You should read the following discussion together with the unaudited financial statements and related notes appearing elsewhere in this Quarterly Report. This discussion contains forward-looking statements that involve risks and uncertainties. Any or all of our forward-looking statements in this Quarterly Report may turn out to be wrong. These forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Factors which could cause actual results to differ materially include those set forth in Part II—Item 1A—“Risk Factors” in this Quarterly Report and Part I—Item 1A—“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 as well as those discussed elsewhere in this Quarterly Report. See “Forward-Looking Statements.” The financial information presented in this Quarterly Report includes the results of Ceva, Inc. and its subsidiaries. BUSINESS OVERVIEW We enable Physical AI, the artificial intelligence embedded in billions of devices that connect, sense and infer data in the real world. We view Physical AI as the natural evolution of Edge AI. While Edge AI refers to running AI workloads locally on devices rather than in the cloud, Physical AI extends this concept further: it unifies connectivity, sensing and inference layers into a single fabric that allows devices not only to process data at the edge, but also to interact intelligently with their physical environment and the cloud. We believe Ceva is uniquely positioned as the only company with leadership in innovative silicon and software IP solutions across all three layers – connect, sense and infer. In the second quarter of 2026, we continued to execute on our strategy, generating revenues of $29.0 million, up 13% year-over-year. Licensing and related revenues were $18.2 million, up 21% year-over-year and representing our strongest quarterly licensing performance in more than three years. Royalty revenues were $10.8 million, up 17% sequentially, reflecting improving smartphone royalties, continued strength in wireless connectivity and the ongoing ramp of automotive AI programs. According to IPnest, we commanded 68% of the wireless connectivity IP market in 2024. Since 2003, more than 20 billion devices have shipped with Ceva IP, including approximately 2.1 billion in 2025. Our technologies power the connectivity, perception and intelligence in today’s most advanced smart edge products across consumer IoT, automotive, industrial and infrastructure, and mobile and PC markets. Based on market research, we believe these sectors will represent a $170 billion total addressable market for Physical AI and Edge AI by 2030. Our portfolio spans: ● Connectivity layer (wireless transport): Bluetooth, Wi‑Fi, Ultra‑Wideband (UWB), cellular internet-of-things (IoT), and 5G‑Advanced IP platforms that form the backbone of ubiquitous, secure, and high‑performance communication. ● Sensing layer (software and DSPs): Sensor fusion processors, RealSpace spatial audio, MotionEngine software, and general‑purpose digital signal processors (DSPs) that transform raw sensor data into actionable intelligence. ● Inference layer (NPUs and AI DSPs): The NeuPro family of neural processing units (NPUs), from NeuPro‑Nano for embedded AI to NeuPro‑M for generative AI, supported by a unified toolchain and software stack for simple model deployment, and the SensPro family of AI DSPs for high‑performance signal and AI workloads. Together, these layers make Ceva, with our unified AI fabric, an essential enabler of Physical AI that breaks down barriers to entry and accelerates time‑to‑market for our customers. We are increasingly delivering more integrated, system-level solutions, rather than individual IP blocks. This approach enables customers to accelerate development, reduce engineering risk and focus internal resources on system-level differentiation, while increasing Ceva’s content per platform, deepening customer relationships and strengthening long-term royalty potential. For more than three decades, we have been a trusted partner to hundreds of leading semiconductor and original equipment manufacturer (OEM) companies, serving not only our largest target growth markets but also a wide variety of other applications, including smart home, surveillance, robotics and medical. Our transformative semiconductor IP and embedded software offerings are incorporated by customers into application-specific integrated circuits (ASICs) and application-specific standard products (ASSPs) to enable power‑efficient, intelligent, secure and connected devices that connect, sense and infer – the three critical pillars of the rapidly evolving era of AI‑enabled smart edge technology. We license our portfolio of wireless communications, sensing and scalable Edge AI IP to our customers, breaking down barriers to entry and enabling them to bring new cutting-edge products to market faster, more reliably, efficiently and economically. 