8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 11, 2020

CEVA, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of Incorporation)

000-49842 (Commission File Number)	77-0556376 (I.R.S. Employer Identification No.)
1174 Castro Street, Suite 210, Mountain View, CA (Address of Principal Executive Offices)	94040 (Zip Code)

650/417-7900
(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.001 per share	CEVA	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Security Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On May 11, 2020, CEVA, Inc. (the “Company”) announced its financial results for the quarter ended March 31, 2020. A copy of the press release, dated May 11, 2020, is attached and filed herewith as Exhibit 99.1. On the same day, the Company will hold a conference call to discuss its financial results for the first quarter of 2020. A copy of the script of the conference call is attached hereto as Exhibit 99.2. This information, including Exhibits 99.1 and 99.2 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing.

In addition to the disclosure of financial results for the quarters ended March 31, 2020 and 2019 in accordance with generally accepted accounting principles in the United States (“GAAP”), the press release and script also included non-GAAP net income and diluted earnings per share (EPS) figures for the referenced periods.

Non-GAAP net income and diluted earnings per share for the first quarter of 2020 excluded (a) equity-based compensation expense, net of taxes, and (b) the impact of the amortization of acquired intangibles associated with the acquisition of the Hillcrest Labs business and investments in NB-IoT and Immervision technologies. Non-GAAP net income and diluted earnings per share for the first quarter of 2019 excluded (a) equity-based compensation expense, net of taxes, and (b) the impact of the amortization of acquired intangibles associated with the acquisition of RivieraWaves and an investment in NB-IoT technologies.

The Company believes that the reconciliation of financial measures in the press release and script is useful to investors in analyzing the results for the quarters ended March 31, 2020 and 2019 because the exclusion of such expenses may provide a more meaningful analysis of the Company’s core operating results and comparison of quarterly results. Further, the Company believes it is useful for investors to understand how the expenses associated with the application of FASB ASC No. 718 are reflected on its statements of income. The reconciliation of financial measures should be reviewed in addition to and in conjunction with results presented in accordance with GAAP, and are intended to provide additional insight into the Company’s operations that, when viewed with its GAAP results and the accompanying reconciliation, offer a more complete understanding of factors and trends affecting the Company’s business. The reconciliation of financial measures should not be viewed as a substitute for the Company’s reported GAAP results.

ITEM 9.01. Financial Statements and Exhibits.

(d) Exhibits.

99.1     Press release of CEVA, Inc., dated May 11, 2020.

99.2     Script of the conference call of CEVA, Inc., dated May 11, 2020.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CEVA, INC.
Date:    May 11, 2020	By:	/s/ Yaniv Arieli
		Yaniv Arieli
		Chief Financial Officer

EX-99.1

Exhibit 99.1

CEVA, Inc. Announces First Quarter 2020 Financial Results

● Total revenue of $23.6 million, up 39% year-over-year

● Robust licensing environment: licensing revenue of $14.5 million, up 32% year-over-year

● Growing 5G penetration: agreements signed for 5G phase II RAN, fixed wireless access and wireless backhaul

MOUNTAIN VIEW, Calif., May 11, 2020 – CEVA, Inc. (NASDAQ: CEVA), the leading licensor of wireless connectivity and smart sensing technologies, today announced its financial results for the first quarter ended March 31, 2020.

Total revenue for the first quarter of 2020 was $23.6 million, a 39% increase compared to $17.0 million reported for the first quarter of 2019. First quarter 2020 licensing and related revenue was $14.5 million, an increase of 32% when compared to $11.0 million reported for the same quarter a year ago. Royalty revenue for the first quarter of 2020 was $9.1 million, an increase of 53% when compared to $6.0 million reported for the first quarter of 2019.

Thirteen license agreements were completed during the quarter, of which three were for smart sensing products and ten were for connectivity products. Three of the agreements were with first time customers. Customers’ target markets include 5G for base station RAN, 5G fixed wireless access and 5G backhaul, Wi-Fi 6 for IoT devices, true wireless stereo earbuds, vision and AI for drones, and voice assistants for a range of smart home and IoT devices. Geographically, four of the deals signed were in China, four were in Europe, three were in the U.S. and two were in the APAC region, including Japan.

