DSP Group, Inc. Reports First Quarter 2019 Results
May 06 2019 - 7:00AM
Growth Initiatives Account for 63% of Quarterly
RevenuesRecord Quarterly GAAP Gross Margin of 51.1%
DSP Group®, Inc. (NASDAQ: DSPG), a leading global provider of
wireless chipset solutions for converged communications, announced
today its results for the first quarter ended March 31, 2019.
First Quarter Business and Financial
Highlights:
- Total revenues of $28.3 million, a year-over-year increase of
1%
- Revenues of $17.7 million from growth initiatives accounted for
63% of total revenues, a year-over-year increase of 26%:
- Unified Communications revenues of $9.4 million, a
year-over-year increase of 13%.
- SmartVoice revenues of $4.1 million, a year-over-year increase
of 162%.
- SmartHome revenues of $4.2 million, a year-over-year increase
of 2%.
- Cordless revenues of $10.6 million, a year-over-year decrease
of 25%.
- GAAP and non-GAAP gross margins of 51.1% and 51.5%,
respectively, compared to GAAP and non-GAAP gross margin of 48.8%
and 49.1%, respectively, for the first quarter of 2018.
- GAAP operating loss of $1.6 million and non-GAAP operating
income of $0.4 million, compared to GAAP operating loss of $2.4 and
non-GAAP operating loss of $0.2 million for the first quarter of
2018.
- GAAP net loss of $1.1 million and non-GAAP net income of $1.2
million, compared to GAAP net loss of $1.8 million and non-GAAP net
income of $0.2 million for the first quarter of 2018.
- GAAP loss per share of $0.05 and non-GAAP diluted earnings per
share of $0.05, compared to GAAP loss per share of $0.08 and
non-GAAP diluted earnings per share of $0.01 for the first quarter
of 2018.
- Used $3.5 million of cash for operating activities, compared to
$3.4 million used during the first quarter of 2018.
- Cash, deposits and marketable securities of approximately
$120.1 million as of March 31, 2019.
- Expanding our position in the unified communications market, as
demonstrated by the following design wins:
- A new tier 1 OEM selected our DVF101 SoC for its high-end
conferencing system.
- NEC, a leading Japanese networking OEM, launched a SIP phone
based on our DVF97 SoC.
- Enhancing our engagement pipeline and design wins for voice
user interface with leading consumer electronics OEMs, thereby
driving growth of a burgeoning new market:
- Oppo, a leading mobile OEM, launched its new Reno smartphone
together with Breeno voice assistant based on our SmartVoice
technology.
- A tier 1 OEM selected our SmartVoice solution for its high-end
TV’s smart remote control that integrates always-on voice.
- Arlo, America's leading connected camera brand, launched its
Ultra 4K camera with our SmartVoice technology.
- A leading Chinese OEM launched a new education tablet product
based on our SmartVoice solution.
- Growing our ULE ecosystem with leading global IoT vendors that
recognize ULE’s unmatched characteristics for wireless indoor IoT
including superior range, interference-free spectrum and natural
support for two-way voice:
- Network Thermostat, a leading U.S. connected thermostat
company, selected our ULE technology for its next-generation of
smart thermostats.
- Snips selected ULE technology to bring multi-room embedded
voice recognition architecture for smart home and smart building
verticals.
- Gigaset launched a smart speaker offering and integrated our
DECT/ULE solution for HD two-way voice.
Management Comments: Commenting
on the results, Ofer Elyakim, CEO of DSP Group, stated: “We are
pleased with our first quarter results that were ahead of our
guidance on most financial metrics. Revenues from growth
initiatives comprised 63% of total revenues and increased by 26%
year-over-year, consequently driving record high GAAP and non-GAAP
gross margins of 51.1% and 51.5%, respectively. In addition, we
continued to execute on the transformation of our business into a
growth company by securing strategic business wins across our
growth initiatives. For instance, in our SmartVoice segment,
we commenced shipments to three leading consumer electronics
brands; in our Unified Communications segment we began shipments to
two new tier 1 OEMs; and in our SmartHome product line, we secured
strategic design wins for ULE in the U.S. and European
markets.”
Mr. Elyakim continued, “Looking ahead to the
second quarter of 2019, we project a sequential increase in
revenues, with record demand for SmartVoice products offset by near
term softness in our Unified Communications business due to
inventory adjustments. We believe that our Unified Communications
revenues will rebound in the second half of 2019 and we are
confident that our design-wins, coupled with the solid momentum and
our engagement pipeline across the growth initiatives, position us
well for sustainable growth in 2019 and beyond.”
First Quarter GAAP Results:Revenues for the
first quarter of 2019 were $28.3 million, an increase of 1% from
revenues of $28.1 million for the first quarter of 2018. Net
loss and loss per share for the first quarter of 2019 were $1.1
million and $0.05, respectively. Net loss and loss per share for
the first quarter of 2018 were $1.8 million and $0.08,
respectively.