28 Table of Contents We believe our portfolio of technologies comprised of connectivity, sensing and inference – the three foundational layers of Physical AI – positions Ceva at the center of the most important megatrends shaping the semiconductor industry, including 5G expansion, generative and embedded AI, industrial automation and vehicle electrification. Demand across these areas continues to drive strong interest in our IP portfolio, both in established markets and in new, emerging use cases. In the second quarter of 2026, we signed 10 IP licensing agreements, including two with first-time customers and two directly with OEMs. The quarter included one of the most strategically significant AI licensing agreements in our history, with a leading global AI and computing platform company selecting our NeuPro-M NPU IP for its next-generation custom AI silicon. This engagement represents a new category of customer for Ceva and enables close collaboration across both the hardware accelerator and AI software stack, allowing the complete AI pipeline to be optimized for the customer’s specific models, applications and use cases. The quarter also reflected increased adoption of our diverse portfolio of broader connectivity solutions. A high-volume U.S. semiconductor company adopted, as part of its own product portfolio, a chip based on our Wi-Fi 6 and Bluetooth Low Energy IP that had been developed with another Ceva customer. Separately, an existing customer expanded from licensing a single baseband component to adopting our complete baseband processing subsystem. These engagements illustrate how customers are increasingly leveraging Ceva for integrated solutions that accelerate time-to-market and reduce development risk. The remaining licensing agreements were primarily across our connectivity portfolio, with customer wins in Europe, China and across Asia-Pacific, demonstrating the broad-based and global nature of demand for our wireless technologies. AI-related licensing represented more than 20% of total licensing and related revenues in the quarter, highlighting the accelerating adoption of edge AI across multiple end markets. We believe the following key elements represent significant growth drivers for Ceva as the leader in silicon and software IP enabling Physical AI, spanning the three foundational layers of connectivity, sensing and inference: ● Connectivity layer – Foundation for billions of devices: Our broad Bluetooth, Wi‑Fi, UWB, and cellular IoT IP platforms address the high‑volume IoT, industrial, consumer, and smart home markets. ABI Research projects more than 16.5 billion devices annually by 2029. With leadership in Wi‑Fi 6 and Wi‑Fi 7 IP, and record Wi‑Fi 6 shipments in 2025, we believe we are positioned to capture higher royalty revenues as customers transition to newer standards. ● Connectivity layer – 5G everywhere: Our PentaG2 platform and DSPs for 5G mobile broadband, 5G RedCap and 5G Advanced, including our PentaG-NTN solution for satellite communications, provide one of the industry’s most comprehensive baseband IP solutions, enabling fixed wireless access, satellite communications, robotics, automotive and industrial applications. ● Connectivity layer – Infrastructure intelligence: Our PentaG RAN platform, including the Ceva‑XC22 multi‑thread DSP, extends our leadership into 5G RAN and 5G Advanced for data centers and infrastructure, enabling scalable, customizable solutions for next‑generation networks. ● Sensing layer – Consumer audio and spatial intelligence: High‑volume consumer audio markets such as TWS earbuds, AR/VR headsets, and wearables represent incremental growth opportunities for our Bluetooth, Audio AI DSPs, NPUs and RealSpace Spatial Audio & Head Tracking software. Recent design wins with Nothing and other consumer brands highlight growing adoption. ● Sensing layer – Software intelligence at scale: Our MotionEngine software, already shipped in more than 500 million devices, enhances MEMS‑based inertial and environmental sensors across robotics, smartphones, laptops, TWS earbuds, and more. Combined with our SensPro DSPs and NeuPro NPUs, we believe this positions Ceva as a one‑stop shop for sensor processing and AI‑driven user experiences. ● Inference layer – Generative and classic AI at the edge: Our NeuPro‑M AI NPU family delivers efficient, high‑performance architectures for generative and classic AI across devices from gateways and notebooks to AR/VR and smartphones. Recent agreements include Microchip’s portfolio license win for our NeuPro-M and NeuPro-Nano family of NPUs, together with a licensing agreement with a leading global AI and computing platform company developing next-generation custom AI silicon. These engagements demonstrate the growing adoption of our AI technologies across semiconductor, OEM and platform customers. ● Inference layer – Embedded AI and TinyML: Our NeuPro‑Nano NPUs bring cost‑ and power‑efficient AI to microcontrollers and systems-on-chips (SoCs), enabling artificial IoT (AIoT) devices for sound, vision, vibration, and health monitoring. ABI Research projects that by 2030, over 50% of TinyML shipments will be powered by dedicated embedded AI hardware such as NeuPro‑Nano. 29 Table of Contents ● Inference layer – AI DSPs for perception and sensor intelligence: Our SensPro2 AI DSP family addresses demand for efficient, high‑performance AI signal processing across sensor‑rich applications, from smartphones and drones to automotive ADAS and industrial IoT. As a result of our focus on silicon and software IP solutions spanning the connectivity, sensing