CEVA, Inc.

Good day and welcome to the CEVA, Inc. second quarter 2026 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. Please note today's event is being recorded. I'd now like to turn the conference over to Richard Kingston, Vice President, Market Intelligence, Investor, and Public Relations. Please go ahead, sir.

Thank you, Rocco. Good morning, everyone, and welcome to SEVA's second quarter 2026 earnings conference call. Joining me today are Amir Panush, Chief Executive Officer, and Yaniv Arieli, Chief Financial Officer. Before handing the call over to Amir, I'd like to remind everyone 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 our results to differ materially from those expressed or implied by such statements. We will also discuss certain non-GAAP financial measures which we believe provide investors with additional insight into our core operating performance. Reconciliations between our GAAP and non-GAAP results are included in the earnings release issued this morning and available on the investors relations section of our website. With that, I'll turn the call over to Amir.

Thank you, Richard, and good morning, everyone. We delivered another strong quarter with revenue increasing 13% year-over-year to $29 million, fueled by licensing and related revenue growing 21% to its highest level in three years. The quarter also benefited from a sequential recovery in royalty revenue driven by continuing momentum across wireless connectivity, ramping automotive AI programs, and market share gains in smartphones. During the quarter, we signed 10 licensing agreements, including two with first-time customers and two directly with OEMs. More important than the number of agreements is the quality of those agreements. Increasingly, customers are adopting broader platforms and deeper collaborations that strengthen both our near-term licensing business and our long-term royalty opportunity. I would like to focus today on two themes that we believe highlight an important shift in the semiconductor industry and explain why SIVA and our technologies are increasingly well positioned for long-term growth. The first is the continuing migration of intelligence from the cloud to the smart edge. This is a trend we have discussed for several years. and one that is increasingly driving demands for our higher performance, connectivity, sensing and AI technologies. During the quarter, we announced that we believe is one of the most strategically significant AI licensing agreements in CIVAL's history. A leading global AI and computing platform company selected our new 4M NPUIP for its next generation custom AI silicon. This agreement is significant for several reasons. First, it represents a new category of AI customers for SIVA. Historically, our AI licensing activity has primarily been with semiconductor companies and device OEMs. This customer develops both the hardware platform and the operating system, allowing us to collaborate at a much deeper level by optimizing not only the MPU hardware, but also the AI software stack for its models, applications, and workloads. The expertise we gain through this engagement extends well beyond a single customer program. Co-optimizing AI hardware and software at the platform level will strengthen both our hardware and software roadmaps and further enhance our AI offering for future customers. More broadly, we believe these agreements reflect an important industry trend where companies with some of the world's large engineering organizations are increasingly choosing to leverage proven AI IP rather than developing every component internally. For these companies, the question is no longer whether they have the engineering capability to build an NPU, but whether doing so represents the best use of their engineering resources. By licensing production-proven IP, they can focus their investments on the hardware, software, and AI experiences to differentiate their platforms while reducing development risk and accelerating time-to-market. The second trend we are seeing is customers increasingly adopting border platform solutions rather than individual IP blocks. Two agreements from the quarter illustrate this well. A high-volume U.S. semiconductor company chose to adopt a complete chip built on our Wi-Fi 6 and Bluetooth Low Energy IP, originally developed in partnership with another SIVA customer, rather than licensing the underlying IP blocks individually. The decision reflected the same preference for production-proven, complete solutions over developing internally or licensing component IP. Another US customer expanded a relationship that began with a single basements component by adopting our complete basements processing subsystem. As semiconductor development becomes increasingly complex, customers are recognizing that leveraging proven subsystem IP can significantly reduce engineering effort and execution risk, all while accelerating time to market, enabling them to concentrate their internal resources on the technologies that most differentiate their products. These are different customers and different technologies, but they demonstrate the same underlying trend. Companies are increasingly choosing production-proven hardware, software, and system expertise delivered as a complete platform, rather than assembling individual IP blocks themselves. For SIVA, this expands both the scope and value of our engagement. Border platform adoption increases our content per design, deepens our integration into customer products, and creates larger, longer-term customer relationships and increases the royalty opportunity associated with each customer platform as those products enter production. These successful outcomes also validate the strategy we have been executing over the past several years. We have invested in expanding our diverse portfolio beyond individual IP blocks to more complex hardware and software platforms across connectivity, sensing, and AI. As customers look to accelerate development while reducing execution risk, we believe this positions SIVA to capture a greater share of silicon content in future design. Beyond these strategic engagements, Activity remained broad-based across our business. In addition to the AI and platform wins I just discussed, we signed multiple follow-on agreements with existing customers alongside our new customer engagement, demonstrating our ability to both expand long-term relationships and consistently win new business. Across connectivity, we secured customer engagement spanning the United States, Europe, China, and the border Asia-Pacific region, reinforcing the global demand for our technology. We also expanded our sensing portfolio with the launch of our Microsoft-certified RealSpace Elevate embedded application software, extending our special audio technology into the PC gaming market for the first time. Taking together, these achievements reinforce the strength of our connect, sense, and infer offering to enable physical AI use cases. While AI is creating exciting new opportunities for SIVA, connectivity remains the foundation of physical AI and continues to be the entry point for many of our customers' relationships. Increasingly, those relationships expand over time Customers adopt additional technologies across our portfolio.