Gideon Wertheizer, CEO of CEVA, stated: “We are extremely proud of our performance during the first quarter, despite the wide scale lockdowns and disruptions our customers are facing as a result of COVID-19. Our licensing activities continue to expand, and we are experiencing strong interest in particular for our 5G, Wi-Fi 6 and sensing technologies. Our royalty revenue performance demonstrates the strength of an increasingly diversified customer base, with IoT products and the introduction of a new low cost flagship smartphone offsetting the impact of supply chain disruptions in China during the first quarter. We continue to execute on our strategy and drive new product developments as we believe that these investments present further growth opportunities as the industry recovers from the pandemic.”

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Net loss for the first quarter of 2020 was $1.2 million, as compared to a net loss of $2.3 million reported for the same period in 2019. GAAP diluted loss per share for the first quarter of 2020 was ($0.05), as compared to a GAAP diluted loss per share of ($0.10) for the same period in 2019.

Non-GAAP net income and diluted earnings per share for the first quarter of 2020 increased to $2.6 million and $0.11, respectively, from $0.3 million and $0.01 reported for the first quarter of 2019. Non-GAAP net income and diluted earnings per share for the first quarter of 2020 excluded: (a) equity-based compensation expense, net of taxes, of $3.1 million, (b) the impact of the amortization of acquired intangibles, net of taxes, of $0.7 million associated with the acquisition of the Hillcrest Labs business and investments in NB-IoT and Immervision technologies. Non-GAAP net income and diluted earnings per share for the first quarter of 2019 excluded: (a) equity-based compensation expense, net of taxes, of $2.3 million, and (b) the impact of the amortization of acquired intangibles of $0.3 million associated with the acquisition of RivieraWaves and an investment in NB-IoT technologies.

Yaniv Arieli, Chief Financial Officer of CEVA, stated: “We will continue to act responsibly and adapt to the dynamics of the COVID-19 impact, while maintaining our customer focus, and research and development roadmaps. During the quarter, the company repurchased approximately $4.8 million of its common stock. Our cash and cash equivalent balances, marketable securities and bank deposits were approximately $151 million at the end of the first quarter, with no debt.”

CEVA Conference Call

On May 11, 2020 CEVA management will conduct a conference call at 8:30 a.m. Eastern Time to discuss the operating performance for the quarter.

The conference call will be available via the following dial in numbers:

● U.S. Participants: Dial 1-844-435-0316 (Access Code: CEVA)

● International Participants: Dial +1-412-317-6365 (Access Code: CEVA)

The conference call will also be available live via webcast at the following link: https://www.webcaster4.com/Webcast/Page/984/33821. Please go to the web site at least fifteen minutes prior to the call to register, download and install any necessary audio software.

For those who cannot access the live broadcast, a replay will be available by dialing +1-877-344-7529 or +1-412-317-0088 (access code: 10141056) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on May 25, 2020. The replay will also be available at CEVA's web site www.ceva-dsp.com.

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Forward Looking Statement

This press release 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 Mr. Wertheizer’s statement that the company’s investments present further growth opportunities as the industry recovers from the pandemic, as well as Mr. Arieli’s statement that the company will continue to act responsibly and adapt to the dynamics of the COVID-19 impact, while maintaining customer focus, and research and development roadmaps. The risks, uncertainties and assumptions that could cause differing CEVA results include: the duration of the COVID-19 pandemic; the extent and length of the shelter-in-place and other restrictions associated with the COVID-19 pandemic and the impact on customers, consumer demand and the global economy generally; the ability of the CEVA DSP cores and other technologies to continue to be strong growth drivers for us; our continued success in penetrating new markets and maintaining our market position in existing markets; our ability to diversify the company’s royalty streams, the ability of products incorporating our technologies to achieve market acceptance, the speed and extent of the expansion of 5G RAN and Wi-Fi 6, the maturation of the autonomous driving and IoT markets, the effect of intense industry competition and consolidation, global chip market trends, the possibility that markets for CEVA’s technologies may not develop as expected or that products incorporating our technologies 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.

About CEVA, Inc.

CEVA is the leading licensor of signal processing platforms and artificial intelligence processors for a smarter, connected world. We partner with semiconductor companies and OEMs worldwide to create power-efficient, intelligent and connected devices for a range of end markets, including mobile, consumer, automotive, industrial and IoT. Our ultra-low-power IPs for vision, audio, communications and connectivity include comprehensive DSP-based platforms for LTE/LTE-A/5G baseband processing in handsets, infrastructure and cellular IoT (NB-IoT and Cat-M) enabled devices, advanced imaging and computer vision for any camera-enabled device, audio/voice/speech and ultra-low power always-on/sensing applications for multiple IoT markets. For artificial intelligence, we offer a family of AI processors capable of handling the complete gamut of neural network workloads, on-device. For connectivity, we offer the industry’s most widely adopted IPs for Bluetooth (low energy and dual mode) and Wi-Fi (Wi-Fi 4 (802.11n), Wi-Fi 5 (802.11ac) and Wi-Fi 6 (802.11ax) up to 4x4). Visit us at www.ceva-dsp.com and follow us on Twitter, YouTube, Facebook, LinkedIn and Instagram.

