DSP Group®, Inc. (NASDAQ: DSPG), a leading global provider of
wireless chipset solutions for converged communications, announced
today its results for the third quarter ended September 30, 2020.
Third Quarter Financial Highlights (and
Comparison to Third Quarter of 2019):
- Total revenues of $26.0 million, a
16% decrease:° Revenues from IoAT (Internet of Audio Things)
businesses of $13.5 million, a decrease of 28%. IoAT businesses
accounted for 52% of total revenues in the quarter.
• Unified Communications segment revenues of $2.6 million, a
decrease of 74%. • SmartVoice segment
revenues of $7.2 million, an increase of 45%.
• SmartHome segment revenues of $3.7 million, a decrease
of 3%.° Cordless revenues of $12.5 million, an increase of
2%.
- GAAP and non-GAAP gross margin of
50.8% and 51.6%, respectively, a 0 and 40 basis point increase,
respectively.
- GAAP loss per share of $0.08 and
non-GAAP diluted earnings per share of $0.05, compared to GAAP
diluted earnings per share of $0.02 and non-GAAP diluted earnings
per share of $0.10 for the third quarter of 2019.
- GAAP operating loss of $2.3 million
and non-GAAP operating income of $1.0 million, compared to GAAP
operating loss of $0.3 million and non-GAAP operating income of
$1.7 million for the third quarter of 2019.
- GAAP net loss of $1.9 million and
non-GAAP net income of $1.3 million, compared to GAAP net income of
$0.5 million and non-GAAP net income of $2.5 million for the third
quarter of 2019.
- Used $2.9 million of cash for
operations, compared to $0.2 million of cash generated from
operations in the third quarter of 2019.
- Used $13.9 million of net cash for
the acquisition of SoundChip S.A., closed early July 2020.
- Cash, deposits and marketable
securities of approximately $120.1 million as of September 30,
2020.
Management Comments:
Commenting on the results, Ofer Elyakim, CEO of
DSP Group, stated: “Our third quarter results reflect short-term
disruptions to our business brought about by the pandemic, while
highlighting the strategic importance and long-term growth
potential of DSP Group's audio, voice, and connectivity
technologies. We ended the quarter with revenues of $26.0 million,
meeting the mid-point of our guidance range. Nevertheless, we are
disappointed by our top-line results, which were negatively
impacted by an expected yet acute decline in our Unified
Communications revenues. We view this weakness as temporary and
expect demand to recover as businesses shift to hybrid working
models combining on-premise and remote work. Moreover, we
successfully delivered record non-GAAP gross margins and reported
record-high quarterly revenues in our SmartVoice business. The
latter further underscores the positive impact of voice-centric
market trends. In particular, our business is directly benefitting
from increased adoption of voice user interfaces, a surge in voice
call traffic, and demand for intuitive, seamless, and reliable
collaboration tools.”
Mr. Elyakim continued, “Looking ahead to the
fourth quarter of 2020, we are optimistic about the business
momentum and our outlook. While industry-wide supply chain
constraints are placing certain limitations on our product
deliveries, we are experiencing improving end market demand across
our different businesses, and we expect our fourth quarter revenues
to grow both sequentially and year over year. We are excited about
the momentum of our business as our products and technologies play
a pivotal role in accelerating voice-centric market trends. We
believe that our leadership in voice AI, IoT and hearables,
following the acquisition and successful integration of SoundChip,
brings a more diversified product offering and positions us well
for sustainable long-term growth.”
Third Quarter Business Highlights:
- Continued to grow and strengthen
our SmartVoice franchise with design wins and product launches for
voice user interfaces (VUIs) with leading consumer electronics
OEMs, thereby driving dynamic growth in a burgeoning market:°
Shipped the 100 millionth SmartVoice SoC, a milestone event that
demonstrates the importance of voice as a user interface in
applications ranging from mobile computing to entertainment and
IoT.° GoPro launched its new Hero9 with our SmartVoice
technology integrated for always on voice.° Lenovo and a
leading mobile OEM launched a number of new tablet products with
our SmartVoice solutions supporting multiple simultaneous wake word
detection.
- 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 native support for
two-way voice:° ADT launched Blue by ADT, a line of sensors
and hub targeting the DIY security market based on our ULE and
SmartVoice solutions.° Deutsche Telekom launched its Speedport
Pro Plus, a premium router for Wi-Fi 6 networks integrating our
DECT/ULE SoC.° Joined the Project Connected Home over IP
(CHIP) initiative.
- Solidified our leadership position
and expanded our market share in the Unified Communications market,
as demonstrated by the following business wins:° A Tier-1 OEM
launched its top-of-the-line IP phone based on our DVF101 chipset
for enhanced communications capabilities.° Yealink launched
the W59R professional DECT handset, the first product to integrate
the new and advanced LC3Plus audio codec, based on our
chipset.° Panasonic launched the KX-TGP700, the first
16-line/16-handset single-cell DECT solution based on our DCX and
DVF SoCs.
