DSP Group, Inc. Reports Second Quarter 2019 Results
July 30 2019 - 7:00AM
DSP Group®, Inc. (NASDAQ: DSPG), a leading global provider of
wireless chipset solutions for converged communications, announced
today its results for the second quarter ended June 30, 2019.
Second Quarter Financial
Highlights:
- Total revenues of $29.0 million, a year-over-year decrease of
5% ° Revenues from growth initiatives of $17.8 million, a
year-over-year increase of 12%, accounted for 61% of total
revenues ° Unified Communications segment
revenues of $8.8 million, a year-over-year decrease of 10%
° SmartVoice segment revenues of $5.3 million, a
year-over-year increase of 142% ° SmartHome
segment revenues of $3.6 million, a year-over-year decrease of
4%° Cordless revenues of $11.3 million, a year-over-year
decrease of 24%GAAP and non-GAAP gross margins of 49.7% and 50.1%,
respectively, compared to GAAP and non-GAAP gross margins of 49.1%
and 49.5%, respectively, for the second quarter of 2018
- GAAP loss per share of ($0.02) and non-GAAP diluted earnings
per share of $0.07, compared to GAAP loss per share of ($0.01) and
non-GAAP diluted earnings per share of $0.07, respectively, for the
second quarter of 2018
- GAAP operating loss of ($1.3) million and non-GAAP operating
income of $0.9 million, compared to GAAP operating loss of ($0.7)
and non-GAAP operating income of $1.4 million, respectively, for
the second quarter of 2018
- GAAP net loss of ($0.5) million and non-GAAP net income of $1.7
million, compared to GAAP net loss of ($0.3) and non-GAAP net
income of $1.6 million, respectively, for the second quarter of
2018
- Generated $3.0 million of cash from operations compared to $5.4
million in the second quarter of 2018
- Cash, deposits and marketable securities of approximately
$121.9 million as of June 30, 2019
Management Comments:Commenting on the results,
Ofer Elyakim, CEO of DSP Group, said, “We are pleased to report
that revenues from our growth initiatives grew by 12% year over
year to $17.8 million and accounted for 61% of sales. This
accomplishment was propelled by record results in our SmartVoice
product line, which offset the expected weakness in the Unified
Communications product line and temporary slowdown in demand for
home gateways as part of our SmartHome product line. Moreover, we
are excited about the momentum in our SmartVoice business with
second quarter revenues growing by 142%, reaching a record of $5.3
million and demonstrating the strength and diversity of our product
offering in addressing a number of new applications including
cameras, tablets and smart TVs.”
“Looking ahead to the third quarter of 2019, we
project a sequential increase in revenues and remain confident that
we are well positioned for sustainable revenue growth in 2019 and
onwards, driven by strategic wins across all of our growth
initiatives, including a major SmartHome design win with a leading
North American service provider that selected our ULE technology
for its IoT offering, initial commercial shipments of a high-volume
design win in our Unified Communications product line, and the
continued growth and diversification of our SmartVoice business
with an expanding roster of customers.”
Second Quarter Business
Highlights:
- Continued to grow and strengthen our SmartVoice franchise, as
evidenced by 142% year over year revenue growth, expanding roster
to 55 customers and recent noteworthy design wins including:°
Three new innovative devices based on our technologies were
certified by Amazon Alexa Voice Services (AVS), bringing the total
number of certified products to 16° 5 new voice enabled
tablet products were launched by leading Chinese OEMs° A
leading OEM launched a handsfree voice enabled Smart TV offering
based on our SmartVoice solution
- Grew and diversified our SmartHome 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:
° A leading North American service provider selected DECT/ULE
for its IoT product offering ° A leading Japanese OEM
selected our DECT/ULE solution for wireless Hi-Fi audio
streaming° A North American company selected our DECT/ULE
solution for its wireless sensor system diagnosing machinery
conditions° Motorola launched an innovative Alexa-enabled
voice device – the world’s first DECT phone that is Amazon Alexa
Voice Services certified, underscoring the unique value proposition
of voice user interface coupled with best in class wireless voice
technology, thereby reinventing the home phone experience
- Solidified our leadership position in the Unified
Communications (UC) market, as demonstrated by the following
business wins: ° Initial commercial shipments of our
high-volume design win to a Tier-1 OEM customer° Grandstream
Networks launched a new line of carrier-grade IP phones and
longer-range IP-DECT products based on our DCX81 and DVF99xx voice
processors° A leading Korean service provider launched a new
IP phone based on our DVF99 SoC° Gigaset launched Maxwell 4,
a professional business phone, based on our DVF101 SoC
Second Quarter GAAP Results:Revenues for the
second quarter of 2019 were $29 million, a decrease of 5% from
revenues of $30.7 million for the second quarter of 2018. Net
loss and loss per share for the second quarter of 2019 were ($0.5)
million and ($0.02), respectively. Net loss and loss per share for
the second quarter of 2018 were ($0.3) million and ($0.01),
respectively.
