CEVA INC

Previous wording

Headquartered in Rockville, Maryland, we are the leader in innovative silicon and software IP solutions that enable smart edge products to connect, sense, and infer data more reliably and efficiently. Commanding 67% of the wireless connectivity market share based on IP design revenues in 2023, according to IPnest, we believe we have the industry’s broadest portfolio of comprehensive wireless communications and Edge AI IP platforms and embedded software solutions. We power the connectivity, sensing, and inference capabilities in today’s most advanced smart edge products across four large, diversified markets with significant opportunity for long-term growth, covering consumer IoT, automotive, industrial and infrastructure, as well as the mobile and PC markets where we have well established customers and presence Based on our research, we believe that these sectors will represent a $5 billion total addressable market by 2027. Since 2003, more than 19 billion of the world’s most innovative smart edge products from AI-infused smartwatches, IoT devices and wearables to autonomous vehicles, 5G mobile networks and more have been shipped with Ceva IP, with approximately 2 billion products shipped in 2024 alone.

Current wording

Headquartered in Rockville, Maryland, we are the leader in innovative silicon and software IP solutions that enable smart edge products to connect, sense, and infer data more reliably and efficiently. Commanding 68% of the wireless connectivity market share based on IP design revenues in 2024, according to IPnest, we believe we have the industry’s broadest portfolio of comprehensive wireless communications and Edge AI IP platforms and embedded software solutions. We power the connectivity, sensing, and inference capabilities in today’s most advanced smart edge products across four large, diversified markets with significant opportunity for long-term growth, covering consumer IoT, automotive, industrial and infrastructure, as well as the mobile and PC markets where we have well established customers and presence Based on our research, we believe that these sectors will represent a $5 billion total addressable market by 2027. Since 2003, more than 20 billion of the world’s most innovative smart edge products from AI-infused smartwatches, IoT devices and wearables to autonomous vehicles, 5G mobile networks and more have been shipped with Ceva IP, with approximately 2 billion products shipped in 2024 alone.

Previous wording

● Advanced wireless connectivity solutions: Bluetooth, Wi-Fi, Ultra-Wideband (UWB), and 5G-Advanced platform IP for ubiquitous and robust communication;

Current wording

● Advanced wireless connectivity solutions: Bluetooth, Wi-Fi, Ultra-Wideband (UWB), cellular IoT and 5G-Advanced platform IP for ubiquitous and robust communication;

Previous wording

We believe our portfolio of wireless communications, sensing and Edge AI technologies address some of the most important megatrends, including 5G expansion, generative AI, embedded AI, industrial automation and vehicle electrification. We continue to experience strong interest across our IP portfolio due to these trends, in both traditional and new areas. In the first quarter of 2025, we concluded eleven IP licensing deals for a range of wireless and smart sensing use cases, including notable strategic licensing deals for our Wi-Fi 7 IP with two of our current highest volume customers. We also signed significant agreements for our NeuPro-M Edge AI NPU with an automotive semiconductor company for their next-generation ADAS solutions and for our RealSpace spatial audio software to be integrated into PC headsets for a leading PC OEM.

Current wording

We believe our portfolio of wireless communications, sensing and Edge AI technologies address some of the most important megatrends, including 5G expansion, generative AI, embedded AI, industrial automation and vehicle electrification. We continue to experience strong interest across our IP portfolio due to these trends, in both traditional and new areas. In the second quarter of 2025, we concluded thirteen IP licensing deals for a range of wireless and smart sensing use cases, including four licensing agreements for NeuPro family of NPUs, which we believe represents a pivotal moment for our AI business as we entered the broad adoption phase of our Edge AI NPUs. These NPU agreements include a high-volume connectivity customer expanding into AI-powered audio features, the second high volume connectivity in recent quarters to adopt our NeuPro-Nano NPU for their product lines. We also secured a notable automotive-related agreement with Qualcomm, following the acquisition of our long time V2X customer Autotalks by Qualcomm, and another automotive related agreement with a U.S. customer developing a 4D radar platform.

Previous wording

As a result of our focus on silicon and software IP solutions that enable products to connect, sense, and infer data, we believe we are well positioned for long-term growth in shipments and royalty revenues derived from smart edge products. Royalty rates from these products comprise a range of ASPs, from high volume Bluetooth and Wi-Fi to high value sensor fusion and base station RAN. The royalty ASP of our other products will be in between the two ranges.

Current wording

As a result of our focus on silicon and software IP solutions that enable products to connect, sense, and infer data, we believe we are well positioned for long-term growth in shipments and royalty revenues derived from smart edge products. Royalty rates from these products comprise a range of ASPs, from high volume Bluetooth and Wi-Fi to high value sensor fusion and base station RAN.

