DSP Group®, Inc. (NASDAQ: DSPG), a leading global provider of
wireless chipset solutions for converged communications, announced
today its results for the fourth quarter and year ended December
31, 2018.
Fourth Quarter Business and Financial
Highlights:
- Total revenues of $26.1 million, a year-over-year decrease of
17%:° Revenues from growth initiatives of $15.5 million accounted
for 59% of total revenues, a year-over-year increase of 1%.
- Office/VoIP segment revenues of $8.5 million, a year-over-year
decrease of 10%.
- SmartVoice segment revenues of $4.1 million, a year-over-year
increase of 83%.
- SmartHome revenues of $2.9 million, a year-over-year decrease
of 21%.
- Cordless revenues of $10.6 million, a year-over-year decrease
of 33%.
- GAAP and non-GAAP gross margin of 47.5% and 47.9%, compared to
GAAP and non-GAAP gross margin of 47.8% and 48.1% for the fourth
quarter of 2017.
- GAAP operating loss of $2.9 million and non-GAAP operating loss
of $0.7 million, compared to GAAP operating loss of $0.7 and
non-GAAP operating income of $1.1 million for the fourth quarter of
2017.
- GAAP net loss of $0.3 million and non-GAAP net income of $1.0
million, compared to GAAP net loss of $0.1 and non-GAAP net income
of $1.3 million for the fourth quarter of 2017.
- GAAP loss per share of $0.01 and non-GAAP diluted earnings per
share of $0.04, compared to GAAP loss per share of $0.01 and
non-GAAP diluted earnings per share of $0.06 for the fourth quarter
of 2017.
- Generated $6.7 million of cash from operating activities,
compared to $7.1 million of cash generated from operating
activities during the fourth quarter of 2017.
- Repurchased approximately 231,000 shares of common stock for a
total consideration of $2.7 million.
- Cash, deposits and marketable securities of approximately
$123.9 million as of December 31, 2018.
- Continue to expand our position in the unified communications
market as demonstrated by our design wins:
- Secured a major design-win with a tier 1 OEM based on our
DVF101 SoC.
- Audiocodes launched a Microsoft Teams Android based business
phone based on our DVF101 SoC.
- AtalsIED launched an IP speaker that extends tele-presence with
enhanced audio based on our VoIP solution.
- Continue to grow our design pipeline for voice user interface
with leading consumer electronics OEMs, thereby driving growth of a
burgeoning new market:
- Began mass shipments of SmartVoice products to a tier 1 Chinese
smartphone OEM.
- Lenovo™ Smart Tabs integrated our SmartVoice technology to
enable Alexa voice experiences.
- Universal Electronics developed a hands-free, low power,
voice-activated remote control based on our SmartVoice
technology.
- Simplehuman announced that its new generation of voice
activated trash cans is powered by our SmartVoice solution.
- Growing our ULE ecosystem with leading IoT vendors that
recognize ULE’s unmatched characteristics for wireless indoor IoT:
- Orange, France’s leading telecommunication service provider,
announced Maison-Connectee, its new Smart Home service based on
ULE.
- Technicolor announced its future voice enabled solutions based
on our ULE and SmartVoice technologies.
- Bezeq, Israel’s leading telecommunication service provider,
selected our ULE technology to power its smart security solutions
for enterprise customers.
- Elite Computer Systems selected our SmartVoice and ULE
solutions to power its next-generation portable smart speaker with
Amazon Alexa.
Full Year 2018 Financial Highlights:
- Total revenues of approximately $117.4 million, a decrease of
6% vs. $124.8 million in 2017.
- Revenues from growth initiatives of $64.2 million, a
year-over-year increase of 12% when compared to 2017.
- Office/VoIP segment revenues of $38.8 million, a year-over-year
increase of 11%.
- SmartVoice segment revenues of $10.9 million, a year-over-year
increase of 124%.
- SmartHome revenues of $14.5 million, a year-over-year decrease
of 17%.
- Cordless revenues of $53.2 million, a year-over-year decrease
of 21%.
- GAAP and non-GAAP gross margin of 48.9% and 49.3%,
respectively, a 270 bps and 280 bps improvement, as compared to
2017 gross margin of 46.2% on GAAP and 46.5% on a non-GAAP
basis.
