NEW YORK, August 10, 2026, 15:46 EDT — U.S. markets open with CEVA shares falling 16% after the firm reported robust AI licensing revenues but saw royalty income lag behind.
- Ceva stock dropped 15.7% to $32.60, even after reporting better-than-expected earnings for the second quarter.
- Licensing revenue climbed 21%, whereas royalty revenue registered just a 1% rise.
- Management increased its full-year revenue growth outlook to between 13% and 15%.
Ceva, Inc. NASDAQ:CEVA shares fell $6.07 to $32.60 late Monday, wiping out Friday’s 9% advance and trimming its market capitalization to roughly $911 million. The quote stayed provisional as trading persisted.
The decline came after the company reported a clear headline beat. Adjusted earnings were $0.08 per share, topping the $0.07 estimate. Revenue totaled $29.0 million, about 3% above the $28.14 million consensus forecast.
The breakdown below that headline figure was more significant. Licensing and related sales increased 21%, reaching their strongest level in three years. However, royalties edged up just 1%, meaning investors are still waiting for recent AI design wins to move into production.
Chief Executive Amir Panush stated: “Our agreement signed in the quarter with a leading global AI and computing platform company represents an important expansion of our AI customer base.” The company, which was not identified, chose Ceva’s NeuPro-M NPU for its custom AI silicon. Ceva earnings release
| Q2 metric | 2026 | 2025 | Change |
|---|---|---|---|
| Total revenue | $29.03M | $25.68M | up 13.1% |
| Licensing and related | $18.22M | $15.02M | up 21.3% |
| Royalty revenue | $10.81M | $10.66M | up 1.5% |
| GAAP operating loss | -$2.08M | -$4.48M | Loss reduced by 53.7% |
| Non-GAAP operating income | $3.11M | $0.77M | up 302.7% |
Ceva reported to the SEC that licensing accounted for 63% of its sales for the quarter. The greater contribution helped increase non-GAAP operating margin to 11%, up from 3%. The GAAP gross margin rose by one percentage point to 87%.
Unit figures showed more variation. Customers delivered 567 million devices powered by Ceva, marking a 16% increase. Consumer IoT and Wi-Fi saw robust growth, while industrial IoT volumes dropped.
| Shipment measure | Q2 2026 | Q2 2025 | Change |
|---|---|---|---|
| Total Ceva-powered devices | 567M | About 489M | +16% |
| Consumer IoT | 487M | 409M | +19.1% |
| Industrial IoT | 19M | 24M | -20.8% |
| Bluetooth | 295M | About 254M | +16% |
| Wi-Fi | 80M | 62.5M | +28% |
The management’s prepared remarks outline the shipment specifics. Industrial IoT royalty revenue increased 7%, as automotive AI and infrastructure offerings generated more revenue per unit. This product mix rather than overall shipment volume is what underpins the margin argument.
The firm raised its 2026 sales growth forecast following a robust first half. Revenue guidance for the third quarter points to sequential growth of between 5% and 19%, with a midpoint of 12%.
| Outlook measure | New guidance | Prior or comparison |
|---|---|---|
| 2026 revenue growth | 13%–15% | Previously 12% |
| Q3 revenue | $30.5M–$34.5M | $32.5M midpoint |
| Q3 GAAP gross margin | Approximately 87% | 87% during Q2 |
| 2026 non-GAAP operating income growth | Roughly 70% | Outlook increased |
| 2026 non-GAAP net income growth | Roughly 50% | Outlook increased |
The company’s guidance maintains non-GAAP costs and operating expenses rising by about 8%. This gap, lower than forecast revenue growth, drives operating leverage. Factors including memory pricing, supply dynamics, and currency fluctuations continue to be in play.
The timing remains challenging. Management stated the new AI program might tape out in several quarters. Production could start 18 to 24 months after that. Licensing is expected to precede, with material royalties coming in once customers receive shipments.
“Licensing and related revenues reached $18.2 million in the quarter,” Chief Financial Officer Yaniv Arieli said. Licensing revenue for the trailing 12 months increased by 13% to $69.6 million. Ceva earnings release
Ceva’s balance sheet offers a buffer. Cash, equivalents, securities and deposits amounted to around $221 million, or about 24% of the company’s market value late on Monday. Operating cash flow stood at $5.8 million for the quarter.
| Analyst view | Current | One month ago |
|---|---|---|
| Buy recommendations | 7 | 8 |
| Hold recommendations | 2 | 1 |
| Sell recommendations | 0 | 0 |
| Overall consensus | Buy | Buy |
| Mean price target | $50 | — |
| Median price target | $49 | — |
According to FactSet, there are seven Buy ratings and two Hold ratings. The consensus price target averages $50, which is 53% higher than the current share price of $32.60. However, these targets could shift after Monday’s results.
Risks: Ceva continues to report losses according to GAAP. The rise in royalty revenue is tied to customers’ production timelines, handset market trends and effective AI deployment. The leading platform customer has not been identified, making it difficult to externally confirm the scale of its business impact.
The next hurdle is seeing if third-quarter revenue meets the $32.5 million midpoint without driving up costs. After that, a pick-up in royalties needs to prove that bigger AI licensing deals can generate steady recurring income.
Related articles: Semiconductors