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For More Information Contact:

Yaniv Arieli CEVA, Inc. CFO +1.650.417.7941 yaniv.arieli@ceva-dsp.com Richard Kingston CEVA, Inc. VP Market Intelligence, Investor & Public Relations +1.650.417.7976 richard.kingston@ceva-dsp.com

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CEVA, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME – U.S. GAAP

U.S. dollars in thousands, except per share data

	Quarter ended
	March 31,
	2020			2019
	Unaudited			Unaudited
Revenues:
Licensing and related revenues	$	14,495		$	11,011
Royalties		9,120			5,958
Total revenues		23,615			16,969
Cost of revenues		2,751			2,023
Gross profit		20,864			14,946
Operating expenses:
Research and development, net		15,113			12,330
Sales and marketing		3,168			3,021
General and administrative		3,664			2,317
Amortization of intangible assets		582			210
Total operating expenses		22,527			17,878
Operating loss		(1,663	)		(2,932	)
Financial income, net		831			800
Loss before taxes on income		(832	)		(2,132	)
Taxes on income		353			165
Net loss	$	(1,185	)	$	(2,297	)
Basic and diluted net loss per share	$	(0.05	)	$	(0.10	)
Weighted-average shares used to compute net loss per share (in thousands):
Basic		22,421			21,917
Diluted		22,421			21,917

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Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

U.S. Dollars in thousands, except per share amounts

	Quarter ended
	March 31,
	2020			2019
	Unaudited			Unaudited
GAAP net loss		(1,185	)		(2,297	)
Equity-based compensation expense included in cost of revenues		158			136
Equity-based compensation expense included in research and development expenses		1,623			1,362
Equity-based compensation expense included in sales and marketing expenses		451			356
Equity-based compensation expense included in general and administrative expenses		875			562
Income tax benefit related to equity-based compensation expenses		(49	)		(137	)
Amortization of intangible assets, net of taxes, related to acquisitions of RivieraWaves and Hillcrest Labs business, investments in NB-IoT and Immervision technologies		693			289
Non-GAAP net income	$	2,566		$	271
GAAP weighted-average number of Common Stock used in computation of diluted net loss per share (in thousands)		22,421			21,917
Weighted-average number of shares related to outstanding stock-based awards (in thousands)		506			775
Weighted-average number of Common Stock used in computation of diluted earnings per share, excluding the above (in thousands)		22,927			22,692
GAAP diluted loss per share	$	( 0.05	)	$	( 0.10	)
Equity-based compensation expense, net of taxes	$	0.13		$	0.10
Amortization of intangible assets, net of taxes, related to acquisitions of RivieraWaves and Hillcrest Labs business, investments in NB-IoT and Immervision technologies	$	0.03		$	0.01
Non-GAAP diluted earnings per share	$	0.11		$	0.01

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CEVA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

	March 31,			December 31,
	2020			2019 (*)
	Unaudited			Unaudited
ASSETS
Current assets:
Cash and cash equivalents	$	22,903		$	22,803
Marketable securities and short-term bank deposits		126,390			121,782
Trade receivables, net		16,426			11,066
Unbilled receivables		8,499			17,241
Prepaid expenses and other current assets		6,981			5,660
Total current assets		181,199			178,552
Long-term assets:
Bank deposits		1,296			5,368
Severance pay fund		9,827			9,881
Deferred tax assets, net		11,753			10,605
Property and equipment, net		7,944			7,879
Operating lease right-of-use assets		10,608			11,066
Goodwill		51,070			51,070
Intangible assets, net		12,771			13,424
Other long-term assets		9,449			9,176
Total assets	$	295,917		$	297,021
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade payables	$	925		$	701
Deferred revenues		4,034			3,642
Accrued expenses and other payables		20,279			19,642
Operating lease liabilities		2,375			2,393
Total current liabilities		27,613			26,378
Long-term liabilities:
Accrued severance pay		10,607			10,551
Operating lease liabilities		7,788			8,273
Other accrued liabilities		637			662
Total liabilities		46,645			45,864
Stockholders’ equity:
Common stock		22			22
Additional paid in-capital		225,583			228,005
Treasury stock		(36,033	)		(39,390	)
Accumulated other comprehensive income (loss)		(349	)		94
Retained earnings		60,049			62,426
Total stockholders’ equity		249,272			251,157
Total liabilities and stockholders’ equity	$	295,917		$	297,021

(*) Derived from audited financial statements

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EX-99.2

Exhibit 99.2

CEVA, Inc. Q1 2020 Financial Results Conference Call - Prepared Remarks :: May 11, 2020

CEVA, INC.