Third Quarter GAAP Results:
Revenues for the third quarter of 2020 were
$26.0 million, a decrease of 16% from revenues of $31 million for
the third quarter of 2019. Net loss and loss per share for
the third quarter of 2020 were $1.9 million and $0.08,
respectively. Net earnings and diluted earnings per share for the
third quarter of 2019 were $0.5 million and $0.02,
respectively.
Third Quarter Non-GAAP
Results:Non-GAAP net income and diluted earnings per share
for the third quarter of 2020 were $1.3 million and $0.05,
respectively, as compared to non-GAAP net income and diluted
earnings per share of $2.5 million and $0.10, respectively, for the
third quarter of 2019. Non-GAAP net income and diluted earnings per
share for the third quarter of 2020 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 $2.4 million, non-cash expenses from
exchange rate differences resulting from the new lease accounting
standard (ASC 842) in the amount of $0.1 million, transaction
expenses related to the acquisition of SoundChip in amount of $0.25
million and amortization of employees retention expenses related to
the acquisition of SoundChip in amount of $0.25 million and income
resulting from changes in deferred taxes in the amount of $0.2
million related to intangible assets acquired in current and
previous acquisitions and equity-based compensation expenses.
Non-GAAP net income and diluted earnings per share for the third
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 $0.2 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.
Earnings Conference Call Details
DSP Group will discuss its third quarter
financial results, along with its outlook and guidance for the
fourth 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 +1 877 870 9135 (domestic US) or +44 (0) 2071
928338 (international) approximately 10 minutes prior to the
starting time. The password is 4187784.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/hvdbb6wy
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: 4187784#
Presentation of Non-GAAP Net Income and
EPSThe Company believes that the non-GAAP presentation of
net income (loss) and diluted earnings (loss) per share presented
in this press release is useful to investors in comparing results
for the third quarter ended September 30, 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 and amortization
of employees’ retention expenses related to the acquisition 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 about: (i) the strategic
importance and long-term growth potential of the company’s audio,
voice and connectivity technologies, (ii) decline in Unified
Communications revenues being temporary and the company’s
expectation that demand will recover as businesses shift to hybrid
working models, (iii) positive impact of voice-centric market
trends to the company’s business, which is directly benefitting
from increased adoption of voice user interface, a surge in voice
call traffic and demand for intuitive, seamless, and reliable
collaboration tools, (iv) the company’s optimism about the business
outlook which is characterized by improved end market demand across
its different businesses, (v) the expectation of industry-wide
supply chain constraints placing certain limitations on the
company’s product deliveries, (vi) the company’s expectation that
its fourth quarter revenues to grow both sequentially and year over
year, (vii) the company’s products and technologies play a pivotal
role in accelerating voice-centric market trends, and (viii) the
company’s leadership in voice AI, IoT and hearables, following the
SoundChip acquisition, brings a more diversified product offering
and positions the company well for sustainable long-term growth.
The results from these statements may not actually arise as a
result of various factors, including the scope and duration of the
pandemic; the extent and length of the remote work environment and
other restrictions associated with the pandemic and the impact on
the demand for consumer electronics, SmartVoice and unified