Previous wording

Our strategy returned us to year-over-year revenue growth in 2024, with overall revenue growing 10% over 2023, outperforming the 4% to 8% we expected at the beginning of 2024. In 2025, we expect our licensing and related revenues business will continue to expand into new markets and use cases for industrial IoT (IIoT) and consumer IoT devices, offering connectivity platforms, sensing platforms and software, AI solutions (including AI engines, NPUs and software) and more. On royalties, we expect our connectivity products to continue to also show growth in 2025, particularly related to our Bluetooth, Wi-Fi and cellular IoT business lines which enjoyed record shipments in 2024 and from an in-house 5G modem powered by our cellular DSP from a leading U.S. mobile OEM that launched its first smartphone based on the modem in the first quarter of 2025.

Current wording

Our strategy returned us to year-over-year revenue growth in 2024, with overall revenue growing 10% over 2023, outperforming the 4% to 8% we expected at the beginning of 2024. In 2025, we expect our licensing and related revenues business will continue to expand into new markets and use cases for industrial IoT (IIoT) and consumer IoT devices, offering connectivity platforms, sensing platforms and software, AI solutions (including AI engines, NPUs and software) and more. We saw the first evidence for solid IP expansion into AI during the second quarter of 2025, with four of thirteen deals signed for AI use cases and strong licensing revenue contribution. On royalties, we expect our connectivity products to continue to also show growth in 2025, particularly related to our Bluetooth, Wi-Fi and cellular IoT business lines which enjoyed record shipments in 2024 and from an in-house 5G modem powered by our cellular DSP from a leading U.S. mobile OEM that launched its first smartphone based on its own modem in the first quarter of 2025. In the second quarter of 2025, we recorded an all-time record high volume of our cellular IoT and Wi-Fi 6 IPs powering customer shipments.

Previous wording

However, the global economy continues to be impacted by macroeconomic conditions, including as a volatile interest rate environment, ongoing inflation and recent changes in legislation and regulations, including enacted and proposed tariffs and other trade policies, have introduced additional uncertainty in the global economy. In periods of perceived or actual unfavorable economic conditions, our customers or potential customers could delay or re-evaluate their decisions to initiate various projects which in turn could result in a delay or cessation of engagement or other business activities with us, and which could result in lower licensing revenues. In addition, lower consumer demand may result in lower royalty revenues as our customers ship fewer units. These factors may make it difficult for us to forecast and plan future budgetary decisions or business activities accurately. Accordingly, while we do not currently expect our IP solutions will themselves be subject to tariffs, the indirect impact on consumer demand, among other factors, has increased the uncertainty about the year. Given these evolving dynamics, as well as our lower than anticipated revenues for the first quarter, we are adopting a more cautious outlook, and have lowered our revenue guidance for the 2025 fiscal year from around a high-single digits range to a low-single digits range for growth over 2024 annual revenues.

Current wording

However, the global economy continues to be impacted by macroeconomic conditions, including as a volatile interest rate environment, ongoing inflation and recent changes in legislation and regulations, including enacted and proposed tariffs and other trade policies, have introduced additional uncertainty in the global economy. In periods of perceived or actual unfavorable economic conditions, our customers or potential customers could delay or re-evaluate their decisions to initiate various projects which in turn could result in a delay or cessation of engagement or other business activities with us, and which could result in lower licensing revenues. In addition, lower consumer demand may result in lower royalty revenues as our customers ship fewer units. These factors may make it difficult for us to forecast and plan future budgetary decisions or business activities accurately. Accordingly, while we do not currently expect our IP solutions will themselves be subject to tariffs, the indirect impact on consumer demand, among other factors, has increased the uncertainty about the year. Given these evolving dynamics, as well as our lower than anticipated revenues for the first quarter, in May 2025, we adopted a more cautious outlook, and lowered our revenue guidance for the 2025 fiscal year from around a high-single digits range to a low-single digits range for growth over 2024 annual revenues.

Previous wording

Our operations in Israel remain largely unaffected by the war between Israel and Hamas that began on October 7, 2023 and escalated to conflicts with Lebanon and Hezbollah, and we continue to drive our business and support our customers globally. However, a portion of our employees in Israel have been or are called to active reserve duty and additional employees may be called in the future, if needed. The Company has executed its business continuity plan with respect to those employees. It is possible that some of our operations in the region may be disrupted if this continues for a significant period of time or if the situation further deteriorates.

Current wording

Our operations in Israel remain largely unaffected by the war between Israel and Hamas that began on October 7, 2023 and escalated to conflicts with Lebanon, Hezbollah and Iran. Nevertheless, we continue to drive our business and support our customers globally. However, a portion of our employees in Israel have been or are called to active reserve duty and additional employees may be called in the future, if needed. The Company has executed its business continuity plan with respect to those employees. It is possible that some of our operations in the region may be disrupted if this continues for a significant period of time or if the situation further deteriorates.

Previous wording

Total revenues were $24.2 million for the first quarter of 2025, representing an increase of 10% as compared to the corresponding period in 2024. The increase in total revenues for the first quarter of 2025 was due to higher licensing and related revenues, offset by lower royalty revenues, as further described below.