First Quarter 2020 Financial Results Conference Call

Prepared Remarks of Gideon Wertheizer, Chief Executive Officer and
Yaniv Arieli, Chief Financial Officer

May 11, 2020

8:30 A.M. Eastern

Good morning everyone and welcome to CEVA’s first quarter 2020 earnings conference call. I’m joined today by Gideon Wertheizer, Chief Executive Officer, and Yaniv Arieli, Chief Financial Officer of CEVA. Gideon will cover the business aspects and highlights from the first quarter and provide general qualitative data. Yaniv will then cover the financial results for the first quarter and also provide qualitative data for the second quarter and full year 2020.

I will start with the forward-looking statements.

Forward Looking Statements 

Please note that today’s discussion 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 guidance for the second quarter of 2020, our anticipated pillars of growth, including 5G Ran and Wi-Fi 6, and optimism about achieving such growth objectivities, optimism about certain of our customers gaining market share in 5G, our ability to manage our non-GAAP expense levels to mitigate the adverse impact of the pandemic in the coming months and market data by Cisco and ABI Research. For information on the factors that could cause a difference in our results, please refer to our filings with the Securities and Exchange Commission. These include: the duration of the COVID-19 pandemic; the extent and length of the shelter-in-place and other restrictions associated with the COVID-19 pandemic and the impact on customers, consumer demand and the global economy generally; the ability of CEVA’s IPs for smarter, connected devices 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 new products incorporating our technologies to achieve market acceptance; the speed and extent of the expansion of the 5G, Wi-Fi and IoT markets; our ability to execute more non-handset baseband license agreements; the effect of intense industry competition and consolidation; and global chip market trends. CEVA assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

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CEVA, Inc. Q1 2020 Financial Results Conference Call - Prepared Remarks :: May 11, 2020

Gideon

Thank you Richard. Good morning everyone and thank you for joining us today. Firstly, our heartfelt sympathies are with those around the world that have lost their loved ones or their jobs due to the COVID-19 pandemic. We are all hopeful that the measures taken by governments around the world will lead to sustainable recovery. At CEVA, we are taking proactive steps to protect all of our employees’ health and adjust our operations to work from home. Our IT infrastructure is advanced and scalable, which allowed a seamless migration from office to work from home. Our ongoing R&D developments remain at a high-level of productivity, and our interactions with customers for sales and support activities are smooth. We continue to monitor government instructions country by country and are taking careful steps to enable our employees to return to our offices.

Against this backdrop, we had an excellent quarter with revenue of $23.6 million, up 39% year-over-year. The licensing environment continues to be robust, and we recorded $14.5 million in licensing revenue, up 32% year-over-year. We signed 13 new agreements, of which 10 were for connectivity and 3 were for smart sensing. 3 out of the 13 deals were with first time customers. Target applications for our technologies include 5G for base station RAN, 5G fixed wireless access and 5G backhaul, Wi-Fi 6 for IoT devices, true wireless stereo earbuds, vision and AI for drones, and voice assistants for a range of smart home and IoT devices.

Royalty revenue came in at $9.1 million, up 53% year-over-year. Above seasonal weakness in the Chinese handset market resulting from the COVID-19 lockdown in China was more than offset by solid IoT-based product shipments and the introduction of a new low cost model from a leading smartphone company.

Let me take the next few minutes to provide you with additional perspective on two growth vectors that are central in our strategy: 5G RAN and Wi-Fi 6. These spaces represent secular trends and are expected to come increasingly into focus on the back of COVID-19, as they are key to enabling better work-from-home practices, and support the proliferation of the use of robots, and remote medical diagnosis and treatments in the future.

