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    CEVA
    Earnings call· Jun 2026(Q2 FY26)

    CEVA Q2 FY26 earnings call CEVA

    Aug 10, 2026 Source

    Executive summary

    CEVA Q2 FY26 — Strong Licensing & Diversified Royalty Growth

    CEVA delivered a strong quarter driven by robust licensing activity, particularly from broader platform engagements and a strategic AI deal, alongside a sequential recovery in diversified royalty revenue. The company is well-positioned for long-term growth as intelligence migrates to the edge and customers increasingly adopt complete platform solutions, leading to increased content per design and future royalty opportunities. This momentum has translated into significant non-GAAP profitability expansion and a raised full-year outlook.

    Highlights

    5

    • Revenue increased 13% year-over-year to $29 million.

    • Licensing and related revenue grew 21% year-over-year to $18.2 million, reaching its highest level in three years.

    • Non-GAAP operating income increased to $3.1 million, up from $0.8 million in the prior year, with non-GAAP operating margins expanding to 11% from 3%.

    • Non-GAAP net income increased 28% year-over-year to $2.3 million, and non-GAAP diluted EPS increased to 8 cents from 7 cents.

    • Customer shipments of CEVA-powered devices increased 16% year-over-year to 567 million units.

    Concerns

    5

    • Net financial income was $1 million, below guidance of $1.7 million, primarily due to foreign exchange effects related to Israeli shekel-denominated lease obligations.

    • Income tax expenses were approximately $1.8 million, slightly above guidance.

    • Industrial IoT shipments decreased to 19 million units compared to 24 million units in the prior year.

    • Bluetooth shipments decreased 16% year-over-year to 295 million units.

    • Memory pricing dynamics and broader supply constraints remain important variables for the second half of the year.

    Guidance & targets

    15
    CategoryTargetConfidence
    Full-year 2026 revenue growth
    increase between 13% and 15% over 2025
    high materiality
    High
    Full-year 2026 non-GAAP operating income growth
    increase approximately 70% year over year
    high materiality
    High
    Full-year 2026 non-GAAP net income growth
    increase approximately 50%
    high materiality
    High
    Full-year 2026 total non-operating cost of revenues and operating expenses increase
    approximately 8% on an annual basis over 2025
    medium materiality
    High
    Q3 FY26 Revenue
    $30.5 million to $34.5 million
    high materiality
    High
    Q3 FY26 Gross margin (GAAP)
    approximately 87%
    medium materiality
    High
    Q3 FY26 Gross margin (non-GAAP)
    approximately 88%
    medium materiality
    High
    Q3 FY26 GAAP operating expenses
    between $28.2 and $29.2 million
    medium materiality
    High
    Q3 FY26 Non-GAAP operating expenses
    between $22.5 to $23.5 million
    medium materiality
    High
    Q3 FY26 Net financial income
    approximately $2 million
    low materiality
    High
    Q3 FY26 Income tax expense
    approximately $1.9 million
    low materiality
    High
    Q3 FY26 Weighted average diluted share count (GAAP)
    approximately 28.2 million shares
    low materiality
    High
    Q3 FY26 Weighted average diluted share count (non-GAAP)
    approximately 30 million shares
    low materiality
    High
    Second half 2026 revenue
    stronger than the first
    medium materiality
    High
    Bluetooth HDT royalties
    start towards the end of this year
    medium materiality
    High

    Operational metrics

    28
    Licensing and related revenue
    $18.2 millionup 21% YoY
    Q2 FY26

    Strongest licensing quarters in three years.

    Trailing 12-month licensing and related revenue
    $70 millionincreased 13%
    TTM Q2 FY26
    Royalty revenue
    $10.8 millionup 17% sequentially
    Q2 FY26

    Reflecting continued strength across wireless connectivity, automotive AI, and smartphone share gains.

    Non-GAAP operating margin
    11%up from 3% YoY
    Q2 FY26

    Expanded from 3% a year ago, demonstrating continued operating leverage.

    Non-GAAP operating income
    $3.1 millionincreased from $0.8 million YoY
    Q2 FY26

    Improved significantly on a sequential basis.

    Net financial income
    $1 millioncompared to $2.1 million in Q2 2025
    Q2 FY26

    Below guidance of $1.7 million, primarily due to foreign exchange effects related to Israeli shekel-denominated lease obligations.

    Income tax expenses
    $1.8 millionslightly above guidance
    Q2 FY26

    Reflecting the geographic mix of licensing and royalty revenues recognized.

    Non-GAAP net income
    $2.3 millionincreased 28% YoY
    Q2 FY26

    Doubled sequentially.

    Non-GAAP diluted EPS
    8 centsincreased from 7 cents YoY
    Q2 FY26

    Doubled sequentially.