and inference layers of Physical AI, we believe Ceva is well positioned for sustained, long‑term growth in both shipments and royalty revenues. Our diversified royalty streams reflect a broad range of advanced semiconductor packages (ASPs) – from high‑volume Bluetooth and Wi‑Fi connectivity platforms that power billions of consumer devices to higher‑value inference engines and AI DSPs such as NeuPro and SensPro, as well as infrastructure‑class platforms like PentaG-RAN. We believe this mix provides both scale and resilience, enabling us to capture growth across consumer, automotive, industrial and infrastructure markets while reinforcing our role as the enabler of Physical AI. CURRENT TRENDS We believe the long-term trend of digital transformation is evolving into a new era defined by Physical AI – the next phase of Edge AI – where intelligence is embedded directly into the devices that connect, sense and interact with the real world. Our ubiquitous IP portfolio and collaborative licensing model position us to capture secular growth across consumer IoT, automotive, industrial and infrastructure, and mobile and PC markets. Our customers are increasingly adopting our roadmap as they seek to integrate connectivity, sensing and intelligence into their devices. The second quarter of 2026 provided further evidence of this trend, with 10 licensing agreements, including two first-time customers and two OEMs. The quarter was highlighted by one of the most strategically significant AI licensing agreements in our history with a leading global AI and computing platform company, together with continued customer adoption of broader hardware and software platform solutions across our connectivity portfolio, reinforcing demand for our connect, sense and infer portfolio. On royalties, we continue to see encouraging momentum across our diversified smart edge markets, with growth in wireless connectivity, automotive AI and improving smartphone royalties. In the second quarter of 2026, Ceva-powered device shipments reached 567 million units, up 16% year-over-year. Bluetooth shipments increased 16% year-over-year to 295 million units, Wi-Fi shipments grew 28% year-over-year to 80 million units and cellular IoT shipments reached a new record of 68 million units, up 3% year-over-year. We are also seeing continued contributions from AI-driven royalties, highlighted by the ongoing ramp of automotive AI programs and a ramping AI SoC for surveillance, marking the initial phase of what we expect to become a meaningful long-term growth driver. Following the seasonal weakness experienced in the first quarter, royalty revenues improved sequentially in the second quarter, supported by market share gains in entry-level smartphones, continued expansion at the premium tier and ongoing strength across our wireless connectivity portfolio. While macroeconomic conditions, geopolitical developments and supply chain dynamics continue to create uncertainty across the semiconductor industry, we believe our diversified royalty base positions us well for long-term growth. In addition, we expect to complement our strong presence in the Asia-Pacific region by further expanding our customer base and revenues in Europe and the U.S. During the quarter, we signed licensing agreements with customers in the U.S., China, and across Asia-Pacific, further reinforcing our global reach. This balance strengthens our resilience and underscores Ceva’s role as a leader in silicon and software IP enabling Physical AI across global markets. However, the global economy continued to be impacted by macroeconomic conditions, including a volatile interest rate environment, foreign currency exchange rate fluctuations, ongoing inflation, memory pricing increases and shortage impacting consumer demand and manufacturing, world conflicts and uncertainty, like the Middle East conflict and higher fuel and oil prices, as well as changes in legislation and regulations, including enacted and proposed tariffs and other trade policies, which introduced additional uncertainty. In periods of perceived or actual unfavorable economic conditions, our customers or potential customers may delay or re-evaluate their decisions to initiate projects, which could result in a delay or cessation of engagements with us and lower licensing revenues. In addition, weaker consumer demand may result in lower royalty revenues as our customers ship fewer units, and supply chain dynamics and component pricing may also impact end-market demand. Instability in the Middle East 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. In February 2026, the United States and Israel launched joint combat operations in Iran to which Iran and Hezbollah responded with ballistic missile and drone attacks on Israel as well as other countries and U.S. military bases in the region. Although the United States and Iran have announced ceasefire and de-escalation arrangements from time to time, including a memorandum of understanding entered into on June 17, 2026 that contemplates the termination of military operations on multiple fronts, hostilities have resumed and may continue or escalate. Despite the evolving geopolitical situation, 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. We have executed our 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. The intensity and duration of these conflicts, as well as their economic implications for the Company and Israel’s economy, remain difficult to predict. For more information, please refer to the risk factor titled “Our operations in Israel may be adversely affected by instability in the Middle East region” in Part I—Item 1A—“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025. 