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CEVA, Inc. Q1 2020 Financial Results Conference Call - Prepared Remarks :: May 11, 2020

On 5G RAN, our largest 5G OEM customers extended the use of our technologies and signed new licensing agreements during the quarter for development of next-generation 5G chipsets to address the 5G phase II network services. These services include Ultra Reliable Low Latency Communication (“uRLLC”) targeting robotics, smart manufacturing, automotive, medical and Massive Machine-Type-Communications (“mMTC”) that enables billions of low powered sensors to be connected to the cloud for aggregation, and AI services. uRLLC and mMTC will drive the upcoming capital investments in 5G and are the focus of our customers with their new RAN designs. In this context, a few weeks ago, we unveiled our latest generation DSP, the CEVA-XC16. This is the most advanced and powerful DSP platform available today, offering unprecedented performance and state-of-the-art architecture innovations in operating speed, parallel processing and multithreading. We are also encouraged by the recent traction our customer, ZTE, has had in 5G. To date, it has 45 commercial contracts and most recently won a 29% share of a $5.2 billion contract to deploy 5G base stations for China Mobile, a substantially bigger share than it had in prior engagements for China Mobile.

On Wi-Fi 6, we are experiencing good momentum and customer interest with two new agreements signed during the quarter targeting a variety of IoT devices, ranging from DTV, smart set-top boxes, smart speakers to smart door locks. Wi-Fi 6 is the latest Wi-Fi standard, also referred to as 802.11ax. According to CISCO forecasts, nearly 60 percent of mobile data traffic worldwide will be offloaded to Wi-Fi networks by 2022. According to a recent study from ABI research, the Wi-Fi 6 market is forecasted to reach 2.2 billion units by 2024, as compared to less than 300 million in 2019. The recent FCC approval to free up additional spectrum at the 6 GHz band will enable compliant Wi-Fi 6e devices to achieve speeds comparable to 5G mobile networks, support low-latencies required for applications like virtual and augmented reality (VR/AR) and mobile gaming and is also expected to boost the Industry 4.0 uptake for smart manufacturing.

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CEVA, Inc. Q1 2020 Financial Results Conference Call - Prepared Remarks :: May 11, 2020

So in summary, our thoughts are with those people suffering from the impact of COVID-19. While the situation is still dynamic, we are encouraged by the persistent design activities of our customers and interests in our products. We are laser focused to continue to expand our business to capitalize on the momentum we gained last year. We are closely monitoring the dynamics and developments concerning our customers’ shipments and will take prudent steps until COVID-19’s impact is contained, and supply and demand resume some normalcy.

We hope you are all safe and look forward to meeting you face to face again in the near future at conferences and roadshows.

With that said, I will hand over the call to Yaniv for the financials and guidance.

Yaniv

Thank you Gideon, I’ll start by reviewing the results of our operations for the first quarter of 2020.

- Revenue for the first quarter was up 39% to $23.6 million, as compared to $17.0 million for the same quarter last year. The revenue breakdown is as follows:

o Licensing and related revenue was approximately $14.5 million, reflecting 61% of total revenues, 32% higher than $11.0 million for the first quarter of 2019.

o Royalty revenue was $9.1 million, reflecting 39% of total revenues, 53% higher than $6.0 million for the same quarter last year.

o Quarterly gross margin was 88% on a GAAP basis and 90% on a non-GAAP basis, slightly better on non-GAAP than what we projected. Non-GAAP quarterly gross margin excluded approximately $0.2 million of equity-based compensation expenses and $0.2 million of the impact of the amortization of acquired intangibles.

- Total GAAP operating expenses for the first quarter was at the higher-end of our guidance at $22.5 million. OPEX also included an aggregate equity-based compensation expense of approximately $2.9 million, higher than forecasted due to the accounting associated with the February 2020 PSU grants to management. OPEX also included $0.6 million for the amortization of acquired intangibles and $0.9 million allowance for doubtful debt provision associated with liquidity difficulties of one of our U.S.-based customers. Total operating expenses for the first quarter, excluding equity-based compensation expenses and amortization of intangibles, were $19.0 million, also at the high-end of our guidance.

- U.S. GAAP net loss for the quarter was $1.2 million and diluted loss per share was (5 cents) for the first quarter of 2020, as compared to net loss of $2.3 million and diluted loss per share of (10 cents) for the first quarter of 2019.

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CEVA, Inc. Q1 2020 Financial Results Conference Call - Prepared Remarks :: May 11, 2020

- Non-GAAP net income and diluted EPS for the first quarter of 2020 increased by 9.5 fold and 11 fold, respectively to $2.6 million and 11 cents, respectively. Non-GAAP net income and diluted EPS for the first quarter of 2019 were $0.3 million and 1 cent, respectively. First quarter 2020 figures exclude equity-based compensation expenses, net of taxes, of $3.1 million, and the impact of the amortization of acquired intangibles in the amount of $0.7 million.