communications products 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; supply chain
constraints; 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 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. 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:Shiri Weiss, IR &
Communications, Shiri.Weiss@dspg.com
THIRD QUARTER 2020 RESULTS -
INFOGRAPHIC
DSP GROUP, INC.CONSOLIDATED STATEMENTS OF
INCOME(In thousands, except per share amounts) |
|
|
|
|
|
|
Three Months EndedSeptember 30 |
|
Nine Months EndedSeptember 30 |
|
|
|
2020 |
|
|
|
2019 |
2020 |
|
|
|
2019 |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
|
|
|
|
Revenues |
|
$ |
26,020 |
|
|
$ |
31,042 |
|
|
$ |
82,595 |
|
|
$ |
88,352 |
|
Cost of revenues |
|
|
12,814 |
|
|
|
15,262 |
|
|
|
40,747 |
|
|
|
43,697 |
|
Gross profit |
|
|
13,206 |
|
|
|
15,780 |
|
|
|
41,848 |
|
|
|
44,655 |
|
Operating expenses: |
|
|
|
|
|
Research and development, net |
|
|
8,122 |
|
|
|
9,244 |
|
|
|
26,931 |
|
|
|
26,725 |
|
Sales and marketing |
|
|
4,117 |
|
|
|
4,311 |
|
|
|
13,563 |
|
|
|
13,180 |
|
General and administrative |
|
|
2,864 |
|
|
|
2,388 |
|
|
|
7,839 |
|
|
|
7,617 |
|
Amortization of intangible assets |
|
|
427 |
|
|
|
104 |
|
|
|
636 |
|
|
|
312 |
|
Total operating expenses |
|
|
15,530 |
|
|
|
16,047 |
|
|
|
48,969 |
|
|
|
47,834 |
|
Operating loss |
|
|
(2,324 |
) |
|
|
(267 |
) |
|
|
(7,121 |
) |
|
|
(3,179 |
) |
|
|
|
|
|
|
Financial income, net |
|
|
343 |
|
|
|
416 |
|
|
|
1,535 |
|
|
|
1,129 |
|
Income (loss) before taxes on
income |
|
|
(1,981 |
) |
|
|
149 |
|
|
|
(5,586 |
) |
|
|
(2,050 |
) |
Income tax benefit |
|
|
(90 |
) |
|
|
(335 |
) |
|
|
(152 |
) |
|
|
(947 |
) |
Net Income (loss) |
|
$ |
(1,891 |
) |
|
$ |
484 |
|
|
$ |
(5,434 |
) |
|
$ |
(1,103 |
) |
Net earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.08 |
) |
|
$ |
0.02 |
|
|
$ |
(0.23 |
) |
|
$ |
(0.05 |
) |
Diluted |
|
$ |
(0.08 |
) |
|
$ |
0.02 |
|
|
$ |
(0.23 |
) |
|
$ |
(0.05 |
) |
Weighted average number of shares
used in per share computations of earnings (loss) per share: |
|
|
|
|
|
Basic |
|
|
23,562 |
|
|
|
22,957 |
23,399 |
|
|
|
22,752 |
|
Diluted |
|
|
23,562 |
|
|
|
23,940 |
23,399 |
|
|
|
22,752 |
|
Unaudited Reconciliation of GAAP to Non-GAAP Financial
Measures(In thousands, except per share amounts) |
|
|
|
Three Months Ended |
Nine Months Ended |
|
|
September 30, |
September 30, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
Unaudited |
Unaudited |
Unaudited |
Unaudited |
GAAP net income (loss) |
|
$ |
(1,891 |
) |
|
$ |
484 |
|
|
$ |
(5,434 |
) |
|
$ |
(1,103 |
) |
Equity-based compensation expense
included in cost of revenues |
|
|
142 |
|
|
|
109 |
|
|
|
391 |
|
|
|
346 |
|
Equity-based compensation expense
included in research and development, net |
|
|
946 |
|
|
|
677 |
|
|
|
2,523 |
|
|
|
2,202 |
|
Equity-based compensation expense
included in sales and marketing |
|
|
646 |
|
|
|
442 |
|
|
|
1,821 |
|
|
|
1,318 |
|
Equity-based compensation expense
included in general and administrative |
|
|
699 |
|
|
|
645 |
|
|
|
1,811 |
|
|
|
1,972 |
|
Amortization of employee’s
retention expenses related to the acquisition of SoundChip included
in cost of revenues |
|
|
67 |
|
|
|
- |
|
|
|
67 |
|
|
|
- |
|
Amortization of employee’s
retention expenses related to the acquisition of SoundChip included
in sales and marketing |
|
|
149 |
|
|
|
- |
|
|
|
149 |
|
|
|
- |
|
Amortization of employee’s
retention expenses related to the acquisition of SoundChip included
in research and development, net |
|
|
34 |
|
|
|
- |
|
|
|
34 |
|
|
|
- |
|
Transaction expenses related to
the acquisition of SoundChip |
|
|
249 |
|
|
|
- |
|
|
|
249 |
|
|
|
- |
|
Amortization of intangible
assets |
|
|
427 |
|
|
|
104 |
|
|
|
636 |
|
|
|
312 |
|
Non-cash expenses (income) from
exchange rates differences resulting from lease accounting standard
(ASC 842) |
|
|
90 |
|
|
|
210 |
|
|
|
(71 |
) |
|
|
723 |
|
Income from changes of deferred
taxes related to intangible assets and equity-based compensation
expense |
|
|
(232 |
) |
|
|
(135 |
) |
|
|
(249 |
) |
|
|
(322 |