30 Table of Contents RESULTS OF OPERATIONS Total Revenues Total revenues were $29.0 million and $56.1 million for the second quarter and first half of 2026, respectively, representing an increase of 13% and 12%, as compared to the corresponding periods in 2025. The increase in total revenues for both the second quarter and first half of 2026 was due to higher licensing and related revenues, as further described below. Our five largest customers accounted for 55% and 39% of our total revenues for the second quarter and first half of 2026, respectively, as compared to 42% for both of the comparable periods in 2025. Two customers accounted for 21% and 11% of our total revenues for the second quarter of 2026, as compared to two customers that each accounted for 11% of our total revenues for the second quarter of 2025. One customer accounted for 13% of our total revenues for the first half of 2026, as compared to one customer that accounted for 17% of our total revenues for the first half of 2025. 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, one royalty paying customer represented 10% or more of our total royalty revenues for both the second quarter and first half of 2026 and represented 25% and 18% of our total royalty revenues for the second quarter and first half of 2026, respectively. 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. 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. The following table sets forth use cases for the Ceva technology portfolio as percentages of our total revenues for each of the periods set forth below: First Half 2026 First Half 2025 Second Quarter 2026 Second Quarter 2025 Connect (baseband for handset and other devices, Bluetooth, Wi-Fi and NB-IoT) 76 % 74 % 78 % 63 % Sense & Infer (sensor fusion, audio, sound, imaging, vision and AI) 24 % 26 % 22 % 37 % Licensing and Related Revenues Licensing and related revenues were $18.2 million and $36.0 million for the second quarter and first half of 2026, respectively, representing an increase of 21% and 20% as compared to the corresponding periods in 2025. In licensing, two major factors highlight an important shift in the semiconductor industry and explain why Ceva is critically positioned for long-term growth. The first is AI — during the quarter, Ceva signed a landmark AI licensing agreement with a leading global AI and computing platform company, validating our AI IP strategy and expanding our expertise in platform-level AI hardware-software optimization. The second trend we see is customers increasingly adopting broader connectivity solutions. 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 Ceva customer — rather than licensing the underlying IP blocks individually. The decision reflects the same preference for production-proven, complete solutions over developing internally or licensing component IP. Separately, another U.S. customer expanded a relationship that began with a single baseband component by adopting our complete cellular baseband processing subsystem. In addition to the AI and platform wins, we signed multiple follow-on agreements with existing customers alongside our new customer engagements, demonstrating our ability to both expand long-term relationships and consistently win new business. Across connectivity, we secured customer engagements spanning the United States, Europe, China and the broader Asia-Pacific region, reinforcing the global demand for our technologies. While AI is creating exciting new opportunities for Ceva, connectivity remains the foundation of the intelligent edge and continues to be the entry point for many of our customer relationships. Increasingly, those relationships expand over time as customers adopt additional technologies across our portfolio. During the quarter, we signed 10 licensing agreements, including two with first-time customers and two directly with OEMs. Together, these wins demonstrate the breadth of demand across our portfolio and reinforce the quality of the customer engagements we are building. More important than the number of agreements is the quality of those engagements. Increasingly, customers are adopting broader platforms and deeper collaborations that strengthen both our near-term licensing business and our long-term royalty opportunity. Licensing and related revenues accounted for 63% and 64% of our total revenues for the second quarter and first half of 2026, respectively, as compared to 59% and 60% for the comparable periods of 2025. 