Chip designer Ceva (CEVA 1.97%) reported its earnings for the third quarter of 2021 on Nov. 9. In this segment of Backstage Pass, recorded on Nov. 22, Fool contributor Brian Withers discusses the key highlights potential and existing investors should know from the company's earnings report. 

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Brian Withers: My second company is called Ceva, and I mentioned earlier that it's not Ceva Logistics. I put what they do up here because it was a mouthful. Basically, they make chips for digitals or they are the smarts behind...

They've licensed their design firm, basically, and they're focused on AI processors, wireless platforms, blah, blah, blah. One of the examples that they had on their customer page is, it's clear that some of their chips have gone into iRobot vacuums. You talked about sensing and trying to figure out where things are going. Some of the intellectual property that Ceva has developed goes into things like that. It's a small company, about $1.1 billion. This is Domino's. I didn't replace this.

I'll get the new chart for you. [laughs] Sorry about that. They beat Beat and Raise. Pretty solid results across the board. But look, there's $33 million in the quarter. This is a really small company. One of the things that I wanted to show you, they have this business model that I'm going to pop up real quick. I actually have it. This is the slide that I want to share. They have a number of different ways that they get revenue.

During the R&D phase, they charge for their engineering time and whatnot, and so they'll work in tandem with lead customers it mentions. They'll be investing and then if they actually make a product, they get into the licensing phase where they collect licensing revenue and they do 40-50 of those for a year.

Then if it's a long-standing product, they'll continue to collect royalties for up to 10 years. It's really cool about how they face these things and get revenue from their clients throughout the process. That's what this IP license. NRE is non-recurring engineering.

They hit 13 new customers. They have cash and marketable securities. They are profitable, so that's not super important. I thought this was interesting.

Out of their 485 employees, 403 were engineers. Let's look at the results versus the S&P. There you see how the sausage is made, unfortunately. Here we go. Here's the last year. Ceva has trailed the S&P for a bit.