DSP Group®, Inc. (NASDAQ: DSPG), a leading global provider of voice
and wireless chipset solutions for converged communications,
announced today its results for the second quarter ended June 30,
2020.
Second Quarter Financial Highlights (and
Comparisons to Second Quarter of 2019):
- Total revenues of $28.3 million, a 2% decrease: °
Revenues from IoAT (Internet of Audio Things) businesses (formerly
“growth initiatives”) of $18.4 million accounted for 65% of total
revenues, an increase of 4%. ° Unified
Communications segment revenues of $10.1 million, an increase of
15%. ° SmartVoice segment revenues of $3.9
million, a decrease of 26%. ° SmartHome segment
revenues of $4.3 million, an increase of 18%.° Cordless
revenues of $9.9 million, a decrease of 12%.
- GAAP and non-GAAP gross margin of 50.3% and 50.8%,
respectively, a 60 and 70 basis point increase, respectively.
- GAAP loss per share of $0.05 and non-GAAP diluted earnings per
share of $0.06, compared to GAAP loss per share of $0.02 and
non-GAAP diluted earnings per share of $0.07 for the second quarter
of 2019.
- GAAP operating loss of $1.4 million and non-GAAP operating
income of $1.0 million, compared to GAAP operating loss of $1.3
million and non-GAAP operating income of $0.9 million, respectively
for the second quarter of 2019.
- GAAP net loss of $1.1 million and non-GAAP net income of $1.6
million, compared to GAAP net loss of $0.5 million and non-GAAP net
income of $1.7 million for the second quarter of 2019.
- Generated $8.0 million of cash from operations, compared to
$3.0 million of cash from operations in the second quarter of
2019.
- Repurchased 29,000 shares of common stock for a total
consideration of $0.4 million.
- Cash, deposits and marketable securities of approximately
$137.5 million as of June 30, 2020.
Management Comments:
Commenting on the results, Ofer Elyakim, CEO of
DSP Group, stated: “Our second quarter performance reflects prudent
execution while navigating through a disrupted business environment
brought about by the COVID-19 pandemic. We ended the quarter with
revenues of $28.3 million, above the mid-point of our guidance
range, driven by solid performance in our IoAT businesses that grew
by 4% year over year to a total of $18.4 million and comprised 65%
of total revenues. Our performance benefitted from solid results in
our SmartHome and Unified Communications segments. Moreover, during
the quarter, we announced our entry into the rapidly growing
hearables market and strengthened our offerings with the
acquisition of SoundChip that we closed on July 1st. By combining
our core low-power voice processing and audio codec expertise with
SoundChip’s system-level design expertise and patents around
ambient noise cancellation, we have effectively doubled our
potential service addressable market (SAM).”
Mr. Elyakim continued: “Primarily due to the
pandemic’s impact on the global workforce, we currently expect a
decline in revenues in the third quarter, particularly in the
Unified Communications market. However, looking forward, the
pandemic has changed culture and habits globally in ways that we
believe will drive increased demand for our products in an
environment that is increasingly reliant on high quality
communications and remote collaboration tools. For instance, DSP
Group’s best-in-class technologies for voice-as-a-user-interface,
IoT and unified communications are key enabling technologies for
major trends that have arisen from increased sensitivity to health
and safety as well as convenience and efficiency for consumers and
businesses. We are well positioned for long-term sustainable growth
in the SmartVoice, SmartHome and Unified Communications markets and
are very excited about the increase in our SAM and growth
opportunities with our recent entry into the hearables market.”
Second Quarter Business
Highlights:
- Expanded our SAM by enabling a wide variety of features to
support the growing hearables and VUI-enabled consumer products by
leveraging our voice, edge-AI and ANC, thereby driving dynamic
growth in a burgeoning market: ° A leading Korean OEM
launched an innovative always-on remote control based on our
SmartVoice SoC which enables multiple simultaneous wake-word
detection, including Alexa Voice Services (AVS)
support° A leading U.S. retail brand launched a new
branded tablet product based on our SmartVoice
solution° Leading Japanese and U.S. brands launched true
wireless stereo (TWS) headset products
based on our
best-in-class Smart ANC Codec solution
- 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:
° A leading European service provider selected our
DECT/ULE technology for its new smart home gateway
product° Deutsche Telecom and Orange each launched a new
smart speaker that leverages our DECT/ULE solution to offer
reliable, high-performance, two-way voice
support° Orange expanded its smart home devices
ecosystem and launched a flood sensor
- Solidified our leadership position in the Unified
Communications market as demonstrated by the following business
wins: ° A tier 1 OEM launched a premium conference phone
with high-quality audio for smart meetings and sharing based on our
DVF platform.° A tier 1 European networking OEM launched
a new family of SIP desktop IP phones that provides enterprise
grade communication experience based on our DVF97 and DVF99
SoCs.° Grandstream’s GRP series of Carrier-Grade IP
Phones based on our DVF solution was awarded the 2020 TMC Labs
INTERNET TELEPHONY Innovation Award
Second Quarter GAAP
Results:
Revenues for the second quarter of 2020 were
$28.3 million, a decrease of 2% from revenues of $29 million for
the second quarter of 2019. Net loss and loss per share for the
second quarter of 2020 were ($1.1) million and ($0.05),
respectively. Net loss and loss per share for the second quarter of
2019 were ($0.5) million and ($0.02), respectively.