31 Table of Contents Royalty Revenues Royalty revenues were $10.8 million and $20.0 million for the second quarter and first half of 2026, respectively, representing an increase of 1% as compared to both the corresponding periods in 2025. Royalty revenues accounted for 37% and 36% of our total revenues for the second quarter and first half of 2026, respectively, as compared to 41% and 40% for the comparable periods of 2025. We continue to see encouraging evidence that the investments we have made over recent years are translating into a broader and more diversified royalty base. Royalty revenues increased both sequentially and year over year, supported by continued momentum across wireless connectivity and automotive AI and share gains in smartphones. Wireless connectivity remained particularly strong, with healthy year-over-year growth in both Wi-Fi and Bluetooth shipments, while Cellular IoT shipments reached another quarterly record. In automotive, customer programs continued to ramp, reflecting increasing AI content in next-generation vehicles. Overall, the quarter demonstrates the continued evolution of Ceva's business. The five largest royalty-paying customers accounted for 54% and 51% of our total royalty revenues for the second quarter and first half of 2026, respectively, as compared to 58% and 54% for the comparable periods of 2025. Geographic Revenue Analysis First Half 2026 First Half 2025 Second Quarter 2026 Second Quarter 2025 (in millions, except percentages) United States $ 18.3 33 % $ 9.2 18 % $ 10.9 38 % $ 5.6 22 % Europe and Middle East $ 1.9 3 % $ 3.5 7 % $ 0.9 3 % $ 2.0 8 % Asia Pacific (1) $ 35.8 64 % $ 37.2 75 % $ 17.2 59 % $ 18.1 70 % (1) China $ 29.2 52 % $ 29.8 60 % $ 13.9 48 % $ 13.8 54 % Due to the nature of our license agreements and the associated potential large individual contract amounts, the geographic split of revenues, both in absolute dollars and percentage terms, generally varies from quarter to quarter. 32 Table of Contents Cost of Revenues Cost of revenues was $3.6 million and $7.4 million for the second quarter and first half of 2026, respectively, as compared to $3.5 million and $7.0 million for the comparable periods of 2025. Cost of revenues accounted for 13% of our total revenues for both the second quarter and first half of 2026, as compared to 14% for both of the comparable periods of 2025. The increase for the first half of 2026 primarily reflected higher payments to the Israeli Innovation Authority of the Ministry of Economy and Industry in Israel. Included in cost of revenues for the second quarter and first half of 2026 was a non-cash equity-based compensation expense of $0.2 million and $0.4 million, respectively, as compared to $0.2 million and $0.3 million for the comparable periods of 2025. Gross Margin Gross margin for both the second quarter and first half of 2026 was 87%, as compared to 86% for both of the comparable periods of 2025. The increase in gross margin in percentage and absolute dollars for both the second quarter and first half of 2026 mainly reflected higher licensing and related revenues, as set forth above. Operating Expenses Total operating expenses were $27.5 million and $55.8 million for the second quarter and first half of 2026, respectively, as compared to $26.6 million and $51.8 million for the comparable periods of 2025. The net increase for the second quarter of 2026 principally reflected higher salaries and employee-related costs, mainly associated with higher currency exchange expenses as a result of the devaluation of the U.S. dollar against the NIS. The net increase for the first half of 2026 principally reflected higher salaries and employee-related costs, mainly associated with higher currency exchange expenses as a result of the devaluation of the U.S. dollar against the NIS, and higher non-cash equity-based compensation expenses. Research and Development Expenses, Net Total research and development expenses, net were $19.3 million and $39.2 million for the second quarter and first half of 2026, respectively, as compared to $18.8 million and $36.4 million for the comparable periods of 2025. The increase for both the second quarter and first half of 2026 principally reflected higher salaries and employee-related costs, mainly associated with higher currency exchange expenses as a result of the devaluation of the U.S. dollar against the NIS. Included in research and development expenses for the second quarter and first half of 2026 were non-cash equity-based compensation expenses of $2.7 million and $5.5 million, respectively, as compared to $2.7 million and $5.1 million for the comparable periods of 2025. Research and development expenses as a percentage of our total revenues were 67% and 70% for the second quarter and first half of 2026, respectively, as compared to 73% for both of the comparable periods of 2025. The number of research and development personnel was 295 at June 30, 2026, as compared to 323 at June 30, 2025. 