DSP Group, Inc. Reports First Quarter 2020 Results
May 04 2020 - 7:00AM
DSP Group®, Inc. (NASDAQ: DSPG), a leading global provider of voice
and wireless chipset solutions for converged communications,
announced today its results for the first quarter ended March 31,
2020.
First Quarter Financial Highlights (and
Comparisons to First Quarter of 2019):
- Total revenues of $28.2 million were essentially flat
year-over-year: º Revenues from growth initiatives of $18.2
million accounted for 64% of total revenues, a year-over-year
increase of 3% º Unified Communications segment
revenues of $10.2 million, a year-over-year increase of
9% º SmartVoice segment revenues of $4.0 million,
a year-over-year decrease of 4% º SmartHome
segment revenues of $4.0 million, a year-over-year decrease of
5%º Cordless revenues of $10.1 million, a year-over-year
decrease of 5%
- GAAP and non-GAAP gross margin of 50.9% and 51.4%,
respectively, a 20 and 10 basis point decrease, respectively
- GAAP and non-GAAP R&D expenses of $10.4 million and $9.6
million, respectively, compared to GAAP and non-GAAP R&D
expenses of $8.9 million and $8.2 million, respectively, with the
increase primarily due to project-related discretionary
spending
- GAAP and non-GAAP loss per share of $0.11 and $0.04,
respectively, compared to GAAP loss per share of $0.05 and non-GAAP
diluted earnings per share of $0.05
- GAAP and non-GAAP operating loss of $3.4 million and $1.5
million, respectively, compared to GAAP operating loss of $1.6
million and non-GAAP operating income of $0.4 million,
respectively
- GAAP and non-GAAP net loss of $2.5 million and $1.0 million,
respectively, compared to GAAP net loss of $1.1 million and
non-GAAP net income of $1.2 million
- Generated $0.9 million of cash from operations, compared to
$3.5 million of cash used for operations
- Repurchased 275,000 shares for a total consideration of $3.4
million during the quarter
- Cash, deposits and marketable securities of approximately
$128.4 million as of March 31, 2020
Management Comments:Commenting
on the results, Ofer Elyakim, CEO of DSP Group, stated: “The
COVID-19 outbreak presents an unprecedented global challenge
affecting every aspect of our lives. Ensuring the safety and
well-being of our employees, partners and communities are our top
priorities as we continue to serve our customers and build value
for our stockholders. Despite short-term issues caused by the
COVID-19 pandemic, including supply chain disruptions from China
and slowdowns at customer operations worldwide, we generated
revenues of $28.2 million, in line with the original guidance range
we provided. We are also successfully maintaining gross
margins of over 50%, compared with under 40% just a few years ago,
which highlights the added value we are bringing to our customers
in each of our growth initiatives, namely Unified Communications,
SmartVoice and SmartHome.”
Mr. Elyakim continued, “Our innovative technical
solutions are well-positioned to play a significant role in the
technological trends that are accelerating as a result of the
pandemic. For instance, with more employees working remotely,
and offices reconfiguring workspaces to cater to social distancing
requirements, high-quality communication and remote collaboration
tools are essential. Moreover, individuals worldwide have
recently become sensitive to the health risks of touching
commonly-used surfaces, which should accelerate the adoption of
voice as a user interfaces (VUIs) for a broad array of products,
beyond the original value propositions of convenience and
functionality. DSP Group is uniquely positioned to leverage
its leadership in Unified Communications, SmartVoice and SmartHome
markets with world class technologies and innovative solutions that
address the increasing demands of these markets. While the
pandemic, shelter-in-place restrictions and global economic
slowdown will undoubtedly have a short-term disruptive impact on
our suppliers, customers and partners, we are proud that DSP Group
has the technologies and products to help our customers transition
to a safer and more productive environment, both at the office and
at home. Our leading voice AI and IoT solutions position us
well for sustainable long-term growth as we capitalize on these
accelerating technological trends.”
First Quarter Business
Highlights:
- Continued to grow and strengthen our SmartVoice franchise with
design wins and product launches for VUIs with leading consumer
electronics OEMs, thereby driving dynamic growth in a burgeoning
market: º A tier one platform company integrated our
SmartVoice technology in its newly launched TWS
earbudsº Lenovo, BBK and a leading mobile OEM launched a
number of new tablet products based on our SmartVoice solutions
supporting multiple simultaneous wake word detectionº A
leading security camera brand launched a new outdoor camera with
our SmartVoice DSP and HDClear™ algorithms
- Grew and diversified our SmartHome ecosystem with leading IoT
vendors that recognize ULE’s unmatched characteristics for wireless
indoor connectivity. These characteristics include superior
range, interference-free spectrum and native support for two-way
voice: º Korea Telecom selected our ULE technology for
its new smart small business IoT offeringº British
Telecom launched its digital voice offering leveraging our DECT/ULE
solution to offer its subscribers wireless HD voice
experienceº A leading European security service provider
selected our DECT/ULE for its all-in-one voice emergency and
communication offering
- Solidified our leadership position in the Unified
Communications market as demonstrated by the following business
wins: º A tier one networking OEM selected our DECT
solution for an innovative headset product to be launched in the
coming monthsº Sangoma launched its Sangoma H10 Wireless
Headset based on our DECT solutionº Escene launched a
desktop VoIP phone with 4G modem based on our DVF solution
First Quarter Non-GAAP
Results:Non-GAAP net loss and loss per share for the first
quarter of 2020 were $1.0 million and $0.04, respectively, as
compared to non-GAAP net income and diluted earnings per share of
$1.2 million and $0.05, respectively, for the first quarter of
2019. Non-GAAP net income and diluted earnings per share for
the first quarter of 2020 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
$1.8 million, non-cash income from exchange rate differences
resulting from the new lease accounting standard (ASC 842) in
the amount of $0.4 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 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 expenses from exchange rate differences resulting
from 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.