) |
Non-GAAP net
income |
|
$ |
1,326 |
|
|
$ |
2,536 |
|
|
$ |
1,927 |
|
|
$ |
5,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common stock used in computation of GAAP
diluted net earnings (loss) per share (in thousands) |
|
|
23,562 |
|
|
|
23,940 |
|
|
|
23,399 |
|
|
|
22,752 |
|
|
|
|
|
|
|
Weighted-average number of shares related to outstanding options,
stock appreciation rights and restricted share units (in
thousands) |
|
|
1,565 |
|
|
|
438 |
|
|
|
1,616 |
|
|
|
1,445 |
|
|
|
|
|
|
|
Weighted-average number of common stock used in computation of
non-GAAP diluted net earnings per share (in thousands) |
|
|
25,127 |
|
|
|
24,378 |
|
|
|
25,015 |
|
|
|
24,197 |
|
|
|
|
|
|
|
GAAP diluted net earnings (loss) per share |
|
$ |
(0.08 |
) |
|
$ |
0.02 |
|
|
$ |
(0.23 |
) |
|
$ |
(0.05 |
) |
Equity-based compensation expense |
|
|
0.09 |
|
|
|
0.07 |
|
|
|
0.27 |
|
|
|
0.25 |
|
Amortization of intangible assets |
|
|
0.02 |
|
|
|
0.01 |
|
|
|
0.03 |
|
|
|
0.01 |
|
Transaction expenses related to the acquisition of SoundChip |
|
|
0.01 |
|
|
|
- |
|
|
|
0.01 |
|
|
|
- |
|
Amortization of employee’s retention expenses related to the
acquisition of SoundChip |
|
|
0.01 |
|
|
|
- |
|
|
|
0.01 |
|
|
|
- |
|
Non-cash expenses from Exchange rates differences resulting from
lease accounting standard (ASC 842) |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
- |
|
|
|
0.03 |
|
Income from changes of deferred taxes related to intangible assets
and equity-based compensation expense |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
Non-GAAP diluted net earnings per share |
|
$ |
0.05 |
|
|
$ |
0.10 |
|
|
$ |
0.08 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
DSP GROUP, INC.CONSOLIDATED BALANCE
SHEETS (In thousands) |
|
|
|
|
|
|
September 30, |
December 31, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
(Unaudited) |
(Audited) |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalentsRestricted deposits |
|
$ |
16,648517 |
|
|
$ |
28,737518 |
|
Marketable securities and short-term deposits |
|
|
47,415 |
|
|
|
39,141 |
|
Trade receivables, net |
|
|
11,602 |
|
|
|
15,382 |
|
Inventories |
|
|
8,190 |
|
|
|
7,464 |
|
Other accounts receivable and prepaid expenses |
|
|
5,086 |
|
|
|
3,551 |
|
Total current assets |
|
|
89,458 |
|
|
|
94,793 |
|
Property and equipment, net |
|
|
6,735 |
|
|
|
6,805 |
|
Long term marketable securities and deposits |
|
|
55,555 |
|
|
|
62,884 |
|
Severance pay fund |
|
|
15,743 |
|
|
|
15,800 |
|
Operating leases– right of use assets |
|
|
11,268 |
|
|
|
11,655 |
|
Deferred income taxes |
|
|
6,963 |
|
|
|
6,377 |
|
Intangible assets, net |
|
|
21,030 |
|
|
|
6,904 |
|
Long term prepaid expenses and lease deposits |
|
|
2,130 |
|
|
|
707 |
|
Total long-term
assets |
|
|
112,689 |
|
|
|
104,327 |
|
Total
assets |
|
$ |
208,882 |
|
|
$ |
205,925 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
Trade payables |
|
$ |
7,842 |
|
|
$ |
8,511 |
|
Operating lease liability |
|
|
2,651 |
|
|
|
2,569 |
|
Other current liabilities |
|
|
14,072 |
|
|
|
14,159 |
|
Total current liabilities |
|
|
24,565 |
|
|
|
25,239 |
|
|
|
|
|
Accrued severance pay |
|
|
16,110 |
|
|
|
16,074 |
|
Operating lease liability |
|
|
9,888 |
|
|
|
10,436 |
|
Accrued pensions |
|
|
1,021 |
|
|
|
963 |
|
Deferred income taxes |
|
|
1,138 |
|
|
|
119 |
|
Other long-term liabilities |
|
|
1,945 |
|
|
|
- |
|
Total long-term liabilities |
|
|
30,102 |
|
|
|
27,592 |
|
Stockholders’
equity: |
|
|
|
Common stock |
|
|
24 |
|
|
|
23 |
|
Additional paid-in capital |
|
|
393,168 |
|
|
|
386,534 |
|
Accumulated other comprehensive loss |
|
|
(688 |
) |
|
|
(889 |
) |
Less – Cost of treasury stock |
|
|
(109,670 |
) |
|
|
(113,862 |
) |
Accumulated deficit |
|
|
(128,619 |
) |
|
|
(118,712 |
) |
Total stockholders’ equity |
|
|
154,215 |
|
|
|
153,094 |
|
Total liabilities and
stockholders’ equity |
|
$ |
208,882 |
|
|
$ |
205,925 |
|
|
|
|
|
|
|
|
|
|
DSP (NASDAQ:DSPG)
Historical Stock Chart
From Aug 2024 to Sep 2024
DSP (NASDAQ:DSPG)
Historical Stock Chart
From Sep 2023 to Sep 2024