33 Table of Contents Sales and Marketing Expenses Our sales and marketing expenses were $3.3 million and $7.0 million for the second quarter and first half of 2026, respectively, as compared to $3.3 million and $6.8 million for the comparable periods of 2025. The increase for the first half of 2026 principally reflected higher non-cash equity-based compensation expenses and the cost of a global sales meeting held during the period (an event that did not take place in the first half of 2025). Included in sales and marketing expenses for the second quarter and first half of 2026 were non-cash equity-based compensation expenses of $0.7 million and $1.4 million, as compared to $0.6 million and $1.2 million for the comparable periods of 2025. Sales and marketing expenses as a percentage of our total revenues were 11% and 13% for the second quarter and first half of 2026, respectively, as compared to 13% and 14% for the comparable periods of 2025. The total number of sales and marketing personnel was 28 at June 30, 2026, as compared to 34 at June 30, 2025. General and Administrative Expenses Our general and administrative expenses were $4.7 million and $9.4 million for the second quarter and first half of 2026, respectively, as compared to $4.4 million and $8.3 million for the comparable periods of 2025. The increase for both the second quarter and first half of 2026 primarily reflected higher salaries and employee-related costs and higher non-cash equity-based compensation expenses. Included in general and administrative expenses for the second quarter and first half of 2026 were non-cash equity-based compensation expenses of $1.6 million and $3.2 million, as compared to $1.5 million and $2.6 million for the comparable periods of 2025. General and administrative expenses as a percentage of our total revenues were 16% and 17% for the second quarter and first half of 2026, respectively, as compared to 17% for both of the comparable periods of 2025. The number of general and administrative personnel was 51 at June 30, 2026, as compared to 47 at June 30, 2025. Amortization of Intangible Assets Our amortization charges were $0.1 million and $0.2 million for the second quarter and first half of 2026, respectively, as compared to $0.2 million and $0.3 million for the comparable periods of 2025. The amortization charges for both the second quarter and first half of 2026 and 2025 were incurred in connection with the amortization of intangible assets associated with the acquisitions of the Hillcrest Labs and VisiSonics business. Financial Income, Net (in millions) First Half 2026 First Half 2025 Second Quarter 2026 Second Quarter 2025 Financial income, net $ 2.9 $ 4.2 $ 1.0 $ 2.1 of which: Interest income and gains and losses from marketable securities, net $ 4.1 $ 3.0 $ 2.0 $ 1.5 Foreign exchange gain (loss) $ (1.2 ) $ 1.2 $ (1.0 ) $ 0.6 Financial income, net, consists of interest earned on investments, gains and losses from sale of marketable securities, accretion (amortization) of discounts (premiums) on marketable securities and foreign exchange movements. The increase in interest income and gains and losses from marketable securities, net, during both the second quarter and first half of 2026 principally reflected higher combined bank deposits and marketable securities balances held (mainly resulting from the follow‑on offering completed in the fourth quarter of 2025), partially offset by lower yields. 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 have increased significantly on a quarterly basis beyond our Euro liabilities, mainly from applicable French research tax credits, which are generally refunded every three years. Separately, our NIS liabilities are significantly higher than our NIS‑denominated assets, mainly because of operating lease obligations. This has resulted in a foreign exchange loss of $1.0 million and $1.2 million for the second quarter and first half of 2026, respectively, as compared to a foreign exchange gain of $0.6 million and $1.2 million for the comparable periods of 2025. Remeasurement of Marketable Equity Securities We recorded a gain of $0.0 million and $0.1 million for the second quarter and first half of 2026, respectively, as compared to a loss of $0.2 million and $0.3 million for the comparable periods of 2025, 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. 34 Table of Contents Income Tax Expense Our income tax expense was $1.8 million and $3.2 million for the second quarter and first half of 2026, respectively, as compared to $1.1 million and $2.1 million for the comparable periods of 2025. The increase for both the second quarter and first half of 2026 was primarily due to: (1) higher withholding tax expenses; and (2) the prior-year period included a tax benefit from the recognition of deferred tax assets related to net operating loss carryforwards of our French subsidiary. In December 2025, we established a full valuation allowance against these deferred tax assets. As a result, no similar tax benefit was recognized during the second quarter and first half of 2026. 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. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted. Key corporate tax provisions of OBBBA include the restoration of 100% bonus depreciation, immediate expensing for domestic research and experimental expenditures, changes to Section 163(j) interest limitations, modification of several international tax provisions, and expanded Section 162(m) aggregation requirements. In accordance with ASC 740, we have recognized the effects of the new tax law in the period of enactment. The OBBBA did not have a material impact on our financial position. We have significant operations in Israel and France, and a substantial portion of our taxable income is generated in these jurisdictions, as well as potentially in the U.S. due to Global Intangible Low-Taxed Income and the requirement to capitalize research and development expenditures under IRC Section 174 over 15 years if sourced internationally. Although certain of our non-U.S. subsidiaries are taxed at rates substantially lower than U.S. tax rates, our overall tax rate 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. Our Irish subsidiary qualified for a 12.5% tax rate on its trade. Interest income generated by our Irish subsidiary is taxed at a rate of 25%. Our French subsidiary is entitled to a tax benefit of 10% applied to specific revenues under the French IP Box regime. The French IP Box regime applies to net income derived from the licensing, sublicensing or sale of several IP rights, such as patents and copyrighted software, including royalty revenues. This elective regime requires a direct link between the income benefiting from the preferential treatment and the research and development expenditures incurred and contributing to that income. Qualifying income may be taxed at a favorable 10% CIT rate (plus social surtax, hence 10.3% in total). Income not eligible for a tax benefit under the French IP Box regime is taxed at a regular rate of 25%. Our Israeli subsidiary has previously benefited from various Israeli tax incentives, including reduced corporate tax rates and, in some instances, exemptions on undistributed profits. These tax-exempt profits are permanently reinvested as management has determined that the Israeli subsidiary does not currently intend to distribute dividends. Therefore, deferred taxes have not been provided for such tax-exempt income. We intend to continue to reinvest these profits and do not currently foresee a need to distribute dividends out of such tax-exempt income. Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates. 35 Table of Contents We believe that the assumptions and estimates associated with revenue recognition, equity-based compensation and credit losses have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. See our Annual Report on Form 10-K for the year ended December 31, 2025 for a discussion of additional critical accounting policies and estimates. There have been no changes in our critical accounting policies as compared to those previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2025. LIQUIDITY AND CAPITAL RESOURCES As of June 30, 2026, we had approximately $44.3 million in cash and cash equivalents, $5.1 million in bank deposits, and $171.3 million in marketable securities, totaling $220.7 million, as compared to $222.0 million at December 31, 2025. The decrease for the first six months of 2026 principally reflected investments in leasehold and equipment for our new offices in Ra’anana, Israel, partially offset by cash proceeds from exercise of stock-based awards. Out of total cash, cash equivalents, bank deposits and marketable securities of $220.7 million, $122.7 million was held by our foreign subsidiaries. Our intent is to 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. If additional funds are required in the United States for strategic transactions or other corporate purposes, we would first seek to access such capital through alternative means, including tax-efficient transfers of funds that qualify for applicable exemptions, debt financing arrangements, or capital markets transactions, including potential follow-on equity offerings, similar to our follow-on public offering completed in November 2025. However, if these alternatives are not available or are not sufficient, we may need 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. During the first six months of 2026, we invested $52.0 million of cash in bank deposits and marketable securities with maturities up to 47 months from the balance sheet date. In addition, during the same period, bank deposits and marketable securities were redeemed for cash amounting to $56.2 million. All 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 2026 was immaterial. For more information about our marketable securities, see Note 4 to the interim condensed consolidated financial statements for the three and six months ended June 30, 2026. Bank deposits are classified as short-term bank deposits and long-term bank deposits. Short-term bank deposits are deposits with maturities of more than three months but no longer than one year from the balance sheet date, whereas long-term bank deposits are deposits with maturities of more than one year as of the balance sheet date. Bank deposits are presented at their cost, including accrued interest, and purchases and sales are considered part of cash flows from investing activities. Operating Activities Net cash provided by operating activities for the first six months of 2026 was $0.9 million and consisted of net loss of $7.4 million, adjustments for non-cash items of $13.8 million, and changes in operating assets and liabilities of $5.5 million. Adjustments for non-cash items primarily consisted of $1.7 million of depreciation and amortization of intangible assets, $10.5 million of equity-based compensation expenses, and $1.9 million of unrealized foreign exchange loss. The decrease in