Second Quarter Non-GAAP
Results:Non-GAAP net income and diluted earnings per share
for the second quarter of 2019 were $1.7 million and $0.07,
respectively, as compared to non-GAAP net income and diluted
earnings per share of $1.6 million and $0.07, respectively, for the
second quarter of 2018. Non-GAAP net income and diluted earnings
per share for the second 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 $2.1 million; non-cash exchange rate
differences resulting from the new lease accounting standard (ASC
842) in the amount of $0.2 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 second quarter of 2018 excluded the impact of amortization
of acquired intangible assets in the amount 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 second quarter
financial results, along with its outlook and guidance for the
third 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 +44 (0) 20
7192-8000 (international). The password is 5793887#.
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/mmc/p/hjy465xb 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 (0) 33 3300-9785, internationally and
enter the company access code: 5793887#.
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 second
quarter ended June 30, 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 optimism associated with various design wins, as
well as Mr. Elyakim’s statements that a sequential increase in
revenues is anticipated for the third quarter of 2019 and
sustainable growth in 2019 and onwards due to strategic
design-wins. 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 o 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
SECOND QUARTER 2019 RESULTS -
INFOGRAPHIC
| |
|
DSP GROUP, INC. |
|
CONSOLIDATED STATEMENTS OF INCOME |
|
(In thousands, except per share amounts) |
| |
| |
Three Months Ended June 30 |
Six Months Ended June 30 |
| |
2019 |
2018 |
2019 |
2018 |
|
|
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
|
|
|
|
|
|
|
Revenues |
$ |
29,034 |
|
$ |
30,651 |
|
$ |
57,310 |
|
$ |
58,762 |
|
|
Cost of revenues |
|
14,615 |
|
|
15,598 |
|
|
28,435 |
|
|
29,995 |
|
|
Gross profit |
|
14,419 |
|
|
15,053 |
|
|
28,875 |
|
|
28,767 |
|
|
Operating expenses: |
|
|
|
|
|
Research and development, net |
|
8,559 |
|
|
8,891 |
|
|
17,481 |
|
|
17,889 |
|
|
Sales and marketing |
|
4,386 |
|
|
3,761 |
|
|
8,869 |
|
|
7,829 |
|
|
General and administrative |
|
2,674 |
|
|
2,669 |
|
|
5,229 |
|
|
5,250 |
|
|
Amortization of intangible assets |
|
104 |
|
|
425 |
|
|
208 |
|
|
850 |
|
|
Total operating expenses |
|
15,723 |
|
|
15,746 |
|
|
31,787 |
|
|
31,818 |
|
|
Operating loss |
|
(1,304 |
) |
|
(693 |
) |
|
(2,912 |
) |
|
(3,051 |
) |
|
|
|
|
|
|
|
Financial income, net |
|
400 |
|
|
403 |
|
|
713 |
|
|
799 |
|
| Loss before taxes
on income |
|
(904 |
) |
|
(290 |
) |
|
(2,199 |
) |
|
(2,252 |
) |
| Income tax benefit |
|
(383 |
) |
|
(2 |
) |
|
(612 |
) |
|
(211 |
) |
| Net loss |
$ |
(521 |
) |
$ |
(288 |
) |
$ |
(1,587 |
) |
$ |
(2,041 |
) |
| |
|
|
|
|
|
Net loss per share: |
|
|
|
|
|
Basic |
$ |
(0.02 |
) |
$ |
(0.01 |
) |
$ |
(0.07 |
) |
$ |
(0.09 |
) |
|
Diluted |
$ |
(0.02 |
) |
$ |
(0.01 |
) |
$ |
(0.07 |
) |
$ |
(0.09 |
) |
|
|
|
|
|
|
| Weighted average number of shares
used in per share computations of loss per share: |
|
|
|
|
|
Basic |
|
22,757 |
|
|
22,681 |
22,650 |
|
|
22,680 |
|
|
Diluted |
|
22,757 |
|
|
22,681 |
22,650 |
|
|
22,680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Reconciliation of GAAP to Non-GAAP Financial
Measures |
|
(In thousands, except per share amounts) |
|
|
Three Months Ended |
Six Months Ended |
|
|
June 30, |
June 30, |
|
|
2019 |
2018 |
2019 |
2018 |
|
|
Unaudited |
Unaudited |
Unaudited |
Unaudited |
|
GAAP net loss |
$ |
(521 |
) |
$ |
(288 |
) |
$ |
(1,587 |
) |
$ |
(2,041 |
) |
| Equity-based compensation expense
included in cost of revenues |
|
122 |
|
|
108 |
|
|
237 |
|
|
206 |
|
| Equity-based compensation expense
included in research and development, net |
|
775 |
|
|
701 |
|
|
1,525 |
|
|
1,353 |
|
