CEVA Inc. (CEVA, Financial) filed Quarterly Report for the period ended 2010-06-30.
Ceva Inc. has a market cap of $268.33 million; its shares were traded at around $12.79 with a P/E ratio of 35.53 and P/S ratio of 6.98. CEVA is in the portfolios of John Buckingham of Al Frank Asset Management, Inc., Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Total revenues were $10.6 and $21.2 million for the second quarter and first half of 2010, respectively, representing an increase of 16% and 14%, respectively, as compared to the corresponding periods in 2009. The increase in total revenues reflected significantly higher royalty revenues, as well as higher licensing revenues from our different product lines, offset by lower revenues from the provision of technical support to customers. Five largest customers accounted for 59% and 63% of total revenues for the second quarter and first half of 2010, respectively, as compared to 54% and 52% for the comparable periods in 2009. Two customers accounted for 17% and 15% of total revenues for the second quarter of 2010, as compared to two different customers that accounted for 14% and 18% of total revenues for the second quarter of 2009. Two customers accounted for 18% and 24% of total revenues for the first half of 2010, as compared to two different customers that accounted for 16% and 11% of total revenues for the first half of 2009. Because of the nature of our license agreements and the associated large initial payments due, the identity of major customers generally varies from quarter to quarter and we do not believe that we are materially dependent on any one specific customer or any specific small number of licensees. Our total revenues derived from the handsets market represented 70% and 69% of our total revenues for the second quarter and first half of 2010, respectively, as compared to 59% and 52% for the comparable periods of 2009.
Royalty revenues were $5.2 and $10.1 million for the second quarter and first half of 2010, respectively, an increase of 30% and 31% from the second quarter and first half of 2009. Royalty revenues accounted for 49% and 48% of our total revenues for the second quarter and first half of 2010, respectively, compared to 43% and 42% for the comparable periods of 2009. Royalty revenues for the second quarter and first half of 2010 included $0.4 million of catch-up royalties on past shipments, resulting from two existing customers in the consumer space. Royalty revenues for the second quarter and first half of 2009 included $0.9 million of royalties resulting from catch up royalties on past shipments from another existing customer. Excluding the catch up royalties, the increase in royalty revenues for the second quarter and first half of 2010 reflected our market share expansion in the handsets market, offset by a decrease in the average royalty rate per unit as a result of a change in product mix due to higher shipments of 2G/EDGE phones as compare to high end smartphones. Our per unit and prepaid royalty customers reported sales of 126 and 247 million chipsets incorporating our technology for the second quarter and first half of 2010, respectively, compared to 65 and 124 million for the comparable periods of 2009. The five largest customers paying per unit royalty accounted for 77% and 80% of our total royalty revenues for the second quarter and first half of 2010, respectively, compared to 83% and 69% for the comparable periods of 2009.
Other revenues were $0.9 and $1.8 million for the second quarter and first half of 2010, respectively, a decrease of 3% and 16% from the second quarter and first half of 2009, respectively. The decrease in other revenues for the second quarter and first half of 2010, as compared to the corresponding periods of 2009, reflected principally lower support-related revenues, mainly associated with our customers tighter expense controls and refraining from extending or renewing support-related agreements. Other revenues accounted for 8% of our total revenues for both the second quarter and first half of 2010, compared to 10% and 11% for the comparable periods of 2009. Other revenues include support and training for licensees and sale of development systems.
Cost of revenues were $0.9 and $1.6 million for the second quarter and first half of 2010, respectively, compared to $1.2 and $2.4 million for the comparable periods of 2009. Cost of revenues accounted for 8% and 7% of our total revenues for the second quarter and first half of 2010, respectively, compared to 13% for both the comparable periods of 2009. The decrease for the second quarter of 2010 principally reflected lower customization work for our licensees and lower royalty payback expenses paid to the Office of Chief Scientist of Israel. The decrease for the first half of 2010 principally reflected lower customization work for our licensees, lower salary and related costs and lower royalty payback expenses paid to the Office of Chief Scientist of Israel. Royalty payback expenses amounted to 3%-3.5% of the actual sales of certain of our products, the development of which previously received grants from the Office of Chief Scientist of Israel. Included in cost of revenues for the second quarter and first half of 2010 was a non-cash equity-based compensation expense of $15,000 and $33,000, respectively, compared to $34,000 and $69,000 for the comparable periods of 2009.
Our research and development expenses were $4.5 and $9.1 million for the second quarter and first half of 2010, respectively, compared to $4.0 and $8.1 million for the comparable periods of 2009. The net increase for both the second quarter and first half of 2010 principally reflected higher salary and related costs, partially as a result of a higher number of research and development personnel hired to leverage opportunities in the LTE and HD video markets, as well as lower research grants received from the Office of Chief Scientist of Israel, partially offset by a decrease in project-related expenses and lower non-cash equity-based compensation expenses. Included in research and development expenses for the second quarter and first half of 2010 were a non-cash equity-based compensation expenses of $139,000 and $306,000, respectively, compared to $230,000 and $492,000 for the comparable periods of 2009. Research and development expenses as a percentage of our total revenues were 42% and 43% for the second quarter and first half of 2010, respectively, compared to 44% and 43% for the comparable periods of 2009.
