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Q1 2011 Earnings Call
April 27, 2011 8:30 a.m. ET
Richard Kingston – Director of Marketing and Investor Relations
Gideon Wertheizer – Chief Executive Officer
Yaniv Arieli – Chief Financial Officer
Suji De Silva -ThinkEquity
Joseph Wolf – Barclays Capital
Doug Whitman – Whitman Capital
Matt Robison – Wunderlich Securities
Gary Mobley – Benchmark
Brian Nugent – William Blair
Daniel Meron - RBC
Daniela Ventrone – Matrix
Previous Statements by CEVA
» CEVA, Inc. CEO Discusses Q4 2010 Results - Earnings Call Transcript
» CEVA CEO Discusses Q3 2010 Results - Earnings Call Transcript
» CEVA, Inc. Q2 2010 Earnings Call Transcript
» CEVA, Inc. Q1 2010 Earnings Call Transcript
Richard Kingston – Director of Marketing and Investor Relations
Thank you. Good morning everyone, and welcome to CEVA’s first quarter 2011 earnings conference call. This conference call will be conducted by Gideon Wertheizer, chief executive officer of CEVA; Yaniv Arieli, chief financial officer of CEVA; and I, Richard Kingston, director of marketing and investor relations.
Gideon will cover the business aspects and the highlights of the quarter, followed by Yaniv, who will cover the financial results for the first quarter and will provide financial guidance for the second quarter and fiscal 2011.
I will start with forward-looking statements. Today’s conference call contains forward-looking statements that involve risks and uncertainties as well as assumptions that if they materialize or prove incorrect, could cause the results of CEVA to differ materially from those expressed or implied by such forward-looking statements and assumptions.
Forward-looking statements include financial guidance for the second quarter and fiscal 2011, market data from Strategy Analytics, Inc. herein, optimism about our customers’ product pipelines and market penetration; optimism about our products including CEVA XC and MM3000, projections relating to smart phone expansion and trends related to internet-enabled HDTV and 3D TV, optimism about our ability to penetrate new markets beyond the cellular-based band market, as well as the positive impact on our business of these various factors.
The risks, uncertainties and assumptions include the ability of the CEVA DSP cores and other technologies to continue to be strong growth drivers for us, our success in penetrating new markets and maintaining our market position in existing markets, the ability of our products incorporating our technologies to achieve market acceptance, the effect of intense industry competition and consolidation, the possibility that markets for our technologies may not develop as expected or that products incorporating our technology do not achieve market acceptance, our ability to timely and successfully develop and introduce new technologies, and general market conditions and other risks relating to our business, including but not limited to, those that are described from time to time in our SEC filings.
CEVA assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. With that said, I would now like to turn the call over to Gideon.
Thank you Richard. Good morning everyone and thank you for joining us today. I hope you had the opportunity to review our press release with the financial results for the first quarter of 2011.
Our revenue for the first quarter was $15.1 million, a new record. These results were 42% higher than the first quarter of 2010 and a 16% sequential increase. Royalty revenue for the first quarter of 2011 was an all-time high of $9.2 million, representing an 85% increase over the first quarter of last year and a 23% sequential increase.
Earnings per share on a non-GAAP basis were $0.23, 92% higher compared to last year and 21% higher sequentially.
During the first quarter we concluded seven license agreements. Four of the agreements were for our DSP cores, platform, and software, and three agreements for our SATA/SAS product line. Geographically, three of the license agreements were in the U.S., three were in Asia, and one was in Europe.
Target applications for the licenses completed during the quarter are primarily 3G and 4G baseband processors for handsets and infrastructure, smart grid, and SSD drives.
During the first quarter we [sailed past] our financial targets, driven by market share expansion in the mainstream 2G and 3G segments and new strategic licensing agreements. Shipments during the quarter represented an all-time record high for the company as customers shipped in excess of 234 million units, of which 213 million were baseband processors across all cellular segments including low-cost feature phones, advanced smartphones, and tablets from branded Tier 1 OEMs.
On the licensing front, we signed three new CEVA-XC agreements during the quarter. Two of the agreements we made to two untapped markets for us, base stations and smart grid. Our new base station customer is a Tier 1 OEM in Asia, a well-known leader in multi-mode LTE base stations currently using only merchant chips from PI and other [inaudible] products. The customer aims to transfer its design to be based on our CEVA-XC.
We believe this comprehensive agreement has the potential to replace the incumbent [DSP] the customer other high-volume products, including smartphone networking and wired communications devices. Moreover, we believe this customer endorsement encourages chip companies aiming to do business with this OEM to adopt our CEVA-XC DSP.
The other agreement that we concluded during the quarter was with a key player in the fast-growing [inaudible] market. Our new customer is a pioneer in this space, and already has contracts in place to supply solutions to large utility companies among which are Pacific Gas & Electric Company, Pepco Holdings, and American Electrical Power. The customer plans to use our CEVA-XC for realtime wireless transmission of customer electricity utilization to the utility [back home].