| Equity-based compensation expense
included in sales and marketing |
|
474 |
|
|
265 |
|
|
876 |
|
|
671 |
|
| Equity-based compensation expense
included in general and administrative |
|
689 |
|
|
586 |
|
|
1,327 |
|
|
1,129 |
|
| Amortization of intangible
assets |
|
104 |
|
|
425 |
|
|
208 |
|
|
850 |
|
| Non-cash exchange rates
differences resulting from the new lease accounting standard (ASC
842) |
|
206 |
|
|
- |
|
|
512 |
|
|
- |
|
| Changes of deferred taxes related
to intangible assets and equity-based compensation expense |
|
(105 |
) |
|
(184 |
) |
|
(186 |
) |
|
(381 |
) |
| Non-GAAP net
income |
$ |
1,744 |
|
$ |
1,613 |
|
$ |
2,912 |
|
$ |
1,787 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common stock used in computation of GAAP
diluted net earnings per share (in thousands) |
|
22,757 |
|
|
22,681 |
|
|
22,650 |
|
|
22,680 |
|
|
Weighted-average number of shares related to outstanding options,
stock appreciation rights and restricted share units (in
thousands) |
|
1,522 |
|
|
1,398 |
|
|
1,457 |
|
|
1,378 |
|
|
Weighted-average number of common stock used in computation of
non-GAAP diluted net earnings per share (in thousands) |
|
24,279 |
|
|
24,079 |
|
|
24,107 |
|
|
24,058 |
|
|
|
|
|
|
|
|
GAAP diluted net loss per share |
$ |
(0.02 |
) |
$ |
(0.01 |
) |
$ |
(0.07 |
) |
$ |
(0.09 |
) |
|
Equity-based compensation expense |
|
0.08 |
|
|
0.07 |
|
|
0.17 |
|
|
0.14 |
|
|
Amortization of intangible assets |
|
0.01 |
|
|
0.02 |
|
|
0.01 |
|
|
0.04 |
|
|
Non-cash exchange rates differences resulting from the new lease
accounting standard (ASC 842) |
|
0.01 |
|
|
- |
|
|
0.02 |
|
|
- |
|
|
Changes of deferred taxes related to intangible assets and
equity-based compensation expense |
|
(0.01 |
) |
|
(0.01 |
) |
|
(0.01 |
) |
|
(0.02 |
) |
|
Non-GAAP diluted net earnings per share |
$ |
0.07 |
|
$ |
0.07 |
|
$ |
0.12 |
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DSP GROUP, INC. |
|
CONSOLIDATED BALANCE SHEETS |
|
(In thousands) |
|
|
|
|
June 30, |
December 31, |
|
|
2019 |
2018 |
|
|
(Unaudited) |
(Audited) |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalentsRestricted deposits |
$ |
13,1971,089 |
|
$ |
12,146493 |
|
|
Marketable securities and short term deposits |
|
30,222 |
|
|
35,713 |
|
|
Trade receivables, net |
|
17,149 |
|
|
13,475 |
|
|
Inventories |
|
9,193 |
|
|
9,819 |
|
|
Other accounts receivable and prepaid expenses |
|
3,585 |
|
|
3,670 |
|
|
Total current assets |
|
74,435 |
|
|
75,316 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
5,858 |
|
|
2,748 |
|
|
|
|
|
|
|
|
|
|
Long term marketable securities and deposits |
|
77,380 |
|
|
75,538 |
|
|
Severance pay fund |
|
15,120 |
|
|
14,158 |
|
|
Operating leases |
|
11,937 |
|
|
- |
|
|
Deferred income taxes |
|
4,879 |
|
|
3,580 |
|
|
Intangible assets, net |
|
7,112 |
|
|
7,321 |
|
|
Long term prepaid expenses and lease deposits |
|
949 |
|
|
1,229 |
|
| |
|
117,377 |
|
|
101,826 |
|
| Total
assets |
$ |
197,670 |
|
$ |
179,890 |
|
| |
| |
|
|
Liabilities and Stockholders’ Equity |
|
|
Current liabilities: |
|
|
|
Trade payables |
$ |
7,990 |
|
$ |
9,579 |
|
|
Lease liability |
|
2,088 |
|
|
- |
|
|
Other current liabilities |
|
13,266 |
|
|
13,120 |
|
|
Total current liabilities |
|
23,344 |
|
|
22,699 |
|
|
Accrued severance pay |
|
15,310 |
|
|
14,348 |
|
|
Lease liability |
|
10,362 |
|
|
- |
|
|
Accrued pensions |
|
830 |
|
|
827 |
|
|
Deferred income taxes |
|
135 |
|
|
151 |
|
|
Total long term liabilities |
|
26,637 |
|
|
15,326 |
|
|
|
|
|
|
|
|
|
| Stockholders’
equity: |
|
|
|
Common stock |
|
23 |
|
|
22 |
|
|
Additional paid-in capital |
|
382,849 |
|
|
378,855 |
|
|
Accumulated other comprehensive loss |
|
(946 |
) |
|
(2,324 |
) |
|
Less – Cost of treasury stock |
|
(116,940 |
) |
|
(122,325 |
) |
|
Accumulated deficit |
|
(117,297 |
) |
|
(112,363 |
) |
|
Total stockholders’ equity |
|
147,689 |
|
|
141,865 |
|
| Total liabilities and
stockholders’ equity |
$ |
197,670 |
|
$ |
179,890 |
|
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