Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 10, 2026 · Beat 4 of last 5 quarters
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CEVA's strong licensing quarter, including a landmark NeuPro-M NPU win with a major AI platform company, underscores the accelerating shift of AI inference to the edge and the growing demand for production-proven IP in custom silicon. The company's platform-level engagements and expanding royalty base across automotive AI, Wi-Fi, and cellular IoT signal sustained content growth per device, which is a key enabler for the AI infrastructure buildout at the edge.
CEVA delivered a strong Q2 with revenue of $29.0M (+13% YoY) and licensing revenue of $18.2M (+21% YoY), the highest in three years, driven by a landmark AI licensing agreement with a leading global AI/computing platform company for its NeuPro-M NPU IP. The company signed 10 licensing agreements, including two first-time customers and two direct OEM deals, with notable platform-level wins in Wi-Fi/Bluetooth and baseband subsystems. Royalty revenue recovered sequentially (+17%) to $10.8M, supported by wireless connectivity strength, automotive AI ramps, and smartphone share gains, with 567M CEVA-powered devices shipped (+16% YoY). Non-GAAP operating income rose to $3.1M (11% margin) from $0.8M a year ago, and the company raised its full-year revenue outlook.
Management raised full-year 2026 revenue guidance to 13%-15% growth (from 12% previously), citing strong first-half licensing execution and improving royalty trends. They expect second-half revenue to be stronger than first half on normal seasonality, with continued smartphone share gains and automotive AI ramps, though memory pricing and supply constraints remain watch items. Non-GAAP operating income is now expected to increase ~70% YoY and non-GAAP net income ~50% YoY, both above prior expectations, as they maintain expense discipline. Q3 revenue guidance is $30.5M-$34.5M with non-GAAP gross margin of 88%. Management emphasized the strategic shift toward platform-level engagements and custom AI silicon, which they expect to drive higher licensing fees and royalty content per device over time.
“During the quarter, we announced what we believe is one of the most strategically significant AI licensing agreements in CEVA's history. A leading global AI and computing platform company, selected our NeuPro-M NPU IP for its next-generation custom AI silicon.”
on Strategic AI win
“The more we offering the complete solution, it's easier for them and drive more the decision towards buying IP from CEVA rather than doing that internally. So overall, this is a very, very positive trend, and fits very well to our strategy of how we drive our engineering activities and overall innovation in IP.”
on Platform adoption trend
“We now expect 2026 revenue to increase between 13% and 15% over 2025, compared with our previous expectation of 12% growth that we shared at the end of the first quarter.”
on Guidance raise
You had mentioned about a large company bringing their wireless design in-house rather than buying someone else. Is that a trend you're seeing longer term? And maybe you could talk about the trend you're seeing for more integration of technologies vertically within your customers.
Amir confirmed this is a growing trend, noting customers increasingly seek complete turnkey offerings (including radio IP) to accelerate time-to-market. He highlighted three benefits: larger licensing deals and future royalties, stronger customer stickiness, and a more compelling make-vs-buy case. Yaniv added that recurring licensing deals for new standards/features further deepen stickiness.
Amir, you talked at length about how you're engaging deeper with the customers, maybe a hardware-software integration, perhaps more sort of product development effort. Is this going to result in more custom IP blocks or more continued standard products and will it affect kind of how we should think about royalty rate for you guys?
Amir said the mix is shifting toward more custom solutions, which increases royalty per unit meaningfully. He cited the new strategic AI deal as an example where customization and platform-level integration drive significantly higher royalty per unit versus typical NPU offerings.
I had two. So one is on the smartphone. You mentioned improving share of the entry smartphone, as well as premium. Could you please speak a bit more what are you seeing there? And maybe what's helpful from standpoint of share gains on the entry-level smartphones for you guys?
Amir noted a meaningful sequential recovery in entry-level smartphone royalties, with customers gaining share. Yaniv added that UNISOC is transitioning to 5G and has won multiple design wins with brands like Vivo and Xiaomi, which should benefit CEVA. They expect continued momentum into H2, including share gains from a large U.S. OEM moving to internal modems.