DSP Group, Inc. Reports Second Quarter 2021 Results
August 02 2021 - 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 second quarter ended June 30,
2021.
Second Quarter Financial Highlights (and
Comparisons to Second Quarter of 2020): Revenue breakdown
(USD in millions)
|
Q2 2021 |
|
Q2 2020 |
|
vs. Q2 2020 |
IoAT Revenues: |
|
|
|
|
|
SmartVoice |
$7.20 |
|
$3.95 |
|
up 82% |
SmartHome |
$5.74 |
|
$4.30 |
|
up 33% |
Unified Communications |
$11.82 |
|
$10.15 |
|
up 16% |
Total IoAT Revenues |
$24.76 |
|
$18.40 |
|
up 35% |
Cordless Revenues |
$11.05 |
|
$9.94 |
|
up 11% |
Total Revenues |
$35.81 |
|
$28.34 |
|
up 26% |
|
|
|
|
|
|
- GAAP and non-GAAP gross margin of 53.4% and 54.1%,
respectively, a 330 and 310 basis point increase,
respectively.
- GAAP loss per share of $0.02 and non-GAAP diluted earnings per
share of $0.12, compared to GAAP loss per share of $0.05 and
non-GAAP diluted earnings per share of $0.06 for the second quarter
of 2020.
- GAAP operating loss of $0.4 million and non-GAAP operating
income of $3.3 million, compared to GAAP operating loss of $1.4
million and non-GAAP operating income of $1.0 million for the
second quarter of 2020.
- GAAP net loss of $0.4 million and non-GAAP net income of $3.2
million, compared to GAAP net loss of $1.1 million and non-GAAP net
income of $1.6 million for the second quarter of 2020.
- Generated $6.8 million of cash from operations, compared to
$8.0 million of cash generated from operations in the second
quarter of 2020.
- Repurchased approximately 339,000 shares of common stock for a
total consideration of $5.3 million.
- Cash, deposits and marketable securities of approximately
$129.9 million as of June 30, 2021.
Management Comments:
Commenting on the results, Ofer Elyakim, CEO of
DSP Group, stated: “We are very pleased with our outstanding
results. We successfully navigated tight supply chain challenges,
posted a record quarter on virtually all fronts, and surpassed our
guidance on most financial metrics. Revenues of $35.8 million were
at the high-end of our guidance range, up 26% year-over-year and
10% sequentially. Revenue growth was driven by strong demand for
voice-centric products, predominantly in our IoAT businesses, which
reached record revenues of $25 million, up 35% year over year and
19% sequentially and comprising 69% of total revenues. The
favorable mix of products and the solid revenue growth propelled
record high non-GAAP gross margins of 54.1%.”
Mr. Elyakim continued, “Looking ahead to the
third quarter, we expect the solid momentum in our business to
continue, translating into revenue growth both sequentially and
year over year. These are exciting times for DSP Group as markets
shift favorably in our direction, driving record demand for our
core expertise. These promising trends are propelled by new models
of living, working and interacting, all of which increasingly rely
on voice-centric products delivered by our IoAT businesses. The
breadth and depth of our technology offering, including a
comprehensive portfolio of software and silicon, uniquely positions
DSP Group to capitalize on these large growth opportunities. We are
experiencing record design activity, which positions us well for
continued revenue growth ahead.”