    CEVA-powered devices shipped
    567 millionincrease of 16% YoY
    Q2 FY26
    Mobile handset modem shipments
    61 millioncompared with 55 million units YoY
    Q2 FY26

    Reflecting improving smartphone royalties driven by stronger market share in entry-level smartphones and continued expansion in the premier tier.

    Consumer IoT shipments
    487 millioncompared to 409 million units YoY
    Q2 FY26
    Industrial IoT shipments
    19 millioncompared to 24 million units YoY
    Q2 FY26

    Despite lower unit volume, industrial royalty revenues increased 7% YoY due to a richer mix of higher value products.

    Bluetooth shipments
    295 milliondecreased 16% YoY
    Q2 FY26
    Cellular IoT shipments
    68 millionup 3% YoY
    Q2 FY26

    Reached another quarterly record.

    Wi-Fi shipments
    80 millionincreased 28% YoY
    Q2 FY26
    Cash and investments balance
    $221 million
    Q2 FY26

    Includes cash, cash equivalents, marketable securities, and cash deposits, providing significant financial flexibility.

    Days sales outstanding
    70 days
    Q2 FY26
    Cash from operating activities
    $5.8 million
    Q2 FY26
    Depreciation and amortization expenses
    $0.8 million
    Q2 FY26
    Capital expenditure
    $0.6 million
    Q2 FY26
    Total employees
    406
    Q2 FY26

    Reflecting continued investment in innovation while maintaining disciplined expense management.

    Non-GAAP operating expenses
    $22.5 millionat the low end of guidance
    Q2 FY26
    GAAP operating expenses
    $27.5 millionbelow the low end of guidance
    Q2 FY26
    GAAP operating loss
    $2.1 millionimproved from $4.5 million in Q2 2025
    Q2 FY26
    GAAP net loss
    $2.9 millioncompared with $3.7 million in Q2 2025
    Q2 FY26
    GAAP diluted EPS
    10 centscompared with 15 cents in Q2 2025
    Q2 FY26
    AI revenue share
    about 20%
    FY25

    AI is a significant part of CEVA's revenue, and this trend continues in H1 FY26.

    Industry KPIs

    3
    MetricValueDetails
    Ai data center revenueabout 20%%
    Design wins socket pipelinefew dozens of different design winswins
    End market segment revenue mixWireless connectivity particularly strong with healthy year-over-year growth in both Wi-Fi and Bluetooth shipments; cellular IoT shipments reached another quarterly record; automotive AI programs ramping; share gains in smartphones.

    Product announcements

    1
    ProductTypeDetails
    Microsoft certified Real Space Elevate embedded application softwarelaunch

    Deals & partnerships

    3
    leading global AI and computing platform companySelected CEVA's 4M NPUIP for its next-generation custom AI silicon.

    CEVA announced a strategically significant AI licensing agreement where a leading global AI and computing platform company selected CEVA's 4M NPUIP for its next-generation custom AI silicon. This customer develops both hardware and operating systems, enabling deeper collaboration and optimization of the AI software stack for its models, applications, and workloads. This agreement reflects a trend of companies leveraging proven AI IP to reduce development risk and accelerate time to market, rather than developing every component internally. The expertise gained will strengthen CEVA's hardware and software roadmaps for future customers. Production is expected in 1.5 to 2 years from engagement start. This deal was one of 10 licensing agreements signed in the quarter, including two with first-time customers and two directly with OEMs. This deal is expected to drive significantly higher royalty per unit than typical NPU offerings due to the level of integration and customization. Management sees this as a tailwind for CEVA's NPU business, especially in the US and Western markets, following the AHRQ acquisition by GlobalFoundries. AI revenue is about 20% of total revenue and continues to be a significant part of the business. This deal is expected to contribute to the overall licensing and related revenue growth, which is already stronger than expected in the first half of the year. The company has a strong pipeline for these types of deals and believes it has achieved a step function with adding AI.

    high-volume US Semiconductor companyAdopted a complete chip built on CEVA's Wi-Fi 6 and Bluetooth Low Energy IP.

    A high-volume US Semiconductor company chose to adopt a complete chip built on CEVA's Wi-Fi 6 and Bluetooth Low Energy IP, originally developed in partnership with another CEVA customer. This decision reflects a preference for production-proven, complete solutions over internal development or licensing individual component IP. This type of engagement expands both the scope and value of CEVA's relationship, increasing content per design, deepening integration, and creating larger, longer-term customer relationships with increased royalty opportunities.

    another US customerExpanded relationship by adapting CEVA's complete baseband processing subsystem.

    Another US customer expanded a relationship that began with a single baseband component by adapting CEVA's complete baseband processing subsystem. This demonstrates the trend of customers leveraging proven subsystem IP to reduce engineering effort, execution risk, and accelerate time to market. This specific subsystem is a WAN or wireless access subsystem with complete satellite configuration, excluding the RF component. This type of engagement expands both the scope and value of CEVA's relationship, increasing content per design, deepening integration, and creating larger, longer-term customer relationships with increased royalty opportunities.