Current wording

Total revenues were $25.7 million and $49.9 million for the second quarter and first half of 2025, respectively, representing a decrease of 10% and 1% as compared to the corresponding periods in 2024. The decrease in total revenues for the second quarter of 2025 was mainly due to lower licensing and related revenues, as further described below. The decrease in total revenues for the first half of 2025 was due to lower royalty revenues, offset by higher licensing and related revenues, as further described below.

Previous wording

Our five largest customers accounted for 56% of our total revenues for the first quarter of 2025, as compared to 45% for the comparable period in 2024. One customer accounted for 24% of our total revenues for the first quarter of 2025, as compared to two customers that accounted for 14% and 15% of our total revenues for the first quarter of 2024. Sales to UNISOC (formerly Spreadtrum Communications, Inc. and RDA Corporation) represented 24% and 14% of our total revenues for the first three months of 2025 and 2024, respectively. Generally, the identity of our customers representing 10% or more of our total revenues varies from period to period, especially with respect to our IP licensing customers as we generate licensing revenues generally from new customers on a quarterly basis. With respect to our royalty revenues, two royalty paying customers represented 10% or more of our total royalty revenues for the first quarter of 2025 and collectively represented 30% of our total royalty revenues for the first quarter of 2025. Two royalty paying customers represented 10% or more of our total royalty revenues for the first quarter of 2024 and collectively represented 41% of our total royalty revenues for the first quarter of 2024. We expect that a significant portion of our future revenues will continue to be generated by a limited number of customers. The concentration of our customers is explainable in part by consolidation in the semiconductor industry.

Current wording

Our five largest customers accounted for 42% of our total revenues for both the second quarter and first half of 2025, respectively, as compared to 66% and 50% for the comparable periods in 2024. Two customers each accounted for 11% of our total revenues for the second quarter of 2025, as compared to three customers that accounted for 23%, 21% and 13% of our total revenues for the second quarter of 2024. One customer accounted for 17% of our total revenues for the first half of 2025, as compared to three customers that each accounted for 13% of our total revenues for the first half of 2024. Sales to UNISOC (formerly Spreadtrum Communications, Inc. and RDA Corporation) represented 11% and 17% of our total revenues for the second quarter and first half of 2025, respectively. Generally, the identity of our customers representing 10% or more of our total revenues varies from period to period, especially with respect to our IP licensing customers as we generate licensing revenues generally from new customers on a quarterly basis. With respect to our royalty revenues, two royalty paying customers represented 10% or more of our total royalty revenues for both the second quarter and first half of 2025 and collectively represented 38% and 34% of our total royalty revenues for the second quarter and first half of 2025, respectively. Two royalty paying customers represented 10% or more of our total royalty revenues for both the second quarter and first half of 2024 and collectively represented 45% and 43% of our total royalty revenues for the second quarter and first half of 2024, respectively. We expect that a significant portion of our future revenues will continue to be generated by a limited number of customers. The concentration of our customers is explainable in part by consolidation in the semiconductor industry.

Previous wording

During the quarter, eleven IP licensing agreements were concluded, targeting a wide range of end markets and applications, including Edge AI NPU for automotive ADAS, Wi-Fi 7 connectivity for AIoT, Bluetooth 6 and Wi-Fi 6 for combo connectivity products, 5G cellular IoT for industrial devices, audio for consumer devices and spatial audio for PC headsets. Two of the deals signed were with first-time customers.

Current wording

During the quarter, thirteen IP licensing agreements were concluded, targeting a wide range of end markets and applications, including five first-time customers and four OEM customers, highlighting the breadth and strength of our IP portfolio.

Previous wording

The five largest royalty-paying customers accounted for 50% of our total royalty revenues for the first quarter of 2025, as compared to 58% for the comparable period of 2024.

Current wording

The five largest royalty-paying customers accounted for 58% and 54% of our total royalty revenues for the second quarter and first half of 2025, respectively, as compared to 63% and 59% for the comparable periods of 2024.

Previous wording

Cost of revenues was $3.5 million for the first quarter of 2025, as compared to $2.5 million for the comparable period of 2024. Cost of revenues accounted for 14% of our total revenues for the first quarter of 2025, as compared to 11% for the comparable period of 2024. The increase for the first quarter of 2025 principally reflected higher strategically beneficial customization work associated with the strategic 5G-Advanced deals we signed in the second half of 2024. Included in cost of revenues for the first quarter of 2025 was a non-cash equity-based compensation expense of $159,000, as compared to $203,000 for the comparable period of 2024.