Earnings Conference Call
DetailsDSP Group will discuss its first quarter financial
results, along with its outlook and guidance for the second quarter
of 2020, 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 3378227.
The broadcast via the Internet can be accessed
by 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/p3n4c8en.
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)
3333009785, internationally and enter the company access code:
3378227.
Presentation of Non-GAAP Net Income and
EPSThe Company believes that the non-GAAP presentation of
net income (loss) and diluted earnings per share presented in this
press release is useful to investors in comparing results for the
first quarter and ended March 31, 2020 and 2019 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 StatementsThis
press release contains statements that qualify as “forward-looking
statements” under the Private Securities Litigation Reform Act of
1995, including Mr. Elyakim’s statements: (i) DSP Group’s
innovative technical solutions are well-positioned to play a
significant role in the technological trends that are accelerating
as a result of the pandemic; (ii) DSP Group is uniquely positioned
to leverage its leadership position in the SmartVoice, Unified
Communications and SmartHome market with world class technologies
and innovative solutions; (iii) DSP Group has core competencies in
VUIs and Unified Communications, which it believes will be
increasingly important in the future; (iv) DSP Group has the
technologies and products to help its customers transition to a
safer and more productive environment, both at the office and at
home; (v) our leading voice AI and IoT solutions position the
company well for sustainable long-term growth as it capitalizes on
the accelerating technological trends due to the pandemic; and (vi)
the launch of a headset product by a tier one networking OEM with
DSP Group’s DECT solution in the coming months. The results from
these statements may not actually arise as a result of various
factors, including the duration of the COVID-19 pandemic; the
extent and length of the shelter-in-place and other restrictions
associated with the COVID-19 pandemic and the impact on the demand
for consumer electronics and the global economy; market penetration
of DSP Group’s unified communications, ULE, VUI, 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 2019, 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 Group DSP 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. DSP Group, an expert in voice processing,
invests heavily in innovation for the smart future and designs
leading-edge semiconductor technology that is enabling our
customers to develop a new wave of products that bring enhanced
user experiences through innovation. For more information,
visit www.dspg.com.
Contact:Tali Chen, Chief
Marketing Officer, Tali.Chen@dspg.com
FIRST QUARTER 2020 RESULTS -
INFOGRAPHIC
DSP GROUP,
INC.CONSOLIDATED STATEMENTS OF INCOME(In
thousands, except per share amounts)
|
Three Months EndedMarch 31 |
|
2020 |
|
2019 |
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
Revenues |
$ |
28,239 |
|
|
$ |
28,276 |
|
Cost of revenues |
|
13,858 |
|
|
|
13,820 |
|
Gross profit |
|
14,381 |
|
|
|
14,456 |
|
Operating expenses: |
|
|
|
|
|
|
|
Research and development, net |
|
10,354 |
|
|
|
8,922 |
|
Sales and marketing |
|
5,011 |
|
|
|
4,483 |
|
General and administrative |
|
2,348 |
|
|
|
2,555 |
|
Amortization of intangible assets |
|
104 |
|
|
|
104 |
|
Total operating expenses |
|
17,817 |
|
|
|
16,064 |
|
Operating loss |
|
(3,436 |
) |
|
|
(1,608 |
) |
|
|
|
|
|
|
|
|
Financial income, net |
|
903 |
|
|
|
313 |
|
|
|
|
|
|
|
|
|
Loss before income tax benefit |
|
(2,533 |
) |
|
|
(1,295 |
) |
|
|
|
|
|
|
|
|
Income tax benefit |
|
(68 |
) |
|
|
(229 |
) |
|
|
|
|
|
|
|
|
Net loss |
$ |
(2,465 |
) |
|
$ |
(1,066 |
) |
Net loss per share: |
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.11 |
) |
|
$ |
(0.05 |
) |
|
|
|
|
|
|
|
|
Weighted average number of shares used in per share computations of
loss per share: |
|
|
|
|
|
|
|
Basic and diluted |
|
23,342 |
|
|
|
22,542 |
|
|
|
|
|
|
|
|
|
|