Second Quarter Business Highlights:
- Grew and strengthened our
SmartVoice franchise with design wins and product launches for edge
AI applications with leading consumer electronics OEMs, thereby
driving dynamic growth in a burgeoning market. Wins include:
- A leading U.S. platform company selected our SmartVoice
products for two new product lines
- A leading consumer brand launched an innovative wearable device
based on our SmartVoice solution
- Cuco chose our SmartVoice solution to enable voice control in
its latest Smart Switch product
- Grew and diversified our SmartHome
ecosystem with leading global IoT vendors that recognize ULE’s
unmatched characteristics for wireless IoT, including superior
range, ease of deployment, low power, use of interference-free
spectrum and native support for two-way voice. Wins include:
- A tier 1 security service provider launched an expanded product
offering based on our ULE technology
- A European telecommunication service provider launched a new
broadband gateway model incorporating our DECT/ULE technology
- A new cloud services offering by Cloud of Things included a hub
based on our DECT/ULE technology
- Solidified our leadership position and expanded our market
share in the Unified Communications market, as demonstrated by the
following achievements:
- Our WFA conferencing offering
passed Microsoft Teams labs compliancy requirements for voice
conferencing
- A tier 1 unified communications OEM
chose one of our multi core DSPs for its newly launched WFH
device
- Sangoma launched a line of new IP
phones based on our DVF system-on-chip (SoC) platform
Second Quarter Non-GAAP
Results:Non-GAAP net income and diluted earnings per share
for the second quarter of 2021 were $3.2 million and $0.12,
respectively, as compared to non-GAAP net income and diluted
earnings per share of $1.6 million and $0.06, respectively, for the
second quarter of 2020. Non-GAAP net income and diluted earnings
per share for the second quarter of 2021 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 $3.0 million, amortization of employee
retention expenses related to the SoundChip acquisition of $0.25
million, non-cash expenses from exchange rate differences resulting
from the lease accounting standard (ASC 842) in the amount of $0.2
million, and changes in deferred taxes in the amount of $0.3
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
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 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
Earnings Conference Call Details
DSP Group will discuss its second quarter
financial results, along with its outlook and guidance for the
third quarter of 2021, 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 + 18778709135 (domestic US) or +44 2071 928338
(international) approximately 10 minutes prior to the starting
time. The password is 1974048. 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/moibqavwA 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: 1974048
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
second quarter and six months ended June 30, 2021 and 2020 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 retention expenses 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) solid momentum
to drive revenue growth both sequentially and year over year, (ii)
markets shifting favorably in DSP Group’s direction which is
driving record demand for its core expertise across all IoAT
businesses, (iii) favorable trends, which will result in increasing
reliance on voice-centric products coupled with DSP Group’s
technology offering, uniquely position DSP Group to capitalize on
these large growth opportunities, and (iv) DSP Group’s record
design activity in the second quarter of 2021 should ensure
sustainable revenue growth this year and beyond. 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; impact of supply
chain constraints; 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 2020, 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:Claus StetterVice
President of Marketing & Communications DSP Group Inc.+1 +(650)
521 4082claus.stetter@dspg.com
An infographic PDF accompanying this announcement is
available
at http://ml.globenewswire.com/Resource/Download/b15d7ab8-3527-4dd7-8b49-ce41c50116f0
|
DSP GROUP, INC.CONSOLIDATED STATEMENTS OF
INCOME(In thousands, except per share amounts) |
|
|
Three Months EndedJune 30 |
|
|
Six Months EndedJune 30 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
(Unaudited) |
(Unaudited) |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
35,807 |
|
|
$ |
28,336 |
|
|
$ |
68,454 |
|
|
$ |
56,575 |
|
Cost of revenues |
|
16,676 |
|
|
|
14,075 |
|
|
|
32,342 |
|
|
|
27,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
19,131 |
|
|
|
14,261 |
|
|
|
36,112 |
|
|
|
28,642 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development, net |
|
10,630 |
|
|
|
8,455 |
|
|
|
21,110 |
|
|
|
18,809 |
|
Sales and marketing |
|
5,326 |
|
|
|
4,435 |
|
|
|
10,528 |
|
|
|
9,446 |
|
General and administrative |
|
3,161 |
|
|
|
2,627 |
|
|
|
5,814 |
|
|
|
4,975 |
|
Amortization of intangible assets |
|
429 |
|
|
|