Current wording

Cost of revenues was $3.5 million and $7.0 million for the second quarter and first half of 2025, respectively, as compared to $2.9 million and $5.4 million for the comparable periods of 2024. Cost of revenues accounted for 14% of our total revenues for both the second quarter and first half of 2025, as compared to 10% and 11% for the comparable periods of 2024. The increase for both the second quarter and first half of 2025 principally reflected higher strategically beneficial customization and implementation work associated with the strategic 5G-Advanced deals we signed in the second half of 2024. Included in cost of revenues for the second quarter and first half of 2025 was a non-cash equity-based compensation expense of $166,000 and $325,000, respectively, as compared to $191,000 and $394,000 for the comparable periods of 2024.

Previous wording

Gross margin for the first quarter of 2025 was 86%, as compared to 89% for the comparable period of 2024. The decrease for the first quarter of 2025 mainly reflected higher cost of revenues as set forth above, offset by higher total revenues.

Current wording

Gross margin for both the second quarter and first half of 2025 was 86%, as compared to 90% and 89% for the comparable periods of 2025. The decrease for both the second quarter and first half of 2025 mainly reflected higher cost of revenues, as set forth above, and lower total revenues.

Previous wording

Total operating expenses were $25.1 million for the first quarter of 2025, as compared to $24.5 million for the comparable period of 2024. The net increase for the first quarter of 2025 principally reflected higher salaries and employee-related costs, higher professional services costs and higher non-cash equity-based compensation expenses, partially offset by higher allocation of customization work for our licensees to cost of revenues.

Current wording

Total operating expenses were $26.6 million and $51.8 million for the second quarter and first half of 2025, respectively, as compared to $25.5 million and $50.1 million for the comparable periods of 2024. The net increase for both the second quarter and first half of 2025 principally reflected higher salaries and employee-related costs and higher non-cash equity-based compensation expenses, partially offset by higher allocation of customization and implementation work for our licensees to cost of revenues.

Previous wording

Total research and development expenses, net were $17.6 million for the first quarter of 2025, as compared to $18.0 million for the comparable period of 2024. The decrease for the first quarter of 2025 principally reflected higher allocation of customization work for our licensees to cost of revenues, partially offset by higher non-cash equity-based compensation expenses. Included in research and development expenses for the first quarter of 2025 were non-cash equity-based compensation expenses of $2,466,000, as compared to $2,007,000 for the comparable period of 2024. Research and development expenses as a percentage of our total revenues were 73% for the first quarter of 2025, as compared to 82% for the comparable period of 2024. The percentage decrease for the first quarter of 2025, as compared to the comparable period of 2024, was mainly due to higher revenues.

Current wording

Total research and development expenses, net were $18.8 million and $36.4 million for the second quarter and first half of 2025, respectively, as compared to $18.8 million and $36.7 million for the comparable periods of 2024. The decrease for the first half of 2025 principally reflected higher allocation of customization and implementation work for our licensees to cost of revenues, partially offset by higher salaries and employee-related costs and higher non-cash equity-based compensation expenses. Included in research and development expenses for the second quarter and first half of 2025 were non-cash equity-based compensation expenses of $2,673,000 and $5,139,000, respectively, as compared to $2,438,000 and $4,445,000 for the comparable periods of 2024. Research and development expenses as a percentage of our total revenues were 73% for both the second quarter and first half of 2025, as compared to 66% and 73% for the comparable periods of 2024. The percentage increase for the second quarter of 2025, as compared to the comparable period of 2024, was mainly due to lower revenues.

Previous wording

The number of research and development personnel was 325 at March 31, 2025, as compared to 331 at March 31, 2024.

Current wording

The number of research and development personnel was 323 at June 30, 2025, as compared to 332 at June 30, 2024.

Previous wording

Our sales and marketing expenses were $3.4 million for the first quarter of 2025, as compared to $2.8 million for the comparable period of 2024. The increase for the first quarter of 2025 principally reflected higher salaries and employee-related costs, mainly due to a greater number of personnel, as well as higher non-cash equity-based compensation expenses. Included in sales and marketing expenses for the first quarter of 2025 were non-cash equity-based compensation expenses of $566,000, as compared to $365,000 for the comparable period of 2024. Sales and marketing expenses as a percentage of our total revenues were 14% for the first quarter of 2025, as compared to 13% for the comparable period of 2024.

Current wording

Our sales and marketing expenses were $3.3 million and $6.8 million for the second quarter and first half of 2025, respectively, as compared to $3.1 million and $5.9 million for the comparable periods of 2024. The increase for both the second quarter and first half of 2025 principally reflected higher salaries and employee-related costs, mainly due to a greater number of personnel, as well as higher non-cash equity-based compensation expenses. Included in sales and marketing expenses for the second quarter and first half of 2025 were non-cash equity-based compensation expenses of $598,000 and $1,164,000, respectively, as compared to $451,000 and $816,000 for the comparable periods of 2024. Sales and marketing expenses as a percentage of our total revenues were 13% and 14% for the second quarter and first half of 2025, respectively, as compared to 11% and 12% for the comparable periods of 2024.