Other related data

- Shipped units by CEVA licensees during the first quarter of 2020 were 261 million units, down 27% sequentially and up 50% from the first quarter 2019 reported shipments.

- Of the 261 million units shipped, 111 million units, or 43%, were for handset baseband chips, reflecting a sequential decrease of 43% from 196 million units of handset baseband chips shipped during the fourth quarter of 2019 and a 25% increase from 89 million units shipped year over year.

- Our base station and IoT product shipments were 150 million units, down 9% sequentially and up 76% year over year. We have now categorized all of our non-handset baseband chips under the umbrella of “base station and IoT” products.

As for the balance sheet items

- As of March 31, 2020, CEVA’s cash and cash equivalent balances, marketable securities and bank deposits were $151 million. We continued our buyback plan this quarter repurchasing approximately 202,000 shares during the quarter for approximately $4.8 million. In February 2020, our Board of Directors approved a new expansion to the buyback plan by a total of 700,000 shares of common stock available for repurchase. As of today, 498,000 shares are available for repurchase.

- Our “adjusted to ASC 606” DSO for the first quarter of 2020 was 63 days.

- During the first quarter, we generated $6.4 million of net cash from operations; depreciation and amortizations were $1.5 million and purchase of fixed assets was $0.8 million.

- At the end of the first quarter, our headcount was 391 people, of which 324 were engineers, up from a total of 382 people at the end of 2019.

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CEVA, Inc. Q1 2020 Financial Results Conference Call - Prepared Remarks :: May 11, 2020

Now for the guidance

As mentioned by Gideon, we continued to execute well on our business strategy during the first quarter and had an excellent first quarter in licensing and royalty revenues despite the disruptions caused by COVID-19. Although we continue to work diligently towards our goal of meeting the annual revenue guidance given in our last earnings call, the spread of COVID-19 around the world and the extent of the disruption it poses on the supply chain and on consumer demand cannot be fully assessed at this point. Given this uncertainty, as a matter of prudence, we have decided to withdraw our annual royalty revenue guidance at this stage. On the other hand, our licensing and related revenues business remains robust and we are maintaining our annual forecast of growth of $2 million to $4 million over 2019 record annual results.

We will also continue to closely monitor our non-GAAP expense levels to mitigate the adverse impact of the pandemic in the coming months. This will not affect our research and development plans, technology roadmaps or customer support, as we are firmly committed to those areas and believe those technology investments will pay dividends in the future. As we have seen from previous cycles, IP companies play a crucial role in expediting the semiconductor market recovery and with closing technology gaps that such slowdowns can create.

Specifically for the second quarter of 2020

- Gross margin is expected to be approximately 86% on GAAP and 88% on non-GAAP basis, excluding an aggregate of $0.2 million of equity-based compensation expenses and $0.2 million of amortization of other assets associated with the Immervision investment.

- OPEX for the next three quarters of 2020 should be lower than the first quarter. For the second quarter, GAAP-based OPEX is expected to be in the range of $21.2 million to $22.2 million. Of our anticipated total operating expenses for the second quarter, $3.7 million is expected to be attributable to equity-based compensation expenses. As I stated earlier, such expenses are higher than originally forecasted due to the accounting treatment of the February 2020 PSU grants to management and $0.6 million to the amortization of acquired intangibles. Non-GAAP OPEX is expected to be in the range of $17.0 million – $18.0 million.

- Net interest income is expected to be approximately $0.75 million.

- Taxes for the second quarter are expected to be approximately $0.3 million on both GAAP and non-GAAP basis.

- Share count for the second quarter of 2020 is expected to be 23.2 million shares.

Operator: You can now open the Q&A session

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CEVA, Inc. Q1 2020 Financial Results Conference Call - Prepared Remarks :: May 11, 2020

Wrap Up: Richard

Thank you for joining us today and for your continued interest in CEVA. As a reminder, the prepared remarks for this conference call are filed as an exhibit to the Current Report on Form 8-K and accessible through the investor section of our website at https://investors.ceva-dsp.com.

With regards to upcoming events, we will be participating in the following:

● The Cowen 2020 Virtual TMT Conference, May 26 to May 29.

Further information on this event and all events we will be participating in can be found on the investor section of our website.

Thank you and goodbye

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