0001437749-26-016119
SEC filingCEVA's Q1 2026 revenue rose 11% YoY to $27.0M, driven by 18% licensing growth, while royalty revenue was flat.
CEVA's total revenue for Q1 2026 reached $27.0 million, an 11% increase year-over-year, driven entirely by a strong licensing quarter. Licensing and related revenue surged 18% to $17.8 million, representing 66% of total revenue, up from 62% in Q1 2025. Royalty revenue was flat at $9.2 million, accounting for 34% of total revenue. Gross margin remained stable at 86% in both periods, while gross profit increased to $23.3 million from $20.9 million, reflecting the higher licensing mix. Operating expenses rose to $28.4 million from $25.1 million, primarily due to higher salary costs driven by the devaluation of the U.S. dollar against the NIS and increased non-cash equity-based compensation. This resulted in an operating loss of -$4.5 million, compared to -$2.2 million in the prior year. Net loss widened to -$4.5 million from -$3.3 million.
Management categorizes revenue into two strategic use-case segments: Connect and Sense & Infer. In Q1 2026, Connect revenue (baseband, Bluetooth, Wi-Fi, NB-IoT) was $19.7 million, representing 73% of total revenue, down from 84% in Q1 2025. Despite strong Wi-Fi unit growth (record 91 million units, +158% YoY) and cellular IoT volume (+38% YoY), the segment's absolute revenue declined slightly due to typical seasonal softness in mobile and near-term memory/channel inventory issues. Sense & Infer revenue (sensor fusion, audio, AI) jumped to $7.3 million, or 27% of total revenue, up from 16% in the prior year. This growth was fueled by AI-related licensing, which accounted for over 20% of licensing revenue in the quarter, and early royalty contributions from a mass-volume automotive AI deployment at Toyota and a ramping AI SoC for surveillance. The shift toward higher-value licensing and AI reflects Ceva's strategic pivot to integrated Physical AI solutions.
Management raised its full-year 2026 revenue growth guidance to the higher end of 8%-12% year-over-year, up from previous expectations, citing strong licensing momentum and the expectation that mobile-related royalty headwinds are timing-related. Key strategic priorities include: expanding system-level licensing wins (e.g., first full Bluetooth 7 solution), growing AI-related licensing across automotive and surveillance, and capturing Wi-Fi 6/7 and cellular IoT royalty growth as customer transitions accelerate. The company acknowledged ongoing macroeconomic uncertainty, including tariffs and Middle East instability, but expressed confidence in its diversified revenue mix and strong pipeline.
CEVA's notes highlight a strong liquidity position with $189.2 million in marketable securities (all corporate bonds) as of March 31, 2026. Cash and equivalents are not explicitly reiterated in the notes, but the balance sheet shows $21.4 million. Deferred revenue (short-term) stood at $3.0 million, reflecting contract liabilities. No long-term debt is reported.
The notes disclose no purchase commitments or contractual obligations beyond those recognized on the balance sheet. The company does not have material off-balance-sheet commitments.
CEVA repurchased no shares during Q1 2026. As of March 31, 2026, 684,486 shares remained available under the existing repurchase program. No dividends were declared. Capital expenditures are not separately discussed in the notes; however, the cash flow statement (not part of notes) shows $2.3 million in property and equipment purchases.
The company operates as a single operating segment (IP licensing). The notes provide geographic revenue breakdown (Note 6): Asia Pacific contributed 69% of total revenue ($18.6M), United States 28% ($7.5M), and Europe/Middle East 4% ($1.0M). Long-lived assets are concentrated in Israel ($21.4M), with smaller amounts in France, US, Greece, and other. No segment profitability is disclosed. The disaggregated revenue table also separates licensing vs royalties and by use case (Connect vs Sense & Infer). There is no separate segment note.
CEVA's net loss of $4.5 million was partially offset by non-cash charges (depreciation, amortization, equity-based compensation) totaling $6.2 million, resulting in operating cash outflow of $4.9 million. This represents a $2.5 million improvement over the prior year's operating cash outflow of $7.4 million, driven largely by a $3.8 million favorable swing in trade receivables (from a $3.5 million use to a $0.4 million source). However, prepaid expenses and other assets consumed $5.8 million, and accrued expenses/payables declined, indicating working capital drag.
Capital expenditures increased sharply to $2.3 million from $0.3 million, reflecting higher investment in property and equipment. Investing activities also included $24.6 million in purchases of marketable securities, partially offset by $14.1 million in maturities, leading to a net investing outflow of $15.8 million. Financing activities provided $1.6 million from stock-based award exercises. No share repurchases or dividends were paid.
Free cash flow (not explicitly stated) would be negative given the operating outflow and elevated capex. The company ended the period with $21.4 million in cash, down from $40.6 million at the start of the quarter. The cash burn is primarily due to investing activities and operating losses, with no capital returns to shareholders.