Previous wording

The total number of sales and marketing personnel was 34 at March 31, 2025, as compared to 28 at March 31, 2024.

Current wording

The total number of sales and marketing personnel was 34 at June 30, 2025, as compared to 30 at June 30, 2024.

Previous wording

Our general and administrative expenses were $3.9 million for the first quarter of 2025, as compared to $3.6 million for the comparable period of 2024. The increase for the first quarter of 2025 primarily reflected higher professional services costs. Included in general and administrative expenses for the first quarter of 2025 were non-cash equity-based compensation expenses of $1,132,000, as compared to $996,000 for the comparable period of 2024. General and administrative expenses as a percentage of our total revenues were 16% for the first quarter of both 2025 and 2024.

Current wording

Our general and administrative expenses were $4.4 million and $8.3 million for the second quarter and first half of 2025, respectively, as compared to $3.5 million and $7.1 million for the comparable periods of 2024. The increase for the second quarter of 2025 primarily reflected higher non-cash equity-based compensation expenses. The increase for the first half of 2025 primarily reflected higher non-cash equity-based compensation expenses and higher professional services costs. Included in general and administrative expenses for the second quarter and first half of 2025 were non-cash equity-based compensation expenses of $1,465,000 and $2,597,000, as compared to $ 820,000 and $1,816,000 for the comparable periods of 2024. General and administrative expenses as a percentage of our total revenues were 17% for both the second quarter and first half of 2025, as compared to 12% and 14% for the comparable periods of 2024.

Previous wording

The number of general and administrative personnel was 47 at March 31, 2025, as compared to 46 at March 31, 2024.

Current wording

The number of general and administrative personnel was 47 at June 30, 2025, as compared to 45 at June 30, 2024.

Previous wording

Our amortization charges were $0.1 million for the first quarter of both 2025 and 2024. The amortization charges for the first quarter of 2025 and 2024 were incurred in connection with the amortization of intangible assets associated with the acquisitions of the Hillcrest Labs and VisiSonics business.

Current wording

Our amortization charges were $0.2 million and $0.3 million for the second quarter and first half of 2025, respectively, as compared to $0.1 million and $0.3 million for the comparable periods of 2024. The amortization charges for both the second quarter and first half of 2025 and 2024 were incurred in connection with the amortization of intangible assets associated with the acquisitions of the Hillcrest Labs and VisiSonics business.

Previous wording

The slight increase in interest income and gains and losses from marketable securities, net, during the first quarter of 2025 principally reflected higher yields, partially offset by lower combined bank deposits and marketable securities balances held.

Current wording

The slight increase in interest income and gains and losses from marketable securities, net, during both the second quarter and first half of 2025 principally reflected higher yields, partially offset by lower combined bank deposits and marketable securities balances held.

Previous wording

We review our monthly expected major non-U.S. dollar denominated expenditures and look to hold equivalent non-U.S. dollar cash balances to mitigate currency fluctuations. However, our Euro cash balances increase significantly on a quarterly basis beyond our Euro liabilities, mainly from applicable French research tax credits, which are generally refunded every three years. This has resulted in a foreign exchange gain of $0.60 million for the first quarter of 2025, as compared to a foreign exchange loss of $0.19 million for the comparable period of 2024.

Current wording

We review our monthly expected major non-U.S. dollar denominated expenditures and look to hold equivalent non-U.S. dollar cash balances to mitigate currency fluctuations. However, our Euro cash balances increase significantly on a quarterly basis beyond our Euro liabilities, mainly from applicable French research tax credits, which are generally refunded every three years. This has resulted in a foreign exchange gain of $0.57 million and $1.17 million for the second quarter and first half of 2025, respectively, as compared to a foreign exchange loss of $0.09 million and $0.28 million for the comparable periods of 2024.

Previous wording

We recorded a loss of $54,000 for the first quarter of 2025, as compared to a loss of $60,000 for the comparable period of 2024, related to remeasurement of marketable equity securities, which we hold at fair value. Over time, other income (expense), net, may be affected by market dynamics and other factors. Equity values generally change daily for marketable equity securities and upon the occurrence of observable price changes or upon impairment of marketable equity securities. In addition, volatility in the global economic climate and financial markets could result in a significant change in the value of our investments.

Current wording

We recorded a loss of $208,000 and $262,000 for the second quarter and first half of 2025, respectively, as compared to a loss of $58,000 and $118,000 for the comparable periods of 2024, related to remeasurement of marketable equity securities, which we hold at fair value. Over time, other income (expense), net, may be affected by market dynamics and other factors. Equity values generally change daily for marketable equity securities and upon the occurrence of observable price changes or upon impairment of marketable equity securities. In addition, volatility in the global economic climate and financial markets could result in a significant change in the value of our investments.