First Quarter Non-GAAP
Results:Non-GAAP net income and diluted earnings per share
for the first quarter of 2019 were $1.2 million and $0.05,
respectively, as compared to non-GAAP net income and diluted
earnings per share of $0.2 million and $0.01, respectively, for the
first quarter of 2018. Non-GAAP net income and diluted
earnings per share for the first quarter of 2019 excluded the
impact of amortization of acquired intangible assets in the amount
of $0.1 million associated with previous acquisitions, equity-based
compensation expenses of $1.9 million, non-cash exchange rate
differences resulting from the new lease accounting standard (ASC
842) in the amount of $0.3 million and changes in deferred taxes in
the amount of $0.1 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 first quarter of 2018 excluded the impact of
amortization of acquired intangible assets of $0.4 million
associated with previous acquisitions, equity-based compensation
expenses of $1.7 million, and changes in deferred taxes in the
amount of $0.2 million related to intangible assets acquired in
previous acquisitions and equity-based compensation expenses.
Earnings Conference Call Details
DSP Group will discuss its first quarter
financial results, along with its outlook and guidance for the
second 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.
+1 866 966 1396 (domestic US) or +1 631 510 7495
(international) approximately 10 minutes prior to the starting
time. The password is 3986834.
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/k9f49nbs.
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: 3986834.
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 first
quarter ended March 31, 2019 to the same period in 2018 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) a sequential
increase in revenues for the second quarter of 2019 resulting from
a demand pick up for SmartVoice products is anticipated, (ii) a
short term softness in the company’s Unified Communications
business is anticipated in the second quarter of 2019 due to
inventory adjustments but believe Unified Communications revenues
will rebound in the second half of 2019; and (iii) the company’s
design-wins, coupled with the solid momentum and engagement
pipeline across the growth initiatives, position the company well
for sustainable growth in 2019 and beyond. The results from these
statements may not actually arise as a result of various factors,
including the market penetration of DSP Group’s unified
communications, ULE, voice user interface, SmartVoice and SmartHome
products; unexpected delays in the commercial launch of new
products; unexpected inventory adjustments, the 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 2018, 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
which enable the company to 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 Ended March 31 |
| |
2019 |
|
2018 |
| |
(Unaudited) |
|
(Unaudited) |
| |
|
|
|
| Revenues |
$ |
28,276 |
|
|
$ |
28,111 |
|
| Cost of revenues |
|
13,820 |
|
|
|
14,397 |
|
| |
|
|
|
|
|
|
|
| Gross profit |
|
14,456 |
|
|
|
13,714 |
|
| Operating expenses: |
|
|
|
|
|
|
|
| Research and development, net |
|
8,922 |
|
|
|
8,998 |
|
| Sales and marketing |
|
4,483 |
|
|
|
4,068 |
|
| General and administrative |
|
2,555 |
|
|
|
2,581 |
|
| Amortization of intangible assets |
|
104 |
|
|
|
425 |
|
| |
|
|
|
|
|
|
|
| Total operating expenses |
|
16,064 |
|
|
|
16,072 |
|
| |
|
|
|
|
|
|
|
| Operating loss |
|
(1,608 |
) |
|
|
(2,358 |
) |
| |
|
|
|
|
|
|
|
| Financial income, net |
|
313 |
|
|
|
396 |
|
| |
|
|
|
|
|
|
|
| Loss before
taxes on income |
|
(1,295 |
) |
|
|
(1,962 |
) |
| |
|
|
|
|
|
|
|
| Income tax
benefit |
|
229 |
|
|
|
209 |
|
| |
|
|
|
|
|
|
|
| Net loss |
$ |
(1,066 |
) |
|
$ |
(1,753 |
) |
| Net loss per share: |
|
|
|
|
|
|
|
|
Basic |
$ |
(0.05 |
) |
|
$ |
(0.08 |
) |
|
Diluted |
$ |
(0.05 |
) |
|
$ |
(0.08 |
) |
| |
|
|
|
| Weighted average number of
shares used in per share computations of loss per share: |
|
|
|
|
|
Basic |
|
22,542 |
|
|
|
22,678 |
|
|
Diluted |
|
22,542 |
|
|
|
22,678 |
|
| |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2019 |
|
2018 |
|
|
|
Unaudited |
|
Unaudited |
| GAAP net
loss |
|
$ |
(1,066 |
) |
|
$ |
(1,753 |
) |
