The stock of cutting-edge processing devices and software specialist Ceva (CEVA 2.33%) was losing its edge over the past few trading sessions. On the back of a lackluster quarterly earnings report, the stock had fallen by more than 25% week to date as of Friday before market open, according to data compiled by S&P Global Market Intelligence.
Two diverging revenue streams
Ceva's first quarter saw the company earn revenue of $24.2 million, for a 10% year-over-year increase. It benefited from the signing of 11 new licensing agreements during the period; licensing revenue rose by 32% to over $15 million. But the other component of the company's top line, royalty revenue, went in the opposite direction by slipping to $9.2 million from the year-ago tally of almost $10.7 million.

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Meanwhile, according to the company, its technology powered 420 million devices in the quarter. This was 13% higher than in the same frame of 2024.
The bottom line showed improvement, too. Ceva flipped to a non-GAAP (adjusted) net income of $1.4 million, or $0.06 per share, from first quarter 2024's loss of almost $1.3 million.
Analysts following Ceva stock were expecting notably better performance, however, as the company missed on both revenue and profitability. The consensus pundit estimate for the former line item was $26.5 million, and that for the latter was $0.08 per share.
Time for guidance cuts
Compounding the twin misses, Ceva also lowered its revenue and profitability guidance for the entirety of 2025.
It's now expecting top-line growth in the low-single-digit percentages over 2024; previously it anticipated this would rise in the high-single-digit range. Adjusted net income is still forecast to increase by a double-digit percentage but at a lower rate than indicated in preceding guidance. The company didn't get more specific.
In a way, Ceva is a victim of high expectations, and with this earnings release it's likely going through a period of correction. I think its underlying business has good potential, though, so if I were an investor I wouldn't give up on it just yet.