Thanks for the quick reply. I, too, am interested in what others may find or may already know about this small company.
I looked back at their revenues and earnings going back to 2012, and you are right, this was going nowhere. 2012 was a fairly strong year posting earnings of 78 cents. Then revenue stagnated and earnings were depressed essentially until last quarter.
Obviously, this is by nature a very risky stock based on its market cap. Anyway, time to actually read through the articles you sent and the earnings.
The big question in my mind is what makes them think they can compete with the big boys in these big plays.
Their guidance for next quarter is Revenue $15M to $16M and non-GAAP EPS of $0.16 to $0.18.
When I read they expect profits to double, that was based on last year’s EPS of $0.08 during the fourth quarter and not sequentially.
I originally assumed it was sequentially which was a mistake. So, the 44 cents I estimated for next quarter is a far cry from management’s actual estimate!!!
Sorry for anyone who was mislead by my earlier post.
CEVA is supplier to chip companies. So companies like AMBA, SWKS, QCOM are either their customers or play complimentary role to them.
CEVA doesn’t compete with these semiconductor manes we follow on this board.
Agree, they have done admirable job expanding technologies and customer base, partly through acquisitions.
Their business model resemble to ARMH, which is fantastic… However, CEVA operates into a segment that is not as scalable as ARMH, so I would not see it as large and scalable opportunity as ARMH has / had.
Having said that, if the valuation is reasonable, this is a great company to own.
Thanks Nilvest. I actually got into them via Parthus - the Irish Bluetooth company back in the TMT boom which CEVA bought out. It has done ok for me but the company is now more interesting than ever. They supply Alphabet/Google and Nest for a start, maybe Fitbit I think if not the Nike fuel band and perhaps even Mobileye. They are in all of the Samsung smart phone range now also. I think their LTE modem business does compete with Qualcomm. If Apple wanted to switch to another LTE supplier and Intel was not yet ready to support LTE then that could be nice!
Ant, in the last conference call I came across this:
On the royalty front, from royalty reports we received thus far, we expect an increase of up to 25% in royalty revenue on a year-over-year basis, mainly due to growing unit shipments of LTE and connected products. This leads to an annual royalty revenue growth rate of approximately 22%, substantially above the overall cellular and semiconductor industries’ growth rates. This also marks CEVA’s return to annual royalty growth after three successive years of royalty declines.
What the heck was going on in the three years previously, and is the current growth sustainable?
Management is telling us profits will double next quarter on increasing revenue of 15%… With 44 cents expected next quarter, TTM EPS would be 80 cents with a PE of 33.2.
AJ, you misunderstood! They are not doubling sequentially from 22 to 44 cents. They will double year-over-year from 8 cents to 16 to 18 cents. That’s a major difference in your thinking.
The 10-K made for interesting reading, a US corporation with Irish, French and Israeli connections. IP, not drugs!
CEVA’s IP business model is very attractive as evidenced by the success of ARM Holdings. One major difference I see is that ARM entered through underserved markets, first in embedded microprocessors and later in mobile in a classic disruptive technology approach. By the time Intel blinked ARM was firmly established. By contrast, CEVA went head to head in DSP so it’s no wonder they floundered. Now CEVA is expanding into connectivity which I don’t think is underserved and artificial intelligence which might be. They do seem to have a very nice ecosystem of partners.
From a risk aversion point of view wouldn’t it be better to wait to see results instead of betting on the promises. If they succeed, there will be over a decade to invest in them. I intend to follow them, thanks for the heads up.
What the heck was going on in the three years previously, and is the current growth sustainable?
Hi Saul - basically I think the change has come about with CEVA’s focus on LTE which finally became the dominant modem chip set in mobile as well as moving beyond mobile into other connectivity spaces allied with their acquisition of Rivierawave.
It must have helped when QUALCOMM’s snapdragon got kicked out of Samsumg as that let Ceva in alongside the in house chip.
From a risk aversion point of view wouldn’t it be better to wait to see results instead of betting on the promises. If they succeed, there will be over a decade to invest in them. I intend to follow them, thanks for the heads up.
