CEVA's CEO Discusses Q1 2012 Results - Earnings Call Transcript

CEVA, Inc (CEVA)

Q1 2012 Earnings Conference Call

May 2, 2012 08:30 AM ET

Executives

Gideon Wertheizer – Chief Executive Officer

Yaniv Arieli – Chief Financial Officer

Richard Kingston – Director, Marketing and IR

Analysts

Gary Mobley - The Benchmark Company

Suji De Silva - ThinkEquity

Jay Srivatsa - Chardan Capital Markets

Anil Doradla - William Blair & Company

Joseph Wolf - Barclays Capital

Daniel Meron – RBC Capital Markets

Matthew Robinson - Wunderlich Securities, Inc

Daniel Gelbtuch - Cantor Fitzgerald

Presentation

Operator

Good morning and welcome to the CEVA Inc First Quarter 2012 Earnings Conference call. All participants will be in listen-only mode. (Operator Instructions) After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded.

I’d now like to turn the conference over to Richard Kingston. Please go ahead.

Richard Kingston

Thank you and good morning everyone. Welcome to CEVA’s first quarter 2012 earnings conference call. I’m joined today by Gideon Wertheizer, Chief Executive Officer of CEVA and Yaniv Arieli, Chief Financial Officer of CEVA. Gideon will cover the business aspects and the highlights from the quarter and Yaniv will then cover the financial results for the first quarter of 2012 and will provide financial guidance for the second quarter and fiscal 2012.

I’ll start with the forward-looking statements.

Today’s conference call contains forward-looking statements that involve risks and uncertainties, as well as assumptions that if they materialize or prove incorrect, could cause the results of CEVA to differ materially from those expressed or implied by such forward-looking statements and assumptions.

Forward-looking statements include financial guidance for the second quarter and full year of 2012, market data from Wireless Intelligence, Strategy Analytics, and Informa Telecom incorporated herein; optimism about our ability to expand our addressable licensing markets, strength of the 3G and LTE markets, recovery and stability of the 2G markets and our ability to capitalize on the trends; predictions that Nokia and the impact on our business as well as our projection of the number of CEVA powered devices in the future.

The risks, uncertainties and assumptions include the ability of the CEVA DSP cores and other technologies to continue to be strong growth drivers for our success in penetrating new markets and maintaining our market position in existing markets, the ability of products incorporating our technologies to achieve market acceptance, the ability of intense industry competition and consolidation, global chip market trends; the possibility that our markets for our technologies may not develop as expected or that products incorporating our technologies do not achieve market acceptance, our ability to timely and successfully develop and introduce new technologies, and general market conditions and other risks relating to our business including, but not limited to those that are described from time to time in our SEC filings. CEVA assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

With that said, I’d now like to turn the call over to Gideon.

Gideon Wertheizer

Thank you, Richard and welcome everyone. We’re pleased with our solid start to the year, which was driven by strong licensing revenues. Total revenue for the first quarter was $15.1 million, in the high-end of our guidance range and flat compared to the first quarter of 2011.

While we experience some expected toughness in the Royalty growth, which were discussed during the fourth quarter earnings call. These were partially offset by better than expected licensing revenues of $5.1 million, resulting from important agreement with key and existing – key new and existing customers.

Royalty revenue was $9.1 million which is in line with the first quarter of 2011. Yaniv, will further elaborate on our financial achievement, including our recent share buyback activities and we will also provide you with our second quarter 2012 guidance and revised annual 2012 guidance. Based on a few trends which I will elaborate on shortly, we’re taking a cautious approach at this time and revising downward our annual 2012 guidance.

During the first quarter we concluded eight new license agreements. Six of the agreements were for our CEVA DSP cores, platforms and software, and two for our SATA/SAS technologies. Geographically three of the license agreements were in the U.S., four were in Asia and one was in Europe. A new DSP agreement with both new and existing customers addressing smartphone opportunities in all of this market key growth segment, from local smart market 3G handset to the premium LTE phones.

The targeted peers of our DSP within smartphone extend beyond baseband into advanced voice and audio processing that has become distinctive and differentiating features recently. These clearly illustrate the strength of our diversified product portfolio, enabling us to generate solid licensing revenues and future royalty stream from incremental DSP socket.

On this point, I’d like to elaborate on the key dynamics for our diversified product strategy. Although the last year yields we have gradually extended our product offering and customer base, both with regard to our core cellular baseband product and new multimedia offerings, a relatively untapped segment for us. Our broad product portfolio for cellular baseband includes DSP cores suitable for every flavor of the market.

Our TeakLite-III DSP is now been declared for baseband processing by all of our key customers targeting mass market 3G smartphone were cost and power consumption are the key metrics. In these respect two of the licensing agreement signed during the first quarter of 2012 were for the TeakLite-III DSP, including a multi-use agreement for high volume WCDMA and TD-SCDMA handset for emerging economy.

Read the rest of this transcript for free on seekingalpha.com

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