Previous wording

Our income tax expenses was $1.0 million for the first quarter of 2025, as compared to $1.7 million for the comparable period of 2024. The decrease for the first three months of 2025 primarily reflected lower withholding tax expenses in our Israeli subsidiary for which we will not be able to obtain a refund from the tax authorities, and lower tax expenses on income generated in our French subsidiary (under the French IP Box regime).

Current wording

Our income tax expenses was $1.1 million and $2.1 million for the second quarter and first half of 2025, respectively, as compared to $1.6 million and $3.3 million for the comparable periods of 2024. The decrease for both the second quarter and first half of 2025 primarily reflected lower withholding tax expenses in our Israeli subsidiary for which we will not be able to obtain a refund from the tax authorities, and lower tax expenses on income generated in our French subsidiary (under the French IP Box regime).

Previous wording

We are subject to income and other taxes in the United States and in numerous foreign jurisdictions. Our domestic and foreign tax liabilities are dependent on the jurisdictions in which profits are determined to be earned and taxed. Additionally, the amount of taxes paid is subject to our interpretation of applicable tax laws in the jurisdictions in which we operate. A number of factors influence our effective tax rate, including changes in tax laws and treaties as well as the interpretation of existing laws and rules. Federal, state, and local governments and administrative bodies within the United States, and other foreign jurisdictions have implemented, or are considering, a variety of broad tax, trade, and other regulatory reforms that may impact us. For example, the Tax Cuts and Jobs Act (the “U.S. Tax Reform”) enacted on December 22, 2017 resulted in changes in our corporate tax rate, our deferred income taxes, and the taxation of foreign earnings. It is not currently possible to accurately determine the potential comprehensive impact of future changes, but these changes could have a material impact on our business and financial condition.

Current wording

We are subject to income and other taxes in the United States and in numerous foreign jurisdictions. Our domestic and foreign tax liabilities are dependent on the jurisdictions in which profits are determined to be earned and taxed. Additionally, the amount of taxes paid is subject to our interpretation of applicable tax laws in the jurisdictions in which we operate. A number of factors influence our effective tax rate, including changes in tax laws and treaties as well as the interpretation of existing laws and rules. Federal, state, and local governments and administrative bodies within the United States, and other foreign jurisdictions have implemented, or are considering, a variety of broad tax, trade, and other regulatory reforms that may impact us. For example, on July 4, 2025, President Trump signed into law Public Law 119-21, commonly known as the One Big Beautiful Bill Act (the “Act”). The Act contained several tax reform proposals that may impact on our current deferred tax liabilities and assets. As the Act was signed into law subsequent to the current quarter end, the impact of the Act on our current and deferred tax liabilities and assets are not included in this filing. We are currently evaluating the effects of these changes; however, we do not expect that the Act will have a material impact on our financial position.

Previous wording

We have significant operations in Israel and operations in France and the Republic of Ireland. A substantial portion of our taxable income is generated in Israel and France, as well as potentially in the U.S. due to GILTI and the requirement to capitalize research and development expenditures under IRC Section 174 over 5 years if sourced from the U.S. and over 15 years if sourced internationally. Although our Israeli, French and Irish subsidiaries are taxed at rates substantially lower than U.S. tax rates, the tax rates in these jurisdictions could nevertheless result in a substantial increase as a result of withholding tax expenses with respect to which we are unable to obtain a refund from the relevant tax authorities.

Current wording

We have significant operations in Israel and operations in France and the Republic of Ireland. A substantial portion of our taxable income is generated in Israel and France, as well as potentially in the U.S. due to GILTI and the requirement to capitalize research and development expenditures under IRC Section 174 over 15 years if sourced internationally. Although our Israeli, French and Irish subsidiaries are taxed at rates substantially lower than U.S. tax rates, the tax rates in these jurisdictions could nevertheless result in a substantial increase as a result of withholding tax expenses with respect to which we are unable to obtain a refund from the relevant tax authorities.

Previous wording

As of March 31, 2025, we had approximately $18.8 million in cash and cash equivalents, $2.0 million in bank deposits, and $137.5 million in marketable securities, totaling $158.3 million, as compared to $163.6 million at December 31, 2024. The decrease for the first three months of 2025 principally reflected cash used in operating activities.

Current wording

As of June 30, 2025, we had approximately $29.1 million in cash and cash equivalents, $2.8 million in bank deposits, and $125.6 million in marketable securities, totaling $157.5 million, as compared to $163.6 million at December 31, 2024. The decrease for the first six months of 2025 principally reflected cash used in operating activities and funds used to repurchase 300,000 shares of common stock for an aggregate consideration of approximately $6.2 million, partially offset by our receipt of cash proceeds of $3.5 million in connection with the sale of Intrinsix that were released from escrow in the second quarter of 2025.