Hi Denny - thanks, yep you are probably right. I bought in during the TMT boom when PLDs, DSPs and Power ICs etc were supposed to be the next big thing. International Rectifier and Altera both finally got bought out bringing the investments into bagging proportions but not exactly wealth creating returns. Ceva stayed independent and really failed to get traction. If I wasn’t already in it I might wait a few quarters to see how it pans out. I was posting on it partly from the point of view of an early alert but also for those invested in stocks in allied spaces (AMBA, AIOCF, MBLY, SWKS etc).
Hi Saul - basically I think the change has come about with CEVA’s focus on LTE which finally became the dominant modem chip set in mobile as well as moving beyond mobile into other connectivity spaces allied with their acquisition of Rivierawave.
I raised this stock on the board a while back. Well their latest results are out and are a beat on revenues and earnings and the traction continues. I’m still wondering how long they can ride the LTE wave before whatever next replaces it in the 5G roll out or beforehand. In the meantime they are doing well.
Q1 had a 19% increase in revenues with royalties rising 31% (driven by LTE) & licensing growing 10%. GAAP earnings and EPS rose 270% & 350% respectively. Non-GAAP earnings & EPS rose to $3.5m and 17c up 115% and 113%.
Their licensing activity (11 deals secured) were mostly outside of traditional base band across a mix of target markets (6 in DSP/Platforms and 5 in connectivity) and across a balance of geographies and with some new clients thrown in.
Still interesting for those of you watching from the sidelines. The analyst call should provide some guidance which I will follow up on.
I notice that I missed reporting on Q4 results which is found here… http://finance.yahoo.com/news/ceva-inc-announces-fourth-quar…
Q4 grew 16% so the revenue growth appears to be accelerating - EPS growth was identical at 113% from 8c to 17c and 13 deals were signed. Non-GAAP net income and diluted earnings per share for the fourth quarter of 2015 were $3.6 million and $0.17, respectively, representing an increase of 106% and 113% over the $1.7 million and $0.08 reported for the fourth quarter of 2014.
I haven’t done the 1YPEG yet but it should be starting to look interesting.
FYI Rolling quarterly EPS have been:
16 Q1 17
15 Q4 17
15 Q3 22
15 Q2 6
15 Q1 8
14 Q4 8
14 Q3 12
14 Q2 0
14 Q1 16
They are forecasting a YoY ramp up in the second half of 2016 so the Q4/Q1 flat line is expected to bend up.
Ant
…and here’s the Q2 guidance.
In the second quarter Ceva expects revenue of $16.5-$17.5 million, up 24-31 percent from a year ago, with adjusted EPS of 17-19 cents, up from 6 cents a year earlier. Analysts are forecasting revenue of $15.9 million and EPS of 15 cents. http://finance.yahoo.com/news/israels-ceva-q1-more-profit-13…
To continue the story guys - the progress looks good and consistent, CEVA pre-announced year end numbers this week. The licensing activity and the numbers are very interesting and that leaves me with some research and thinking to do on this in order to disambiguate the intel impact within iPhone and the broader longer term opportunity (http://seekingalpha.com/article/4007619-ceva-story-just-appl…) - I’m hoping the eventual
If we look at revenues - these are estimated at above guidance at an all-time high too - $21.2m vs guidance of $18.5-19.5m. Whilst growing slightly with a lot of erratic seesawing in the numbers along the way (top and bottom line), since mid 2015 with the LTE roll out hitting full steam and the RivierraWave acquisition bedding in, Ceva numbers has been demonstrating the very model of growth.
Returning to the article in the link at the beginning of this post, I have been caught in 2 minds whether:
This is proving a short term bounce based on Intel (and therefore Ceva) winning a modem slot in a model of the iPhone and Qualcomm’s Snapdragon 810 getting kicked out of Samsung - leaving Ceva with an opportunity but with Qualcomm’s 820 back in Samsung and Intel’s modem under performing Qualcomm’s significantly - these gains could be very quickly reversed;
versus…
If actually and looking at the licensing activity these gains are coming from deep learning, visual intelligence, smart home and automotive arenas; then Ceva may actually have a long road of growth ahead of it and immune from short term Intel type boosts.