- GAAP operating loss of $5.6 million and non-GAAP operating
income of $2.9 million, compared to GAAP operating loss of $4.8
million and non-GAAP operating income of $2.8 million in 2017.
- GAAP net loss of $2.0 million and non-GAAP net income of $5.4
million, compared to GAAP net loss of $3.0 million and non-GAAP net
income of $3.9 million in 2017.
- GAAP loss per share of $0.09 and non-GAAP diluted earnings per
share of $0.23, compared to GAAP loss per share of $0.14 and
non-GAAP earning per share of $0.17 in 2017.
- Generated $8.7 million of cash from operating activities,
compared to $8.5 million in 2017.
- Repurchased approximately 1 million shares of common stock for
a total consideration of $12.3 million.
Management Comments: Commenting
on the results, Ofer Elyakim, CEO of DSP Group, stated, “Our fourth
quarter results were in line with our guidance on most metrics.
Moreover, looking ahead to the first quarter, we expect our
revenues to recover and grow on a sequential basis, as the cordless
supply chain correction gradually eases and customer demand
strengthens, propelled by key accomplishments across our growth
initiatives. We expect to benefit from commencing mass shipments of
SmartVoice products to a tier 1 Chinese smartphone OEM, securing a
high-volume design win with a tier 1 OEM for our Office/VoIP
products, and being selected as the primary IoT technology for
Orange’s new connected home service in France, a milestone event
for ULE.”
Mr. Elyakim added, “2018 marked the first year
in which a majority of the company’s revenues were generated by our
growth initiatives, driving gross margins to an all-time record of
49%. The improving product mix, coupled with solid momentum across
our growth businesses and continued excellent supply chain
execution, provide us with confidence that we are well positioned
for margin expansion and that these initiatives should account for
over two thirds of our total revenues in 2019. These are exciting
developments for DSP Group. We are transitioning back into a growth
technology company as the legacy cordless business becomes a
smaller part of the company’s revenues, thereby allowing our growth
initiatives to play a more meaningful role in driving revenue
growth and margin expansion for the overall company.”
GAAP Results: Fourth
Quarter GAAP Results:Revenues for the fourth quarter of
2018 were $26.1 million, a decrease of 17% from revenues of $31.2
million for the fourth quarter of 2017. Net loss and loss per
share for the fourth quarter of 2018 were $0.3 million and $0.01,
respectively. Net loss and loss per share for the fourth quarter of
2017 were $0.1 million and $0.01, respectively.
Year End Results:
Revenues for the year ended December 31, 2018
were $117.4 million, a decrease of 6% from 2017 revenues of $124.8
million. Net loss for 2018 was $2.0 million, compared to a net loss
of $3.0 million for 2017. Loss per share for 2018 was $0.09,
compared to loss per share of $0.14 for 2017.
Non-GAAP Results:Fourth
Quarter Non-GAAP Results: Non-GAAP net income and diluted
earnings per share for the fourth quarter of 2018 were $1.0 million
and $0.04, respectively, as compared to non-GAAP net income and
diluted earnings per share of $1.3 million and $0.06, respectively,
for the fourth quarter of 2017. Non-GAAP net income and
diluted earnings per share for the fourth quarter of 2018 excluded
the impact of amortization of acquired intangible assets in the
amount of $425,000 associated with previous acquisitions,
equity-based compensation expenses of $1.7 million, and changes in
deferred taxes in the amount of $790,000 related to intangible
assets acquired in previous acquisitions and equity-based
compensation expenses.
Non-GAAP net income and diluted earnings per
share for the fourth quarter of 2017 excluded the impact of
amortization of acquired intangible assets of $425,000 associated
with previous acquisitions, equity-based compensation expenses of
$1.3 million, and changes in deferred taxes in the amount of
$303,000 related to intangible assets acquired in previous
acquisitions and equity-based compensation expenses.