Second Quarter Non-GAAP
Results:
Non-GAAP net income and diluted earnings per
share for the second quarter of 2020 were $1.6 million and $0.06,
respectively, as compared to non-GAAP net income and diluted
earnings per share of $1.7 million and $0.07, respectively, for the
second quarter of 2019. Non-GAAP net income and diluted earnings
per share for the second 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 $2.3 million, non-cash expenses from
exchange rate differences resulting from the new lease accounting
standard (ASC 842) in the amount of $0.3 million, and expenses
resulted from 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
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 expenses from exchange rate differences resulting from ASC
842 in the amount of $0.2 million, and income resulted from 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 second quarter
financial results, along with its outlook and guidance for the
third 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 5493607
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/mjjkf9nc
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: 5493607#
Presentation of Non-GAAP Net Income and
EPS
The 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 second quarter and ended June 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 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) by combining DSP Group’s core low-power voice
processing and audio codec expertise with SoundChip’s system-level
design expertise and patents around ambient noise cancellation, the
company has doubled its potential SAM; (ii) DSP Group currently
expects a decline in revenues in the third quarter; (iii) DSP
Group’s belief that the pandemic has changed culture and habits
globally in ways that will drive increased demand for its products;
(iv) DSP Group’s best-in-class technologies for
voice-as-a-user-interface, IoT and unified communications are key
enabling technologies for major trends that have arisen from the
pandemic; (v) DSP Group is well positioned for long-term
sustainable growth in the SmartVoice, SmartHome and Unified
Communications markets; and (vi) DSP Group’s expectation of
increasing its SAM and growth opportunities with its recent entry
into the hearables market. 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
shelter-in-place and other restrictions associated with the
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
SECOND QUARTER 2020 RESULTS -
INFOGRAPHIC
DSP GROUP, INC.CONSOLIDATED STATEMENTS OF
INCOME(In thousands, except per share amounts) |
|
|
Three Months Ended June 30 |
Six Months EndedJune 30 |
|
2020 |
2019 |
2020 |
2019 |
|
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
28,336 |
|
$ |
29,034 |
|
$ |
56,575 |
|
$ |
57,310 |
|
Cost of revenues |
|
14,075 |
|
|
14,615 |
|
|
27,933 |
|
|
28,435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
14,261 |
|
|
14,419 |
|
|
28,642 |
|
|
28,875 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development, net |
|
8,455 |
|
|
8,559 |
|
|
18,809 |
|
|
17,481 |
|
Sales and marketing |
|
4,435 |
|
|
4,386 |
|
|
9,446 |
|
|
8,869 |
|
General and administrative |
|
2,627 |
|
|
2,674 |
|
|
4,975 |
|
|
5,229 |
|
Amortization of intangible assets |
|
104 |
|
|
104 |
|
|
208 |
|
|
208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
15,621 |
|
|
15,723 |
|
|
33,438 |
|
|
31,787 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
(1,360 |
) |
|
(1,304 |
) |
|
(4,796 |
) |
|
(2,912 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial income, net |
|
289 |
|
|
400 |
|
|
1,192 |
|
|
713 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before taxes on income |
|
(1,071 |
) |
|
(904 |
) |
|
(3,604 |
) |
|
(2,199 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expenses (benefit) |
|
6 |
|
|
(383 |
) |
|
(62 |
) |
|
(612 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(1,077 |
) |
$ |
(521 |
) |
$ |
(3,542 |
) |
$ |
(1,587 |
) |
Net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.05 |
) |
$ |
(0.02 |
) |
$ |
(0.15 |
) |
$ |
(0.07 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in per share computations of
loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
23,301 |
|
|
22,757 |
|
|
23,321 |
|
|
22,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Reconciliation of GAAP to Non-GAAP Financial
Measures(In thousands, except per share amounts) |
|
|
Three Months EndedJune 30, |
Six Months EndedJune 30, |
|
2020 |
2019 |
2020 |
2019 |
|
Unaudited |
Unaudited |