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Ceva Inc. has a market cap of $268.33 million; its shares were traded at around $12.79 with a P/E ratio of 35.53 and P/S ratio of 6.98. CEVA is in the portfolios of John Buckingham of Al Frank Asset Management, Inc., Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
During the past three years, our business has shown profitability growth and market share expansion as a result of the widespread deployment of our DSP cores with all major handset OEMs LG Electronics, Motorola, Nokia, Samsung, and Sony Ericsson and many others, including a major U.S.-based smartphone manufacturer. This positive trend is evident from our royalty revenues which increased by 13% in 2009 from 2008 and increased 78% when comparing 2009 to 2007. Based on internal data and iSupply worldwide shipment data, CEVAs worldwide market share of baseband chips for handsets that incorporate our technologies reached approximately 29% of the worldwide handsets volume based on first quarter 2010 worldwide shipments. Revenues derived from the handsets market accounted for approximately 58% and 57% of our total annual royalty revenues and total annual revenues, respectively, for 2009. We believe the full scale migration to our DSP cores and technologies in the handsets market has not been fully realized and continues to progress. Also, we are optimistic about adoption of our technologies for new categories of products, such as data cards, USB dongles, smart metering, tablets, netbooks, and eReaders. The announcements by Texas Instruments and Freescale of their intent to exit the baseband market, after historically having been large players in this market, is a strong positive driver for our future market share expansion.Total revenues were $10.6 and $21.2 million for the second quarter and first half of 2010, respectively, representing an increase of 16% and 14%, respectively, as compared to the corresponding periods in 2009. The increase in total revenues reflected significantly higher royalty revenues, as well as higher licensing revenues from our different product lines, offset by lower revenues from the provision of technical support to customers. Five largest customers accounted for 59% and 63% of total revenues for the second quarter and first half of 2010, respectively, as compared to 54% and 52% for the comparable periods in 2009. Two customers accounted for 17% and 15% of total revenues for the second quarter of 2010, as compared to two different customers that accounted for 14% and 18% of total revenues for the second quarter of 2009. Two customers accounted for 18% and 24% of total revenues for the first half of 2010, as compared to two different customers that accounted for 16% and 11% of total revenues for the first half of 2009. Because of the nature of our license agreements and the associated large initial payments due, the identity of major customers generally varies from quarter to quarter and we do not believe that we are materially dependent on any one specific customer or any specific small number of licensees. Our total revenues derived from the handsets market represented 70% and 69% of our total revenues for the second quarter and first half of 2010, respectively, as compared to 59% and 52% for the comparable periods of 2009.
Royalty revenues were $5.2 and $10.1 million for the second quarter and first half of 2010, respectively, an increase of 30% and 31% from the second quarter and first half of 2009. Royalty revenues accounted for 49% and 48% of our total revenues for the second quarter and first half of 2010, respectively, compared to 43% and 42% for the comparable periods of 2009. Royalty revenues for the second quarter and first half of 2010 included $0.4 million of catch-up royalties on past shipments, resulting from two existing customers in the consumer space. Royalty revenues for the second quarter and first half of 2009 included $0.9 million of royalties resulting from catch up royalties on past shipments from another existing customer. Excluding the catch up royalties, the increase in royalty revenues for the second quarter and first half of 2010 reflected our market share expansion in the handsets market, offset by a decrease in the average royalty rate per unit as a result of a change in product mix due to higher shipments of 2G/EDGE phones as compare to high end smartphones. Our per unit and prepaid royalty customers reported sales of 126 and 247 million chipsets incorporating our technology for the second quarter and first half of 2010, respectively, compared to 65 and 124 million for the comparable periods of 2009. The five largest customers paying per unit royalty accounted for 77% and 80% of our total royalty revenues for the second quarter and first half of 2010, respectively, compared to 83% and 69% for the comparable periods of 2009.
Other revenues were $0.9 and $1.8 million for the second quarter and first half of 2010, respectively, a decrease of 3% and 16% from the second quarter and first half of 2009, respectively. The decrease in other revenues for the second quarter and first half of 2010, as compared to the corresponding periods of 2009, reflected principally lower support-related revenues, mainly associated with our customers tighter expense controls and refraining from extending or renewing support-related agreements. Other revenues accounted for 8% of our total revenues for both the second quarter and first half of 2010, compared to 10% and 11% for the comparable periods of 2009. Other revenues include support and training for licensees and sale of development systems.
Cost of revenues were $0.9 and $1.6 million for the second quarter and first half of 2010, respectively, compared to $1.2 and $2.4 million for the comparable periods of 2009. Cost of revenues accounted for 8% and 7% of our total revenues for the second quarter and first half of 2010, respectively, compared to 13% for both the comparable periods of 2009. The decrease for the second quarter of 2010 principally reflected lower customization work for our licensees and lower royalty payback expenses paid to the Office of Chief Scientist of Israel. The decrease for the first half of 2010 principally reflected lower customization work for our licensees, lower salary and related costs and lower royalty payback expenses paid to the Office of Chief Scientist of Israel. Royalty payback expenses amounted to 3%-3.5% of the actual sales of certain of our products, the development of which previously received grants from the Office of Chief Scientist of Israel. Included in cost of revenues for the second quarter and first half of 2010 was a non-cash equity-based compensation expense of $15,000 and $33,000, respectively, compared to $34,000 and $69,000 for the comparable periods of 2009.
Our research and development expenses were $4.5 and $9.1 million for the second quarter and first half of 2010, respectively, compared to $4.0 and $8.1 million for the comparable periods of 2009. The net increase for both the second quarter and first half of 2010 principally reflected higher salary and related costs, partially as a result of a higher number of research and development personnel hired to leverage opportunities in the LTE and HD video markets, as well as lower research grants received from the Office of Chief Scientist of Israel, partially offset by a decrease in project-related expenses and lower non-cash equity-based compensation expenses. Included in research and development expenses for the second quarter and first half of 2010 were a non-cash equity-based compensation expenses of $139,000 and $306,000, respectively, compared to $230,000 and $492,000 for the comparable periods of 2009. Research and development expenses as a percentage of our total revenues were 42% and 43% for the second quarter and first half of 2010, respectively, compared to 44% and 43% for the comparable periods of 2009.
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