operating assets and liabilities primarily consisted of an increase in prepaid expenses and other assets of $6.8 million (mainly as a result of payment of a yearly design tool subscription, an increase in French research tax benefits applicable to the CIR, advance tax payments, and a $2.4 million increase in unbilled receivables classified as “other long-term assets” in the interim condensed consolidated balance sheets), as well as a decrease in trade payables of $0.9 million, a decrease in deferred revenues of $0.8 million, and a decrease in accrued expenses and other payables of $0.8 million, partially offset by a decrease in trade receivables, net, of $2.4 million, a decrease in operating lease right-of-use assets of $0.4 million, an increase in accrued payroll and related benefits of $0.6 million, and an increase in operating lease liabilities of $0.5 million. Net 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 yearly bonus payments), partially offset by a decrease in trade receivables of $0.9 million. 36 Table of Contents Cash flows from operating activities may vary significantly from quarter to quarter depending on the timing of our receipts and payments. Our ongoing cash outflows from operating activities principally relate to payroll-related costs and obligations under our property leases and design tool licenses. Our primary sources of cash inflows are receipts from our accounts receivable, to some extent, funding from research and development government grants and French research tax credits, and interest earned from our cash, deposits and marketable securities. The timing of receipts of accounts receivable from customers is based upon the completion of agreed milestones or agreed dates as set out in the contracts. Investing Activities Net cash provided by investing activities for the first six months of 2026 was $1.3 million, compared to $20.8 million of net cash provided by investing activities for the comparable period of 2025. We had a cash outflow of $48.1 million and a cash inflow of $55.4 million with respect to investments in marketable securities during the first six months of 2026, as compared to 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. For the first six months of 2026, we had a net investment of $3.0 million in bank deposits, as compared to an investment of $0.7 million in bank deposits for the comparable period of 2025. We had a cash outflow of $2.9 million and $1.0 million during the first six months of 2026 and 2025, respectively, from purchase of property and equipment (the 2026 outflow partially reflects investments in leasehold improvements and equipment for our new offices in Ra’anana, Israel). For the first six months of 2025, we had a cash inflow of $3.5 million in connection with the release of escrowed funds associated with the sale of Intrinsix. Financing Activities Net cash provided by financing activities for the first six months of 2026 was $1.6 million, as compared to net cash used in financing activities in the amount of $4.5 million for the comparable period of 2025. During the first six months of 2026, we received $1.6 million from the exercise of stock-based awards, as compared to $1.6 million received for the comparable period of 2025. For the first six months of 2025, we had a cash outflow of $6.2 million from the purchase of treasury stock. In August 2008, we announced that our board of directors approved a share repurchase program for up to one million shares of common stock, which was extended collectively by an additional 7,800,000 shares in 2010, 2013, 2014, 2018, 2020, 2023 and 2024. No shares of common stock were repurchased during the first six months of 2026. 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. As of June 30, 2026, we had 684,486 shares available for repurchase. We believe that our cash and cash equivalents, short-term bank deposits and marketable securities, along with cash from operations, will provide sufficient capital to fund our operations for at least the next 12 months. We cannot provide assurances, however, that the underlying assumed levels of revenues and expenses will prove to be accurate. In addition, as part of our business strategy, we occasionally evaluate potential acquisitions of businesses, products and technologies and minority equity investments. Accordingly, a portion of our available cash may be used at any time for the acquisition of complementary products or businesses or minority equity investments. Such potential transactions may require substantial capital resources, which may require us to seek additional debt or equity financing. We cannot assure you that we will be able to successfully identify suitable acquisition or investment candidates, complete acquisitions or investments, integrate acquired businesses into our current operations, or expand into new markets. Furthermore, we cannot provide assurances that additional financing will be available to us in any required time frame and on commercially reasonable terms, if at all. Contractual Obligations and Commitments We believe that our contractual obligations and commitments have not changed materially from those included in our Annual Report on Form 10-K for the year ended December 31, 2025.