How Ceva achieved scale to build a high-margin revenue strategy

Somewhere in Silicon Valley, licensed IP is creating the foundation for the next great technological innovation. Silicon and software IP developer Ceva is an integral player in this ecosystem and the wider Industrial Internet of Things (IIOT). Its IP enables intelligent edge tech (anything from laptops to wearables, or even automotive platforms) to sense, connect, and process data locally; its customers range from Sony to Samsung.

Back in January we caught up with Richard Kingston, Ceva’s VP of market intelligence and investor relations, for a Q&A on the impact of AI. This time around, Revenue Brew spoke with the broader leadership team to decipher how Ceva executes sales, creates cutting-edge technology, and crafts a tactful revenue strategy.

Taking calculated risks

CEO Amir Panush says one of the reasons the company has been successful is its ability to execute calculated research and development to grow its customer base.“We are investing more than 60% of revenue annually, and very constantly, on R&D, pure R&D,” Panush said.

The strategy to build a sustainable revenue foundation has meant investing in technology that can be applied across bluetooth, wi-fi, and solar. Neural processing units (NPUs)—key building blocks for the acceleration of scalable AI—are another of Ceva’s key products.

Panush says a traditional challenge for the IP business model has been the need to replicate that R&D investment across many customers and markets. Ceva is developing IP for specific use cases, but not so specific that it excludes the needs of potential new clients.

For Panush, this means “proliferating with the same base sense of IP.” Successfully deployed, Ceva’s IP-based business model has the potential for high rewards, as evidenced by the company’s gross margin of around 90%, according to CFO Yaniv Arieli. “You don’t have to manufacture anything. You don’t have [the] cost of revenue for a chip. You don’t manufacture a box or a board,” said Arieli.

Growing market share 101

It would be an understatement to say that Ceva’s chief strategycustomer officer Iri Trashanski is confident in the product.

“What we deliver is very hard-to-build technology,” Trashanski said. “When you move to this model, then you’re moving to it for good and that’s the case. That’s the stickiness.”

According to Trashanski, Ceva holds 70% market share in the connectivity space, allowing for an expansive customer acquisition strategy; most recently it expanded into modem IP subsystems designed for satellite user terminals in LEO (low Earth orbit) and MEO (medium Earth orbit) constellations.

“We’re looking at where the inflection points [are]; what can be huge markets where they need those capabilities, and then we go and attack,” Trashanski said. “Because we’re a $100 million company, even getting another $20 million or $30 million, that’s a big thing every time we grow.”

Expert insight: chip industry

Ben Bajarin, CEO at consumer tech research firm Creative Strategies, commends Ceva’s ability to focus on specific areas that lend themselves to edge devices and the IoT.

Bajarin described Ceva’s ideal customer as “somebody who wants to go into that market, doesn’t have that IP, or somebody who wants to build their own technology, or build their own stack, and work with an IT partner to go and build more specialty silicon for something on the edge.”

He said the top priority for Ceva should be staying on top of what buyers need.

“It’s competitive, but as long as they make the right picks on what technology you’re going to invest in…and continue to build a road map around you,” Bajarin said. “You keep yourself in a good pocket of the market to be differentiated.”