CEVA (CEVA) Q3 2025 earnings summary

Executive summary

• Q3 2025 revenue reached $28.4 million, up 4% year-over-year and 11% sequentially, exceeding expectations for both revenue and non-GAAP EPS.

• AI processor licensing contributed about one-third of licensing revenue for the second consecutive quarter, marking a significant shift in the business mix.

• Major design wins included a multi-year NeuPro NPU portfolio deal with Microchip and three AI DSP agreements across consumer electronics and automotive.

• Record wireless IoT shipments, especially in Wi-Fi and cellular IoT, reinforced leadership in wireless IP.

• Signed twelve IP licensing agreements in Q3, including with a first-time customer and a major global consumer OEM.

Financial highlights

• Licensing and related revenue was $16.0 million (56% of total), up 3% year-over-year and 7% sequentially.

• Royalty revenue was $12.4 million (44% of total), up 6% year-over-year and 16% sequentially.

• Gross margin improved to 88% GAAP and 89% non-GAAP, up from 85% and 87% a year ago.

• Non-GAAP operating income was $3.1 million, up 48% year-over-year; non-GAAP net income was $2.7 million.

• GAAP net loss was $2.5 million, with diluted loss per share of $0.10.

• Licensees shipped 579 million units, up 19% sequentially and 11% year-over-year, with record highs in IoT, cellular IoT, and Wi-Fi shipments.

Outlook and guidance

• Full-year revenue guidance maintained, aligned with Street estimates; Q4 revenue expected between $29–$33 million, with gross margin stable at Q3 levels (88% GAAP, 89% non-GAAP).

• Q4 GAAP OpEx projected at $27–$28 million; non-GAAP OpEx at $22–$23 million.

• Maintains a cautious outlook for 2025 due to macroeconomic uncertainty and lower-than-expected Q1 revenues.

• Continued seasonal royalty momentum expected, driven by smartphone, Wi-Fi, and cellular IoT growth.

• Multi-year AI processor licensing agreements provide good visibility into future revenue streams.