CEVA INC. 10-Q Summary: Period Ended June 30, 2026
Business Context and Reporting Period
This is a Quarterly Report (Form 10-Q) for CEVA INC., a leader in silicon and software IP enabling "Physical AI" (connectivity, sensing, and inference layers). The report covers the three and six months ended June 30, 2026. The company operates as a single segment, licensing IP to semiconductor and OEM customers globally, with significant operations in Israel, France, and the U.S.
Key Financial Metrics
| Metric (in thousands) | Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 |
|---|---|---|---|---|
| Total Revenues | $29,033 | $56,057 | $25,678 | $49,923 |
| Gross Profit | $25,387 | $48,682 | $22,129 | $42,887 |
| Gross Margin | 87% | 87% | 86% | 86% |
| Operating Loss | $(2,076) | $(7,161) | $(4,482) | $(8,864) |
| Net Loss | $(2,910) | $(7,369) | $(3,704) | $(7,031) |
| Diluted Net Loss Per Share | $(0.10) | $(0.26) | $(0.15) | $(0.30) |
| Cash and Cash Equivalents (End of Period) | $44,301 (as of June 30, 2026) | |||
| Marketable Securities (End of Period) | $171,271 (as of June 30, 2026) | |||
| Net Cash Provided by Operating Activities | $940 (Six Months 2026) | $(6,221) (Six Months 2025) |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 13% year-over-year (YoY) for the quarter and 12% YoY for the six-month period. Licensing revenues grew 21% YoY (quarter) and 20% YoY (six months), driven by a landmark AI licensing agreement and broader connectivity wins. Royalty revenues grew 1% YoY for both periods, supported by wireless connectivity and automotive AI ramps.
- Profitability: Operating loss narrowed significantly to $2.1 million for the quarter (from $4.5 million) and $7.2 million for the six months (from $8.9 million). Net loss per share improved to $(0.10) for the quarter and $(0.26) for the six months.
- Expense Drivers: Operating expenses increased primarily due to higher salaries and employee-related costs driven by the devaluation of the U.S. dollar against the Israeli New Shekel (NIS). Equity-based compensation also increased.
- Cash Flow: Operating cash flow turned positive ($0.9 million) for the first six months of 2026, compared to a use of $6.2 million in the prior year period. This was driven by non-cash adjustments (equity-based compensation, unrealized FX loss) and a decrease in trade receivables.
- Foreign Exchange: The company recorded a foreign exchange loss of $1.0 million for the quarter and $1.2 million for the six months, contrasting with gains in the prior year periods.
Guidance, Outlook, and Risks
- Strategic Wins: The quarter featured a significant AI licensing agreement with a leading global AI and computing platform company for the NeuPro-M NPU IP. Additionally, 10 licensing agreements were signed, including two with first-time customers and two directly with OEMs.
- Market Trends: Management highlights growth in "Physical AI," with Ceva-powered device shipments reaching 567 million units in Q2 2026 (up 16% YoY). Bluetooth and Wi-Fi shipments grew 16% and 28% YoY, respectively. Cellular IoT shipments hit a record 68 million units.
- Risks:
- Geopolitical Instability: Ongoing conflict in the Middle East (Israel/Hamas/Hezbollah/Iran) poses risks to operations in Israel, including potential employee reserve duty and operational disruption.
- Customer Concentration: The five largest customers accounted for 55% of Q2 2026 revenue. One customer represented 21% of Q2 revenue.
- Macroeconomic Factors: Volatility in interest rates, inflation, and supply chain dynamics could impact customer spending and royalty volumes.
- Capital Resources: The company holds $220.7 million in cash, cash equivalents, and marketable securities. No share repurchases were made in the first half of 2026; 684,486 shares remain available under the repurchase program.
Investor Verification Checklist
- Revenue Quality: Verify the sustainability of the 21% licensing revenue growth and the specific terms of the new AI platform agreement.
- FX Exposure: Assess the impact of continued NIS/Euro volatility on operating expenses, given the significant mismatch between NIS liabilities (leases) and assets.
- Customer Concentration: Monitor the dependency on the top five customers (55% of Q2 revenue) and the specific performance of the customer representing 21% of Q2 revenue.
- Geopolitical Impact: Evaluate the potential for operational disruption in Israel due to the ongoing regional conflict and reserve duty calls for employees.
- Cash Burn vs. Generation: Confirm the trend of positive operating cash flow continues, considering the heavy reliance on non-cash equity compensation adjustments.