CEVA, Inc. (CEVA) | The Buildout — AI Infrastructure
The Verdict
CEVA licenses silicon and software intellectual property that other companies build into chips. It does not manufacture or sell chips itself. The portfolio covers wireless connectivity, sensing and audio, and AI processing — the last being neural-network accelerator IP for running inference on devices rather than in data centers. The company's argument is that as intelligence moves to the edge, device makers will license its IP instead of designing it in-house, and that selling complete platform solutions rather than individual blocks makes it harder for customers to replace.
| Market Cap | — |
| Revenue (TTM) | $116M |
| Revenue Growth | +8.8% |
| EBITDA Margin (TTM) | -5.3% |
| Net Cash | $198M |
| Earnings Beats | 4 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Licensing hit back-to-back three-year highs — $17.8M in Q1 2026 and $18.2M in Q2 2026 — with Q2 licensing up 21% year over year.
- Management raised full-year 2026 revenue growth guidance twice, from an initial 8%-12% to 13%-15%, while holding expense growth near 8%.
- Non-GAAP operating income reached $3.1M in Q2 2026, an 11% margin, versus $0.8M and 3% a year earlier. The GAAP operating loss narrowed to $2.1M from $4.5M.
- The company reported about $221M in cash, cash equivalents, marketable securities, and deposits after Q2 2026, which management said provides flexibility for selective M&A.
- AI was disclosed as more than 20% of licensing and related revenue in Q1 2026, and management said "about 20%" again in Q2 2026, describing it as additive rather than replacing other licensing.
What We’re Watching
- Royalty revenue was flat year over year — $9.2M in Q1 2026 and $10.8M in Q2 2026 against $10.7M a year earlier — even as device shipments grew 9% and 16%.
- Contracted unrecognized licensing revenue was $14.171M at Q1 2026, roughly 20% of trailing-twelve-month licensing revenue, and 80% of it is expected to be recognized in the remainder of 2026.
- The new NeuPro-M platform customer is not expected to reach production for roughly 1.5 to 2 years, putting its royalty contribution in 2027-2028.
- Bluetooth units fell 16% year over year to 295M in Q2 2026, industrial IoT units fell to 19M from 24M, and Wi-Fi fell sequentially to 80M from 91M.
The verifiable improvement sits in licensing and non-GAAP profitability, both of which strengthened again in Q2 2026. The royalty line, which would make that improvement durable, was flat year over year and is waiting on production ramps management guides for late 2026 into 2027-2028. The case is strengthening on licensing and unproven on royalties. The open question is whether the platform deals convert into reported royalty dollars or stay a licensing story.
Earnings Beat
CEVA reported Q2 2026 revenue of $29M, up 13% year over year and 7% sequentially. Licensing and related revenue rose 21% year over year, which management described as the strongest licensing quarter in three years, and trailing-twelve-month licensing and related revenue was about $70M, up 13% year over year. Gross margin was 87% GAAP and 88% non-GAAP. Non-GAAP operating income was $3.1M, an 11% margin, versus $0.8M and 3% a year earlier, while the GAAP net loss was $2.9M.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $29M | $27M | $26M | +12.8% |
| Gross margin | 87.4% | 85.8% | 86.2% | +120bps |
| EBITDA | −$2M | −$4M | −$3M | −52.9% |
| EPS | $-0.10 | $-0.16 | $-0.15 | −33.1% |
| Licensing and related revenue | $18.2M | $17.8M | n/a | +21% YoY |
| Royalties | $10.8M | $9.2M | $10.7M | ~flat YoY |
We have achieved the step function with adding AI, which is a significant part of our revenue these days, about 20%… It doesn't replace anything.— Yaniv Arieli, Chief Financial Officer, 2026-08-10
Management tone: Management raised full-year revenue guidance for the second consecutive quarter and introduced, then raised, explicit profit-growth targets. On the Q2 2026 call the CEO called the new AI platform agreement "one of the most strategically significant AI licensing agreements in CEVA's history," and the CFO described AI as a "step function." They declined to break out licensing versus royalty guidance, size the platform opportunity, or quantify the second-half memory impact.