Year End Non-GAAP
Results:Non-GAAP net income and diluted earnings per share
for the year ended December 31, 2018 were $5.4 million and $0.23,
respectively, as compared to non-GAAP net income and diluted
earnings per share of $3.9 million and $0.17, respectively, for the
year ended December 31, 2017. Non-GAAP net income and diluted
earnings per share for the year ended December 31, 2018 excluded
the impact of amortization of acquired intangible assets of $1.7
million associated with previous acquisitions; equity-based
compensation expenses of $6.8 million and changes in deferred taxes
in the amount of $1.1 million related to intangible assets acquired
in previous acquisitions and equity-based compensation
expenses. Non-GAAP net income and diluted earnings per share
for the year ended December 31, 2017 excluded the impact of
amortization of acquired intangible assets of $1.7 million
associated with previous acquisitions; equity-based compensation
expenses of $5.9 million; and changes in deferred taxes in the
amount of $0.6 million related to intangible assets acquired in
previous acquisitions and equity-based compensation expenses.
Earnings Conference Call
Details DSP Group will discuss its fourth quarter
financial results, along with its outlook and guidance for the
first quarter of 2019, on its conference call at 8:30 a.m. ET
today, and invites you to listen via our conference call or a live
broadcast over the Internet.
Investors may access the conference call by
dialing +1 866 966 1396 (domestic US) or +1 631 510 7495
(international) approximately 10 minutes prior to the starting
time. The password is 5365029. The broadcast via the Internet can
be accessed by all interested parties through the Investor
Relations section of DSP Group’s website at www.dspg.com or link
to: https://edge.media-server.com/m6/p/sxvr7cdx
A replay of the conference call will be
available for a week following the call. To listen to the session,
please dial +1 917 677 7532, domestically or +44 33 3300 9785,
internationally and enter the company access code: 5365029
Presentation of Non-GAAP Net Income and
EPSThe Company believes that the non-GAAP presentation of
net income and diluted earnings per share presented in this press
release is useful to investors in comparing results for the fourth
quarter and year ended December 31, 2018 to the same periods in
2017 because the exclusion of the above noted expenses may provide
a more meaningful analysis of the Company’s core operating results.
Further, the Company believes it is useful to investors to
understand how the expenses associated with equity-based
compensation are reflected in its statements of income.
Forward Looking Statements This
press release contains statements that qualify as “forward-looking
statements” under the Private Securities Litigation Reform Act of
1995, including Mr. Elyakim’s statements that (i) improving product
mix, coupled with solid momentum across our growth businesses and
continued excellent supply chain execution, provide us with
confidence that we are well positioned for margin expansion, (ii)
our first quarter revenues will recover and grow on a sequential
basis, and (iii) revenues from growth initiatives will account for
over two thirds of the company’s total revenues for 2019. The
results from these statements may not actually arise as a result of
various factors, including the market penetration of new products
such as products with Voice User Interface and ULE products;
unexpected delays in the commercial launch of new products; speed
of decline in the cordless market; DSP Group's ability to manage
costs; DSP Group’s ability to develop and produce new products at
competitive costs and in a timely manner and the ability of such
products to achieve broad market acceptance; and general market
demand for products that incorporate DSP Group’s technology in the
market. These factors and other factors which may affect future
operating results or DSP Group’s stock price are discussed under
“RISK FACTORS” in the Form 10-K for fiscal 2017, as well as other
reports DSP Group has filed with the Securities and Exchange
Commission and which are available on DSP Group’s website
(www.dspg.com) under Investor Relations. DSP Group assumes no
obligation to update any forward-looking statements or information,
which speak as of their respective dates.About DSP
GroupDSP Group®, Inc. (NASDAQ: DSPG) is a global leader in
wireless chipsets for a wide range of smart-enabled devices. The
company was founded in 1987 on the principles of experience,
insight and continuous advancement consistently deliver
next-generation solutions in the areas of voice, audio, video and
data connectivity. Experts in voice processing, DSP Group invests
heavily in innovation for the smart future, the result is
leading-edge semiconductor technology that is enabling our
customers to develop a new wave of products that bring enhanced
user experiences through innovation like conversation technology.
From mobile phones to VoIP and virtual assistants using cloud-based
voice services, DSP Group is the answer to the growing demand for
the ever-expanding collection of voice controlled smart devices.
For more information, visit www.dspg.com.