Previous wording

Out of total cash, cash equivalents, bank deposits and marketable securities of $158.3 million, $134.3 million was held by our foreign subsidiaries. Our intent is to permanently reinvest earnings of our foreign subsidiaries and our current operating plans do not demonstrate a need to repatriate foreign earnings to fund our U.S. operations. However, if these funds were needed for our operations in the United States, we would be required to accrue and pay taxes to repatriate these funds. The determination of the amount of additional taxes related to the repatriation of these earnings is not practicable, as it may vary based on various factors such as the location of the cash and the effect of regulation in the various jurisdictions from which the cash would be repatriated.

Current wording

Out of total cash, cash equivalents, bank deposits and marketable securities of $157.5 million, $134.2 million was held by our foreign subsidiaries. Our intent is to permanently reinvest earnings of our foreign subsidiaries and our current operating plans do not demonstrate a need to repatriate foreign earnings to fund our U.S. operations. However, if these funds were needed for our operations in the United States, we would be required to accrue and pay taxes to repatriate these funds. The determination of the amount of additional taxes related to the repatriation of these earnings is not practicable, as it may vary based on various factors such as the location of the cash and the effect of regulation in the various jurisdictions from which the cash would be repatriated.

Previous wording

During the first three months of 2025, we invested $29.1 million of cash in marketable securities with maturities up to 36 months from the balance sheet date. In addition, during the same period, marketable securities were redeemed for cash amounting to $35.7 million. All of our marketable securities are classified as available-for-sale. The purchase and sale or redemption of available-for-sale marketable securities are considered part of investing cash flow. Available-for-sale marketable securities are stated at fair value, with unrealized gains and losses reported in accumulated other comprehensive income (loss), a separate component of stockholders’ equity, net of taxes. Realized gains and losses on sales of investments, as determined on a specific identification basis, are included in the interim condensed consolidated statements of loss. The amount of credit losses recorded for the first three months of 2025 was immaterial. For more information about our marketable securities, see Note 6 to the interim condensed consolidated financial statements for the three months ended March 31, 2025.

Current wording

During the first six months of 2025, we invested $31.5 million of cash in bank deposits and marketable securities with maturities up to 33 months from the balance sheet date. In addition, during the same period, marketable securities were sold or redeemed for cash amounting to $49.8 million. All of our marketable securities are classified as available-for-sale. The purchase and sale or redemption of available-for-sale marketable securities are considered part of investing cash flow. Available-for-sale marketable securities are stated at fair value, with unrealized gains and losses reported in accumulated other comprehensive income (loss), a separate component of stockholders’ equity, net of taxes. Realized gains and losses on sales of investments, as determined on a specific identification basis, are included in the interim condensed consolidated statements of loss. The amount of credit losses recorded for the first six months of 2025 was immaterial. For more information about our marketable securities, see Note 7 to the interim condensed consolidated financial statements for the three and six months ended June 30, 2025.

Previous wording

Cash used in operating activities for the first three months of 2025 was $7.4 million and consisted of net loss of $3.3 million, adjustments for non-cash items of $4.4 million, and changes in operating assets and liabilities of $8.5 million. Adjustments for non-cash items primarily consisted of $0.9 million of depreciation and amortization of intangible assets, and $4.3 million of equity-based compensation expenses, partially offset by $0.2 million of amortization of premiums on available-for-sale marketable securities and $0.6 million of unrealized foreign exchange gain. The decrease in operating assets and liabilities primarily consisted of an increase in trade receivables of $3.5 million, and an increase in prepaid expenses and other assets of $3.7 million (mainly as a result of payment of a yearly design tool subscription), as well as a decrease in deferred revenues of $0.6 million, a decrease in accrued expenses and other payables of $1.1 million, a decrease in accrued payroll and related benefits of $0.8 million (mainly due to partial yearly bonus payments), partially offset by an increase in trade payables of $1.4 million.

Current wording

Cash used in operating activities for the first six months of 2025 was $6.2 million and consisted of net loss of $7.0 million, adjustments for non-cash items of $9.3 million, and changes in operating assets and liabilities of $8.5 million. Adjustments for non-cash items primarily consisted of $2.0 million of depreciation and amortization of intangible assets, and $9.2 million of equity-based compensation expenses, partially offset by $1.7 million of unrealized foreign exchange gain. The decrease in operating assets and liabilities primarily consisted of an increase in prepaid expenses and other assets of $2.9 million (mainly as a result of payment of a yearly design tool subscription and an increase in French research tax benefits applicable to the CIR which is generally refunded every three years), a decrease in accrued expenses and other payables of $1.4 million, and a decrease in accrued payroll and related benefits of $4.6 million (mainly as a result of a yearly bonus payments), partially offset by a decrease in trade receivables of $0.9 million.

Previous wording

Cash used in operating activities for the first three months of 2024 was $7.3 million and consisted of net loss of $5.4 million, adjustments for non-cash items of $4.6 million, and changes in operating assets and liabilities of $6.5 million. Adjustments for non-cash items primarily consisted of $1.0 million of depreciation and amortization of intangible assets, and $3.6 million of equity-based compensation expenses. The decrease in operating assets and liabilities primarily consisted of an increase in trade receivables of $3.0 million, an increase in prepaid expenses and other assets of $3.2 million (mainly as a result of payment of a yearly design tool subscription), a decrease in deferred revenues of $0.5 million, and a decrease in accrued expenses and other payables of $1.0 million, partially offset by an increase in accrued payroll and related benefits of $0.5 million and an increase in trade payables of $0.4 million.