Three Months EndedMarch 31, |
|
2020 |
|
2019 |
|
Unaudited |
|
Unaudited |
|
|
|
|
|
|
|
|
GAAP net Loss |
$ |
(2,465 |
) |
|
$ |
(1,066 |
) |
Equity-based compensation expense included in cost of revenues |
|
120 |
|
|
|
115 |
|
Equity-based compensation expense included in research and
development, net |
|
751 |
|
|
|
750 |
|
Equity-based compensation expense included in sales and
marketing |
|
555 |
|
|
|
402 |
|
Equity-based compensation expense included in general and
administrative |
|
406 |
|
|
|
638 |
|
Amortization of intangible assets |
|
104 |
|
|
|
104 |
|
Non-cash (Income) expenses from Exchange rates differences
resulting from the new lease accounting standard (ASC 842) |
|
(416 |
) |
|
|
307 |
|
Changes of deferred taxes related to intangible assets and
equity-based compensation expense |
|
(66 |
) |
|
|
(81 |
) |
Non-GAAP net income (loss) |
$ |
(1,011 |
) |
|
$ |
1,169 |
|
|
|
|
|
|
|
|
|
Weighted-average number of common stock used in computation of GAAP
diluted net loss per share (in thousands) |
|
23,342 |
|
|
|
22,542 |
|
|
|
|
|
|
|
|
|
Weighted-average number of shares related to outstanding options,
stock appreciation rights and restricted share units (in
thousands) |
|
- |
|
|
|
1,394 |
|
|
|
|
|
|
|
|
|
Weighted-average number of common stock used in computation of
non-GAAP diluted net earnings (loss) per share (in thousands) |
|
23,342 |
|
|
|
23,936 |
|
|
|
|
|
|
|
|
|
GAAP diluted net loss per share |
$ |
(0.11 |
) |
|
$ |
(0.05 |
) |
Equity-based compensation expense |
|
0.08 |
|
|
|
0.08 |
|
Amortization of intangible assets |
|
0.01 |
|
|
|
0.01 |
|
Non-cash (income) expenses from Exchange rates differences
resulting from the new lease accounting standard (ASC 842) |
|
(0.02 |
) |
|
|
0.01 |
|
Changes of deferred taxes related to intangible assets and
equity-based compensation expense |
|
- |
|
|
|
- |
|
Non-GAAP diluted net earnings (loss) per
share |
$ |
(0.04 |
) |
|
$ |
0.05 |
|
|
|
|
|
|
|
|
|
DSP GROUP,
INC.CONSOLIDATED BALANCE SHEETS (In
thousands)
|
March 31, |
December 31, |
|
2020 |
|
2019 |
|
(Unaudited) |
|
(Audited) |
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
35,285 |
|
|
$ |
28,737 |
|
Restricted deposits |
|
500 |
|
|
|
518 |
|
Marketable securities and short-term deposits |
|
40,595 |
|
|
|
39,141 |
|
Trade receivables, net |
|
13,881 |
|
|
|
15,382 |
|
Inventories |
|
8,017 |
|
|
|
7,464 |
|
Other accounts receivable and prepaid expenses |
|
3,553 |
|
|
|
3,551 |
|
Total current assets |
|
101,831 |
|
|
|
94,793 |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
6,698 |
|
|
|
6,805 |
|
|
|
|
|
|
|
|
|
Long term marketable securities and deposits |
|
51,974 |
|
|
|
62,884 |
|
Severance pay fund |
|
15,225 |
|
|
|
15,800 |
|
Operating leases– right of use assets |
|
11,182 |
|
|
|
11,655 |
|
Deferred income taxes |
|
6,567 |
|
|
|
6,377 |
|
Intangible assets, net |
|
6,800 |
|
|
|
6,904 |
|
Long term prepaid expenses and lease deposits |
|
820 |
|
|
|
707 |
|
Total long-term assets |
|
92,568 |
|
|
|
104,327 |
|
|
|
|
|
|
|
|
|
Total assets |
$ |
201,097 |
|
|
$ |
205,925 |
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Trade payables |
$ |
9,042 |
|
|
$ |
8,511 |
|
Operating lease liability |
|
2,388 |
|
|
|
2,569 |
|
Other current liabilities |
|
13,342 |
|
|
|
14,159 |
|
Total current liabilities |
|
24,772 |
|
|
|
25,239 |
|
|
|
|
|
|
|
|
|
Accrued severance pay |
|
15,568 |
|
|
|
16,074 |
|
Operating lease liability |
|
9,726 |
|
|
|
10,436 |
|
Accrued pensions |
|
951 |
|
|
|
963 |
|
Deferred income taxes |
|
101 |
|
|
|
119 |
|
Total long term liabilities |
|
26,346 |
|
|
|
27,592 |
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
Common stock |
|
23 |
|
|
|
23 |
|
Additional paid-in capital |
|
388,387 |
|
|
|
386,534 |
|
Accumulated other comprehensive loss |
|
(1,124 |
) |
|
|
(889 |
) |
Less – Cost of treasury stock |
|
(113,532 |
) |
|
|
(113,862 |
) |
Accumulated deficit |
|
(123,775 |
) |
|
|
(118,712 |
) |
Total stockholders’ equity |
|
149,979 |
|
|
|
153,094 |
|
Total liabilities and stockholders’ equity |
$ |
201,097 |
|
|
$ |
205,925 |
|
|
|
|
|
|
|
|
|
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