS of $0.23 in the same quarter last year.
During the quarter, CEVA concluded seventeen IP licensing agreements across various markets, including industrial IoT, consumer devices, and automotive ADAS. This diversification in licensing agreements reflects the company's strategic focus on expanding its market reach.
The stock's significant upward movement indicates investor optimism following the earnings release. The CEO stated, "Our ability to exceed earnings expectations amidst a revenue decline is a testament to our operational efficiency and the strong demand for our diversified portfolio of IP solutions."
Investors will continue to monitor CEVA's performance as it navigates the dynamic semiconductor industry. The company's strategic licensing agreements and focus on operational efficiency are central to its approach in addressing the challenges and opportunities ahead.
InvestingPro Insights
CEVA Inc.'s recent earnings report has highlighted a mix of challenges and achievements for the company. According to InvestingPro data, CEVA holds a market capitalization of $562.17 million, with a notable gross profit margin of 79.09% for the last twelve months as of Q3 2023. This high margin is indicative of the company's strong ability to manage cost of sales relative to its revenue, a positive sign for investors looking at the company's fundamentals. Despite the revenue decline reported in the fourth quarter, CEVA's gross profit margins remain impressive, which is also reflected in one of the InvestingPro Tips.
InvestingPro Tips suggest that CEVA holds more cash than debt on its balance sheet and has liquid assets that exceed short-term obligations. This financial positioning provides the company with a buffer to navigate through market uncertainties and invest in strategic growth initiatives. Additionally, while the company has not been profitable over the last twelve months, analysts predict that CEVA will be profitable this year, which may offer a potential upside for investors.
However, it's important to note that three analysts have revised their earnings downwards for the upcoming period, and a sales decline is anticipated in the current year. These factors may weigh on investor sentiment and should be considered when evaluating the company's outlook. CEVA does not pay a dividend to shareholders, which may influence the investment decisions of income-focused investors.
For those interested in a deeper analysis, InvestingPro offers additional tips and metrics to help investors make more informed decisions. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 7 additional InvestingPro Tips listed on the platform for CEVA, offering a comprehensive view of the company's financial health and potential investment opportunities.
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