Contact:Tali Chen, Chief
Marketing Officer, Tali.Chen@dspg.com
DSP GROUP,
INC. CONSOLIDATED STATEMENTS OF
INCOME (In thousands, except per share
amounts)
| |
|
Three Months EndedDecember 31 |
Twelve Months Ended December 31 |
| |
|
|
2018 |
|
|
2017 |
2018 |
|
2017 |
|
| |
|
(Unaudited) |
|
(Unaudited) |
(Unaudited) |
|
(Audited) |
|
| |
|
|
|
|
|
|
|
| Revenues |
|
$ |
26,057 |
|
$ |
31,242 |
|
$ |
117,438 |
|
$ |
124,753 |
|
| Cost of revenues |
|
|
13,681 |
|
16,298 |
|
|
|
59,991 |
|
|
67,058 |
|
| |
|
|
|
|
|
|
|
|
|
| Gross profit |
|
|
12,376 |
|
|
14,944 |
|
|
|
57,447 |
|
|
57,695 |
|
| Operating expenses: |
|
|
|
|
|
| Research and development, net |
|
|
8,606 |
|
|
9,090 |
|
|
|
36,109 |
|
|
36,655 |
|
| Sales and marketing |
|
|
3,854 |
|
|
3,675 |
|
|
|
15,323 |
|
|
14,315 |
|
| General and administrative |
|
|
2,343 |
|
|
2,447 |
|
|
|
9,955 |
|
|
9,789 |
|
| Amortization of intangible assets |
|
|
425 |
|
|
425 |
|
|
|
1,700 |
|
|
1,700 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Total operating expenses |
|
|
15,228 |
|
|
15,637 |
|
|
|
63,087 |
|
|
62,459 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Operating loss |
|
|
(2,852) |
|
|
(693) |
|
|
|
(5,640) |
|
|
(4,764) |
|
| |
|
|
|
|
|
| Financial income, net |
|
|
524 |
|
|
453 |
|
|
|
1,815 |
|
|
1,669 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Loss before
taxes on income |
|
|
(2,328) |
|
|
(240) |
|
|
|
(3,825) |
|
|
(3,095) |
|
| Income tax
benefit |
|
|
(2,007) |
|
|
(111) |
|
|
|
(1,868) |
|
|
(92) |
|
| |
|
|
|
|
|
|
|
|
|
|
| Net
loss |
|
$ |
(321) |
|
$ |
(129) |
|
|
$ |
(1,957) |
|
$ |
(3,003) |
|
| Net loss per share: |
|
|
|
|
|
| Basic |
|
$ |
(0.01) |
|
$ |
(0.01) |
|
|
$ |
(0.09) |
|
$ |
(0.14) |
|
| Diluted |
|
$ |
(0.01) |
|
$ |
(0.01) |
|
|
$ |
(0.09) |
|
$ |
(0.14) |
|
| |
|
|
|
|
|
| Weighted average number
of shares used in per share computations of loss per
share: |
|
|
|
|
|
| Basic |
|
|
22,240 |
|
|
22,360 |
22,512 |
|
|
22,229 |
|
| Diluted |
|
|
22,240 |
|
|
22,360 |
22,512 |
|
|
22,229 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
| Unaudited Reconciliation of GAAP to Non-GAAP
Financial Measures |
| (In thousands, except per share amounts) |
|
|
|
Three Months EndedDecember 31, |
Twelve Months Ended December
31 |
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
Unaudited |
Unaudited |
Unaudited |
Unaudited |
|
GAAP net loss |
|
$ (321) |
|
$ (129) |
|
$ (1,957) |
|
$ (3,003) |
|
| Equity-based
compensation expense included in cost of revenues |
|
|
108 |
|
|
77 |
|
|
428 |
|
|
352 |
|
| Equity-based
compensation expense included in research and development, net |
|
|
739 |
|
|
534 |
|
|
2,873 |
|
|
2,349 |
|
| Equity-based
compensation expense included in sales and marketing |
|
|
294 |
|
|
245 |
|
|
1,248 |
|
|
1,115 |
|
| Equity-based
compensation expense included in general and administrative |
|
|
552 |
|
|
479 |
|
|
2,255 |
|
|
2,045 |
|
| Amortization of
intangible assets |
|
|
425 |
|
|
425 |
|
|
1,700 |
|
|
1,700 |
|
| Changes of deferred
taxes related to intangible assets and equity-based compensation
expense |
|
|
(790) |
|
|
(303) |
|
|
(1,131) |