Management Guidance
On the Q2 2026 call, management guided full-year 2026 revenue growth to 13%-15% over 2025, non-GAAP operating income to approximately +70% year over year, and non-GAAP net income to approximately +50%, with total costs and operating expenses up about 8%. For Q3 2026 it guided revenue of $30.5M-$34.5M, gross margin of about 87% GAAP and 88% non-GAAP, GAAP operating expenses of $28.2M-$29.2M, non-GAAP operating expenses of $22.5M-$23.5M, net financial income of about $2M, income tax of about $1.9M, and diluted shares of about 28.2M GAAP and 30M non-GAAP. Management said the second half should be stronger than the first, with memory pricing and supply constraints as variables it declined to quantify.
Trajectory
Reported revenue was $24.2M in Q1 2025, $25.7M in Q2 2025, $28.4M in Q3 2025, and $31.3M in Q4 2025, then $27.0M in Q1 2026 and $29.0M in Q2 2026. Year-over-year growth was 11% in Q1 2026 and 13% in Q2 2026, and it came from licensing: Q2 licensing rose 21% while royalties were about flat. Gross margin has been in the mid-to-high 80s percent in recent quarters. The audited spine shows trailing-twelve-month EBITDA of -$6.1M, so the inflection is in licensing and non-GAAP operating income, not in GAAP or EBITDA.
The Model
The model projects FY+1 revenue of $125.75M with EBITDA of -$2M (-1.3%), and FY+2 revenue of $146.0M with EBITDA of $8M (5.6%). The near-term projection depends on licensing holding near the roughly $18M quarterly level management said it plans around. The FY+2 EBITDA swing depends on royalties from platform and automotive deals guided to ramp from late 2026 into 2027-2028.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $110M | $126M | $146M |
| YoY Growth | — | +14.7% | +16.1% |
| EBITDA | −$7M | −$2M | $8M |
| EBITDA Margin | -6.6% | -1.3% | 5.6% |
Projections are the median of 4 independent model runs. The model’s revenue sits 3.7% above analyst consensus.
On the Q2 2026 call, management guided full-year 2026 revenue growth to 13%-15% over 2025, non-GAAP operating income to approximately +70% year over year, and non-GAAP net income to approximately +50%, with total costs and operating expenses up about 8%. For Q3 2026 it guided revenue of $30.5M-$34.5M, gross margin of about 87% GAAP and 88% non-GAAP, GAAP operating expenses of $28.2M-$29.2M, non-GAAP operating expenses of $22.5M-$23.5M, net financial income of about $2M, income tax of about $1.9M, and diluted shares of about 28.2M GAAP and 30M non-GAAP. Management said the second half should be stronger than the first, with memory pricing and supply constraints as variables it declined to quantify.
What Could Go Right — and Wrong
- The roughly $18M quarterly licensing level holds for a third and fourth consecutive quarter, turning back-to-back three-year highs into a trend.
- The NeuPro-M platform customer reaches tape-out on schedule and starts the roughly 1.5-to-2-year production clock.
- Bluetooth HDT royalties begin contributing, and follow-on full-stack RF-inclusive wins land in Wi-Fi or UWB.
- Royalty dollars start growing faster than unit shipments, validating the higher content-per-design and royalty growth argument.
- The company announces an acquisition from its roughly $221M cash balance in the connect, sense, or infer portfolio.
- Royalties stay flat while unit shipments grow, leaving the licensing line to carry the whole story.
- The new AI platform deal slips, pushing its royalty contribution further out than the guided 1.5-to-2-year window.
- Licensing reverts toward the $15M-$16M quarterly level the CFO cited as last year's run rate.
- Memory pricing and supply constraints cap handset and IoT demand in the second half of 2026.
- A large customer takes designs in-house; CEVA's own 10-K lists internal teams at Marvell, Broadcom, ST, and NXP as competitors.
Looking Ahead
The next twelve months test whether the licensing step holds and whether royalties begin to reflect the platform strategy. Management guides the second half of 2026 to be stronger than the first, with memory pricing and supply constraints as the main variables and no quantified impact. Bluetooth HDT royalties are expected "very soon" with volume ramp toward the end of 2026, and the NeuPro-M platform deal is roughly 1.5 to 2 years from production.