    Risks & headwinds

    5
    Foreign exchange effects on Israeli shekel-denominated lease obligationsQ2 FY26

    Net financial income was $1 million, below guidance of $1.7 million

    Income tax expenses slightly above guidanceQ2 FY26

    $1.8 million

    Memory pricing dynamics and broader supply constraintsSecond half 2026

    Remain important in the script variables

    Mitigation: Management expects continued seasonality expansion despite challenges, particularly for low-end smartphones which need less memory than high-end devices.

    Lower Industrial IoT unit volumeQ2 FY26

    19 million units compared to 24 million units YoY

    Mitigation: Offset by a richer mix of higher value products, leading to a 7% YoY increase in industrial royalty revenues.

    Bluetooth shipments decreaseQ2 FY26

    Decreased 16% YoY to 295 million units

    Mitigation: Overall wireless connectivity remains strong, with Wi-Fi and Cellular IoT showing growth.

    What to watch in Q3 FY26

    5

    Full-year revenue growth

    FY26
    Current12% growth (previous expectation)
    Target13% to 15% over 2025

    Why it matters

    Indicates overall business momentum and market demand, reflecting the impact of strong licensing and royalty trends.

    We now expect 2026 revenue to increase between 13 and 15 percent over 2025, compared with our previous expectation of 12 percent growth that we shared at the end of the first quarter.

    Q&A highlights

    6

    Is the trend of large companies bringing wireless design in-house and seeking integrated solutions a long-term trend, and what does it mean for CEVA?

    Management confirmed this is a positive long-term trend. It leads to meaningfully higher licensing and future royalty per unit, stronger customer stickiness, and makes it easier for customers to choose CEVA's IP over internal development. It also creates opportunities for new licensing deals with technology enhancements.

    “Yes, that's definitely a very positive trend. It actually brings three additional values for us. One, on the agreement itself, the licensing agreement, what we see both the licensing as well as the future royalty is meaningfully higher than just setting the component IP.”

    asked by Kevin Cassidy · answered by Amir Panoush

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic AI Licensing Agreement

    CEVA secured a strategically significant AI licensing agreement with a leading global AI and computing platform company for its 4M NPUIP. This deal marks a new category of AI customers for CEVA, moving beyond semiconductor companies and device OEMs. The collaboration involves optimizing both the NPU hardware and the AI software stack, providing valuable expertise that will enhance CEVA's hardware and software roadmaps for future offerings. This reflects an industry trend where large engineering organizations leverage proven AI IP to accelerate time to market and focus internal resources on differentiation.

    02

    Shift to Platform Solutions

    The company is observing a growing trend of customers adopting complete platform solutions rather than individual IP blocks. This was demonstrated by a high-volume US semiconductor company choosing a full chip built on CEVA's Wi-Fi 6 and Bluetooth Low Energy IP, and another US customer expanding its relationship to a complete baseband processing subsystem. This approach reduces engineering effort and execution risk for customers, while for CEVA, it expands the scope and value of engagements, increases content per design, deepens integration, and enhances long-term royalty opportunities.

    03

    Diversified Royalty Business Growth

    Royalty revenue increased sequentially and year-over-year, driven by continuous momentum across wireless connectivity, ramping automotive AI programs, and market share gains in smartphones. Wireless connectivity, including Wi-Fi and cellular IoT, showed healthy year-over-year growth, with cellular IoT reaching a record 68 million units. Despite a decrease in Industrial IoT unit volumes, royalty revenues from this segment increased 7% year-over-year due to a richer mix of higher-value products, including automotive AI and wireless infrastructure.

    04

    Operating Leverage and Profitability Expansion

    CEVA demonstrated significant operating leverage, with non-GAAP operating income increasing to $3.1 million (11% margin) from $0.8 million (3% margin) in the prior year. This improvement was driven by stronger revenue growth and disciplined expense management, including maintaining non-GAAP operating expenses at the low end of guidance. This strong performance led to a raised full-year outlook for non-GAAP operating income growth of approximately 70% and non-GAAP net income growth of approximately 50%.

    05

    Smartphone Market Dynamics and Outlook

    The company reported improving smartphone royalties, stemming from stronger market share in entry-level smartphones and continued expansion in the premier tier. Unisoc, a key Chinese customer, is transitioning to 5G and securing numerous design wins with brands like Vivo and Xiaomi, which is expected to benefit CEVA through higher average selling prices (ASPs) and increased volume. Management anticipates continued seasonal expansion in the second half, despite ongoing memory allocation challenges in the mobile market.

    AI-generated summary of the company’s earnings call. Not investment advice.