| Equity-based compensation
expense included in cost of revenues |
|
|
115 |
|
|
|
98 |
|
| Equity-based compensation
expense included in research and development, net |
|
|
750 |
|
|
|
652 |
|
| Equity-based compensation
expense included in sales and marketing |
|
|
402 |
|
|
|
406 |
|
| Equity-based compensation
expense included in general and administrative |
|
|
638 |
|
|
|
543 |
|
| Amortization of intangible
assets |
|
|
104 |
|
|
|
425 |
|
| Exchange rates differences
resulting from the new lease accounting standard (ASC 842) |
|
|
307 |
|
|
|
- |
|
| Changes of deferred taxes
related to intangible assets and equity-based compensation
expense |
|
|
(81 |
) |
|
|
(197 |
) |
| Non-GAAP net
income |
|
$ |
1,169 |
|
|
$ |
174 |
|
|
|
|
|
|
|
Weighted-average number of common stock used in computation of GAAP
diluted net earnings (loss) per share (in thousands) |
|
|
22,542 |
|
|
|
22,678 |
|
|
|
|
|
|
|
Weighted-average number of shares related to outstanding options,
stock appreciation rights and restricted stock units (in
thousands) |
|
|
1,394 |
|
|
|
1,359 |
|
|
|
|
|
|
|
Weighted-average number of common stock used in computation of
non-GAAP diluted net earnings per share (in thousands) |
|
|
23,936 |
|
|
|
24,037 |
|
|
|
|
|
|
|
GAAP diluted net loss per share |
|
$ |
(0.05 |
) |
|
$ |
(0.08 |
) |
|
Equity-based compensation expense |
|
|
0.08 |
|
|
|
0.08 |
|
|
Amortization of intangible assets |
|
|
0.01 |
|
|
|
0.02 |
|
| Exchange
rates differences resulting from the new lease accounting standard
(ASC 842) |
|
|
0.01 |
|
|
|
- |
|
| Changes
of deferred taxes related to intangible assets and equity-based
compensation expense |
|
|
- |
|
|
|
(0.01 |
) |
|
Non-GAAP diluted net earnings per share |
|
$ |
0.05 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
| |
| DSP GROUP, INC. |
| CONSOLIDATED BALANCE SHEETS |
| (In thousands) |
| |
|
|
|
March 31, |
|
December 31, |
|
|
|
2019 |
|
2018 |
|
|
|
(Unaudited) |
|
(Audited) |
|
Assets |
|
|
|
|
Current assets: |
|
|
|
| Cash and cash
equivalents |
|
$ |
11,390 |
|
|
$ |
12,146 |
|
| Restricted
deposits |
|
|
1,078 |
|
|
|
493 |
|
| Marketable
securities and short term deposits |
|
|
31,141 |
|
|
|
35,713 |
|
|
Trade receivables, net |
|
|
15,636 |
|
|
|
13,475 |
|
|
Inventories |
|
|
9,278 |
|
|
|
9,819 |
|
|
Other accounts receivable and prepaid expenses |
|
|
3,872 |
|
|
|
3,670 |
|
|
Total current assets |
|
|
72,395 |
|
|
|
75,316 |
|
|
|
|
|
|
|
|
|
|
|
| Property
and equipment, net |
|
|
5,105 |
|
|
|
2,748 |
|
|
|
|
|
|
|
|
|
|
|
| Long
term marketable securities and deposits |
|
|
76,473 |
|
|
|
75,538 |
|
|
Severance pay fund |
|
|
14,800 |
|
|
|
14,158 |
|
|
Operating leases |
|
|
11,972 |
|
|
|
- |
|
| Deferred
income taxes |
|
|
4,090 |
|
|
|
3,580 |
|
|
Intangible assets, net |
|
|
7,217 |
|
|
|
7,321 |
|
| Long
term prepaid expenses and lease deposits |
|
|
1,306 |
|
|
|
1,229 |
|
| |
|
|
115,858 |
|
|
|
101,826 |
|
| Total
assets |
|
$ |
193,358 |
|
|
$ |
179,890 |
|
| |
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
Current liabilities: |
|
|
|
| Trade
payables |
|
$ |
8,176 |
|
|
$ |
9,579 |
|
| Lease
liability |
|
|
1,885 |
|
|
|
- |
|
| Other
current liabilities |
|
|
11,505 |
|
|
|
13,120 |
|
|
Total current liabilities |
|
|
21,566 |
|
|
|
22,699 |
|
|
|
|
|
|
| Accrued
severance pay |
|
|
15,028 |
|
|
|
14,348 |
|
| Lease
liability |
|
|
10,394 |
|
|
|
- |
|
| Accrued
pensions |
|
|
815 |
|
|
|
827 |
|
| Deferred
income taxes |
|
|
142 |
|
|
|
151 |
|
|
Total long term liabilities |
|
|
26,379 |
|
|
|
15,326 |
|
|
|
|
|
|
|
|
|
|
|
| Stockholders’
equity: |
|
|
|
| Common
stock |
|
|
23 |
|
|
|
22 |
|
|
Additional paid-in capital |
|
|
380,777 |
|
|
|
378,855 |
|
|
Accumulated other comprehensive loss |
|
|
(1,525 |
) |
|
|
(2,324 |
) |
| Less –
Cost of treasury stock |
|
|
(117,968 |
) |
|
|
(122,325 |
) |
|
Accumulated deficit |
|
|
(115,894 |
) |
|
|
(112,363 |
) |
|
Total stockholders’ equity |
|
|
145,413 |
|
|
|
141,865 |
|
| Total liabilities
and stockholders’ equity |
|
$ |
193,358 |
|
|
$ |
179,890 |
|
| |
|
|
|
|
|
|
|
|
A PDF accompanying this announcement is available
at http://ml.globenewswire.com/Resource/Download/19567818-4ac2-415b-84b5-07dfc94c1303
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