- Q3 2026Q3 2026 results — Guided revenue $30.5M-$34.5M; tests the stronger-second-half thesis.
- H2 2026U.S. OEM modem share — CEVA estimates a share gain as an OEM moves to its internal modem.
- End 2026Bluetooth HDT ramp — Volume ramp starts; management expects royalty contributions "very soon."
- 2027NeuPro-M tape-out — Platform AI customer tape-out expected within a few quarters.
- 2027-2028HDT significant ramp — Bluetooth HDT significant volume ramp guided for 2027-2028.
- Through 2026Possible M&A — Selective acquisitions in connect, sense, or infer; no target committed.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $107M | $110M | $116M | +2.5% |
| Gross Margin | 88.1% | 87.0% | 87.4% | 110bps |
| EBITDA | −$3M | −$7M | −$6M | -111.8% |
| EBITDA Margin | -3.2% | -6.6% | -5.3% | 339bps |
| Net Income | −$9M | −$11M | −$11M | -21.8% |
| Free Cash Flow | $0M | −$6M | −$1M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)87.4%
- EBITDA Margin (TTM)-5.3%
- Net Margin (TTM)-9.5%
- ROIC-5.3%
- SBC / Revenue14.7%
The Company
CEVA licenses silicon and software intellectual property — the building blocks other companies place inside chips — and does not manufacture or sell chips. The portfolio is organized into three pillars: Connect for wireless connectivity including Bluetooth, Wi-Fi, UWB, and cellular IoT; Sense for sensing, perception, and audio software; and Infer for AI processing, including the NeuPro family of neural-network accelerators. Revenue comes two ways: licensing and related fees paid up front, and royalties paid per device that ships with CEVA IP inside. The FY2025 10-K describes the company as "the leader in silicon and software intellectual property ('IP') enabling Physical AI."
CEVA is fabless and asset-light, with no inventory and gross margins in the high 80s percent. Its headquarters is in Rockville, Maryland, and its largest facility is in Ra'anana, Israel — 43,056 square feet leased through 2035. Israel holds about 81% of the company's long-lived assets. It also operates from Sophia Antipolis, France, and eight other leased buildings. Headcount was 406 people, including 327 engineers, at the end of Q2 2026, down from 430 people and 348 engineers at the end of Q1 2026.
Business Segments
Competitive Landscape
CEVA competes across processor IP, AI accelerators, short-range wireless IP, and spatial audio software. Its 10-K lists Arm, Cadence, Imagination, VeriSilicon, Andes, SiFive, and GlobalFoundries among DSP, NPU, and processor IP competitors; Arm Ethos, Cadence's AI and vision DSP, and Nvidia's open-source NVDLA among AI accelerators; and internal teams at Infineon, Silicon Labs, and NXP in short-range wireless. The filing also lists in-house design teams at Marvell, Broadcom, ST, and NXP as competitors, making build-versus-buy a company-acknowledged risk. Management's answer is the move to complete platform solutions, including RF, which it argues are harder for customers to replace internally.
- ArmNamed in the 10-K among DSP/NPU/processor IP and AI accelerator competitors; not discussed.
- CadenceNamed in the 10-K among processor IP, AI accelerator, and embedded imaging/vision competitors; not discussed.
- NXPNamed as a partner on S32E2/S32Z2 and listed among in-house design and short-range wireless competitors.
- GlobalFoundriesListed in the 10-K among DSP/NPU/processor IP competitors. Management said ARC's acquisition by GlobalFoundries is "a tailwind for our business moving forward, especially for NPU and NeuPro product line."
- ImaginationNamed in the 10-K among DSP/NPU/processor IP and AI accelerator competitors; not discussed.
Supply Chain
CEVA sits upstream of the chip industry, licensing IP and software to chipmakers, OEMs, and platform companies that build it into silicon and pay royalties per device. It owns no fabs or inventory, and no neighbor in the supply-chain read-through named it.
More on CEVA: Earnings recap