Current wording

Cash used in operating activities for the first six months of 2024 was $5.0 million and consisted of net loss of $5.7 million, adjustments for non-cash items of $9.3 million, and changes in operating assets and liabilities of $8.6 million. Adjustments for non-cash items primarily consisted of $2.0 million of depreciation and amortization of intangible assets, and $7.5 million of equity-based compensation expenses. The decrease in operating assets and liabilities primarily consisted of an increase in trade receivables of $5.0 million, an increase in prepaid expenses and other assets of $2.2 million (mainly related to unbilled receivables of $2.1 million classified as “other long-term assets” in the Interim Condensed Consolidated Balance Sheets), and a decrease in accrued payroll and related benefits of $2.0 million (mainly as a result of a yearly bonus payments), partially offset by a decrease in accrued interest on bank deposits in the amount of $0.4 million.

Previous wording

Net cash provided by investing activities for the first three months of 2025 was $6.2 million, compared to $5.1 million of net cash provided by investing activities for the comparable period of 2024. We had a cash outflow of $29.1 million and a cash inflow of $35.7 million with respect to investments in marketable securities during the first three months of 2025, as compared to a cash outflow of $12.7 million and a cash inflow of $18.9 million with respect to investments in marketable securities during the first three months of 2024. We had a cash outflow of $0.3 million and $0.9 million during the first three months of 2025 and 2024, respectively, from purchase of property and equipment. For the first three months of 2024, we had a cash inflow of $0.5 million in connection with the sale of Intrinsix, and a cash outflow of $0.8 million for the acquisition of a Greek-based company.

Current wording

Net cash provided by investing activities for the first six months of 2025 was $20.8 million, compared to $8.2 million of net cash provided by investing activities for the comparable period of 2024. We had a cash outflow of $30.8 million and a cash inflow of $49.8 million with respect to investments in marketable securities during the first six months of 2025, as compared to a cash outflow of $30.0 million and a cash inflow of $31.9 million with respect to investments in marketable securities during the first six months of 2024. For the first six months of 2025, we had an investment of $0.7 million in bank deposits, as compared to proceeds of $8.0 million from bank deposits for the comparable period of 2024. We had a cash outflow of $1.0 million and $1.5 million during the first six months of 2025 and 2024, respectively, from purchase of property and equipment. For the first six months of 2025 and 2024, we had a cash inflow of $3.5 million and $0.5 million, respectively, in connection with the release of escrowed funds associated with the sale of Intrinsix. For the first six months of 2024, we had a cash outflow of $0.8 million for the acquisition of a Greek-based company.

Previous wording

Net cash provided by financing activities for the first three months of 2025 was $1.4 million, as compared to net cash provided by financing activities in the amount of $0.3 million for the comparable period of 2024.

Current wording

Net cash used in financing activities for the first six months of 2025 was $4.5 million, as compared to net cash used in financing activities in the amount of $1.7 million for the comparable period of 2024.

Previous wording

In August 2008, we announced that our board of directors approved a share repurchase program for up to one million shares of common stock pursuant to Rule 10b-18 of the Exchange Act, which was extended by an additional 7,800,000 shares collectively across further approvals in 2010, 2013, 2014, 2018, 2020, 2023 and November 2024. There were no repurchases of our common stock during the three months ended March 31, 2025. During the first three months ended March 31, 2024, we repurchased 56,872 shares of common stock at an average purchase price of $22.48 per share for an aggregate purchase price of $1,278. As of March 31, 2025, we had 1,024,781 shares available for repurchase.

Current wording

In August 2008, we announced that our board of directors approved a share repurchase program for up to one million shares of common stock pursuant to Rule 10b-18 of the Exchange Act, which was extended by an additional 7,800,000 shares collectively across further approvals in 2010, 2013, 2014, 2018, 2020, 2023 and November 2024. During the first six months ended June 30, 2025, we repurchased 300,000 shares of common stock at an average purchase price of $20.54 per share for an aggregate purchase price of $6.2 million. During the first six months ended June 30, 2024, we repurchased 157,303 shares of common stock at an average purchase price of $20.83 per share for an aggregate purchase price of $3.3 million. As of June 30, 2025, we had 724,781 shares available for repurchase.

Previous wording

During the first three months of 2025, we received $1.4 million from the exercise of stock-based awards, as compared to $1.6 million received for the comparable period of 2024.

Current wording

During the first six months of 2025, we received $1.6 million from the exercise of stock-based awards, as compared to $1.6 million received for the comparable period of 2024.