Unaudited |
Unaudited |
GAAP net loss |
$ |
(1,077 |
) |
$ |
(521 |
) |
$ |
(3,542 |
) |
$ |
(1,587 |
) |
Equity-based compensation expense included in cost of revenues |
|
129 |
|
|
122 |
|
|
249 |
|
|
237 |
|
Equity-based compensation expense included in research and
development, net |
|
826 |
|
|
775 |
|
|
1,577 |
|
|
1,525 |
|
Equity-based compensation expense included in sales and
marketing |
|
620 |
|
|
474 |
|
|
1,175 |
|
|
876 |
|
Equity-based compensation expense included in general and
administrative |
|
706 |
|
|
689 |
|
|
1,112 |
|
|
1,327 |
|
Amortization of intangible assets |
|
104 |
|
|
104 |
|
|
208 |
|
|
208 |
|
Non-cash expenses (income) from exchange rates differences
resulting from the new lease accounting standard (ASC 842) |
|
255 |
|
|
206 |
|
|
(161 |
) |
|
512 |
|
Expenses (income) from changes of deferred taxes related to
intangible assets and equity-based compensation expense |
|
50 |
|
|
(105 |
) |
|
(16 |
) |
|
(186 |
) |
Non-GAAP net income |
$ |
1,613 |
|
$ |
1,744 |
|
$ |
602 |
|
$ |
2,912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common stock used in computation of GAAP
diluted net loss per share (in thousands) |
|
23,301 |
|
|
22,757 |
|
|
23,321 |
|
|
22,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares related to outstanding options,
stock appreciation rights and restricted share units (in
thousands) |
|
1,663 |
|
|
1,522 |
|
|
1,572 |
|
|
1,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common stock used in computation of
non-GAAP diluted net earnings per share (in thousands) |
|
24,964 |
|
|
24,279 |
|
|
24,893 |
|
|
24,107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted net loss per share |
$ |
(0.05 |
) |
$ |
(0.02 |
) |
$ |
(0.15 |
) |
$ |
(0.07 |
) |
Equity-based compensation expense |
|
0.09 |
|
|
0.08 |
|
|
0.17 |
|
|
0.17 |
|
Amortization of intangible assets |
|
0.01 |
|
|
0.01 |
|
|
0.01 |
|
|
0.01 |
|
Non-cash expenses (income) from Exchange rates differences
resulting from the new lease accounting standard (ASC 842) |
|
0.01 |
|
|
0.01 |
|
|
(0.01 |
) |
|
0.02 |
|
Expenses (income) from changes of deferred taxes related to
intangible assets and equity-based compensation expense |
|
- |
|
|
(0.01 |
) |
|
- |
|
|
(0.01 |
) |
Non-GAAP diluted net earnings per share |
$ |
0.06 |
|
$ |
0.07 |
|
$ |
0.02 |
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DSP GROUP, INC.CONSOLIDATED BALANCE
SHEETS (In thousands) |
|
|
June 30, |
December 31, |
|
2020 |
2019 |
|
(Unaudited) |
(Audited) |
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
38,198 |
|
$ |
28,737 |
|
Restricted deposits |
|
512 |
|
|
518 |
|
Marketable securities and short-term deposits |
|
50,645 |
|
|
39,141 |
|
Trade receivables, net |
|
10,564 |
|
|
15,382 |
|
Inventories |
|
8,127 |
|
|
7,464 |
|
Other accounts receivable and prepaid expenses |
|
3,829 |
|
|
3,551 |
|
Total current assets |
|
111,875 |
|
|
94,793 |
|
|
|
|
|
|
|
|
Property and equipment, net |
|
6,582 |
|
|
6,805 |
|
|
|
|
|
|
|
|
Long term marketable securities and deposits |
|
48,171 |
|
|
62,884 |
|
Severance pay fund |
|
15,605 |
|
|
15,800 |
|
Operating leases– right of use assets |
|
10,987 |
|
|
11,655 |
|
Deferred income taxes |
|
6,607 |
|
|
6,377 |
|
Intangible assets, net |
|
6,695 |
|
|
6,904 |
|
Long term prepaid expenses and lease deposits |
|
850 |
|
|
707 |
|
Total long-term assets |
|
88,915 |
|
|
104,327 |
|
|
|
|
|
|
|
|
Total assets |
$ |
207,372 |
|
$ |
205,925 |
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Trade payables |
$ |
9,127 |
|
$ |
8,511 |
|
Operating lease liability |
|
2,403 |
|
|
2,569 |
|
Other current liabilities |
|
16,198 |
|
|
14,159 |
|
Total current liabilities |
|
27,728 |
|
|
25,239 |
|
|
|
|
|
|
|
|
Accrued severance pay |
|
16,059 |
|
|
16,074 |
|
Operating lease liability |
|
9,768 |
|
|
10,436 |
|
Accrued pensions |
|
973 |
|
|
963 |
|
Deferred income taxes |
|
82 |
|
|
119 |
|
Total long term liabilities |
|
26,882 |
|
|
27,592 |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
Common stock |
|
23 |
|
|
23 |
|
Additional paid-in capital |
|
390,734 |
|
|
386,534 |
|
Accumulated other comprehensive loss |
|
(554 |
) |
|
(889 |
) |
Less – Cost of treasury stock |
|
(111,532 |
) |
|
(113,862 |
) |
Accumulated deficit |
|
(125,909 |
) |
|
(118,712 |
) |
Total stockholders’ equity |
|
152,762 |
|
|
153,094 |
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
207,372 |
|
$ |
205,925 |
|
|
|
|
|
|
|
|
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