|
|
(622) |
|
| Non-GAAP net
income |
|
$ 1,007 |
|
$ 1,328 |
|
$ 5,416 |
|
$ 3,936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common stock used in computation of GAAP
diluted net earnings (loss) per share (in thousands) |
|
|
22,240 |
|
|
22,360 |
|
|
22,512 |
|
|
22,229 |
|
|
|
|
|
|
|
|
|
Weighted-average number of shares related to outstanding options,
stock appreciation rights and restricted share units (in
thousands) |
|
|
1,203 |
|
|
1,303 |
|
|
1,317 |
|
|
1,379 |
|
|
|
|
|
|
|
|
|
Weighted-average number of common stock used in computation of
non-GAAP diluted net earnings per share (in thousands) |
|
|
23,443 |
|
|
23,663 |
|
|
23,829 |
|
|
23,608 |
|
|
|
|
|
|
|
|
|
GAAP diluted net loss per share |
|
|
$(0.01) |
|
|
$(0.01) |
|
|
$(0.09) |
|
|
$(0.14) |
|
|
Equity-based compensation expense |
|
|
0.07 |
|
|
0.06 |
|
|
0.29 |
|
|
0.26 |
|
|
Amortization of intangible assets |
|
|
0.02 |
|
|
0.02 |
|
|
0.07 |
|
|
0.07 |
|
|
Changes of deferred taxes related to intangible assets and
equity-based compensation expense |
|
|
(0.04) |
|
|
(0.01) |
|
|
(0.04) |
|
|
(0.02) |
|
|
Non-GAAP diluted net earnings per share |
|
$ 0.04 |
|
$ 0.06 |
|
$ 0.23 |
|
$ 0.17 |
|
|
|
|
|
|
|
|
|
|
|
|
DSP GROUP,
INC.CONSOLIDATED BALANCE SHEETS (In
thousands)
|
|
December 31, |
December 31, |
|
|
2018 |
2017 |
|
|
(Unaudited) |
(Audited) |
|
Assets |
|
|
|
Current assets: |
|
|
| Cash and cash
equivalents |
$ |
12,146 |
|
$ |
21,324 |
|
Restricted deposits |
493 |
|
524 |
|
Marketable securities and short term deposits |
35,713 |
|
24,697 |
|
Trade receivables, net |
13,475 |
|
13,416 |
|
Inventories |
9,819 |
|
9,422 |
|
Other accounts receivable and prepaid expenses |
|
3,670 |
|
3,167 |
| Total
current assets |
75,316 |
|
72,550 |
|
Property and equipment, net |
2,748 |
|
3,184 |
|
Long term marketable securities and deposits |
75,538 |
|
82,669 |
|
Severance pay fund |
14,158 |
|
15,190 |
|
Deferred income taxes |
3,580 |
|
1,043 |
|
Intangible assets, net |
7,321 |
|
9,022 |
| Long
term prepaid expenses and lease deposits |
|
1,229 |
|
1,541 |
| |
|
101,826 |
|
109,465 |
| Total assets |
$ |
179,890 |
|
$ |
185,199 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
Current liabilities: |
|
|
|
| Trade
payables |
$ |
9,579 |
|
$ |
8,660 |
| Other
current liabilities |
13,120 |
|
12,819 |
| Total
current liabilities |
22,699 |
|
21,479 |
|
|
|
|
|
|
Accrued severance pay |
14,348 |
|
15,463 |
|
Accrued pensions |
827 |
|
883 |
|
Deferred income taxes |
151 |
|
424 |
|
Total long term liabilities |
15,326 |
|
16,770 |
| Stockholders’
equity: |
|
|
|
|
Common stock |
22 |
|
22 |
|
Additional paid-in capital |
378,855 |
|
372,041 |
|
Accumulated other comprehensive loss |
(2,324) |
|
(1,874) |
|
Less – Cost of treasury stock |
(122,325) |
|
(118,397) |
|
Accumulated deficit |
(112,363) |
|
(104,842) |
| Total
stockholders’ equity |
141,865 |
|
146,950 |
| Total liabilities and
stockholders’ equity |
$ |
179,890 |
|
$ |
185,199 |
A PDF is available
at: http://resource.globenewswire.com/Resource/Download/0b7247c6-042d-4e28-bf60-e25a5e71d13a
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