104 |
|
|
|
848 |
|
|
|
208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
19,546 |
|
|
|
15,621 |
|
|
|
38,300 |
|
|
|
33,438 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
(415 |
) |
|
|
(1,360 |
) |
|
|
(2,188 |
) |
|
|
(4,796 |
) |
|
|
|
|
|
Financial income, net |
|
94 |
|
|
|
289 |
|
|
|
735 |
|
|
|
1,192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before taxes
on income |
|
(321 |
) |
|
|
(1,071 |
) |
|
|
(1,453 |
) |
|
|
(3,604 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expenses
(benefit) |
|
78 |
|
|
|
6 |
|
|
|
289 |
|
|
|
(62 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(399 |
) |
|
$ |
(1,077 |
) |
|
$ |
(1,742 |
) |
|
$ |
(3,542 |
) |
Net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.02 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.15 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares used in per share computations of loss per share: |
|
|
|
|
|
Basic and diluted |
|
24,204 |
|
|
|
23,301 |
|
|
|
24,131 |
|
|
|
23,321 |
|
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, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
Unaudited |
|
Unaudited |
|
Unaudited |
|
Unaudited |
GAAP net loss |
|
$ |
(399 |
) |
|
$ |
(1,077 |
) |
|
$ |
(1,742 |
) |
|
$ |
(3,542 |
) |
Equity-based compensation
expense included in cost of revenues |
|
|
185 |
|
|
|
129 |
|
|
|
346 |
|
|
|
249 |
|
Equity-based compensation
expense included in research and development, net |
|
|
1,305 |
|
|
|
826 |
|
|
|
2,447 |
|
|
|
1,577 |
|
Equity-based compensation
expense included in sales and marketing |
|
|
745 |
|
|
|
620 |
|
|
|
1,371 |
|
|
|
1,175 |
|
Equity-based compensation
expense included in general and administrative |
|
|
770 |
|
|
|
706 |
|
|
|
1,371 |
|
|
|
1,112 |
|
Amortization of intangible
assets |
|
|
429 |
|
|
|
104 |
|
|
|
848 |
|
|
|
208 |
|
Amortization of employee’s
retention expenses related to the acquisition of SoundChip included
in cost of revenues |
|
|
67 |
|
|
|
- |
|
|
|
134 |
|
|
|
- |
|
Amortization of employee’s
retention expenses related to the acquisition of SoundChip included
in sales and marketing |
|
|
149 |
|
|
|
- |
|
|
|
298 |
|
|
|
- |
|
Amortization of employee’s
retention expenses related to the acquisition of SoundChip included
in research and development, net |
|
|
34 |
|
|
|
- |
|
|
|
68 |
|
|
|
- |
|
Non-cash expenses (income)
from exchange rates differences resulting from the lease accounting
standard (ASC 842) |
|
|
177 |
|
|
|
255 |
|
|
|
(271 |
) |
|
|
(161 |
) |
Expenses (income) from changes
of deferred taxes related to intangible assets and equity-based
compensation expense |
|
|
(256 |
) |
|
|
50 |
|
|
|
(399 |
) |
|
|
(16 |
) |
Non-GAAP net
income |
|
$ |
3,206 |
|
|
$ |
1,613 |
|
|
$ |
4,471 |
|
|
$ |
602 |
|
|
|
|
|
|
|
Weighted-average number of common stock used in computation of GAAP
diluted net loss per share (in thousands) |
|
|
24,204 |
|
|
|
23,301 |
|
|
|
24,131 |
|
|
|
23,321 |
|
|
|
|
|
|
|
Weighted-average number of shares related to outstanding options,
stock appreciation rights and restricted share units (in
thousands) |
|
|
1,585 |
|
|
|
1,663 |
|
|
|
1,509 |
|
|
|
1,572 |
|
|
|
|
|
|
|
Weighted-average number of common stock used in computation of
non-GAAP diluted net earnings per share (in thousands) |
|
|
25,789 |
|
|
|
24,964 |
|
|
|
25,640 |
|
|
|
24,893 |
|
|
|
|
|
|
|
GAAP diluted net loss per share |
|
$ |
(0.02 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.15 |
) |
Equity-based compensation expense |
|
|
0.12 |
|
|
|
0.09 |
|
|
|
0.22 |
|
|
|
0.17 |
|
Amortization of intangible assets |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.03 |
|
|
|
0.01 |
|
Amortization of employee’s retention expenses related to the
acquisition of SoundChip |
|
|
0.01 |
|
|
|
- |
|
|
|
0.02 |
|
|
|
- |
|
Non-cash expenses (income) from Exchange rates differences
resulting from the lease accounting standard (ASC 842) |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
Income from changes of deferred taxes related to intangible assets
and equity-based compensation expense |
|
|
(0.01 |
) |
|
|
- |
|
|
|
(0.02 |
) |
|
|
- |
|
Non-GAAP diluted net earnings per share |
|
$ |
0.12 |
|
|
$ |
0.06 |
|
|
$ |
0.17 |
|
|
$ |
0.02 |
|
|
DSP GROUP, INC.CONSOLIDATED BALANCE
SHEETS (In thousands) |
|
|
June 30, |
|
December 31, |
|
2021 |
|
2020 |
|
(Unaudited) |
|
(Audited) |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalentsRestricted deposits |
$ |
16,175574 |
|
|
$ |
16,936548 |
|
Marketable securities and short-term deposits |
|
48,681 |
|
|
|
50,615 |
|
Trade receivables, net |
|
13,502 |
|
|
|
11,003 |
|
Inventories |
|
6,384 |
|
|
|
9,061 |
|
Other accounts receivable and prepaid expenses |
|
5,111 |
|
|
|
3,460 |
|
Total current assets |
|
90,427 |
|
|
|
91,623 |
|
Property and equipment, net |
|
6,501 |
|
|
|
6,574 |
|
|
|
|
|
|
|
|
|
Long term marketable securities and deposits |
|
64,507 |
|
|
|
60,454 |
|
Severance pay fund |
|
15,331 |
|
|
|
16,285 |
|
Operating leases– right of use assets |
|
10,386 |
|
|
|
11,102 |
|
Deferred income taxes |
|
6,410 |
|
|
|
6,893 |
|
Intangible assets, net |
|
19,632 |
|
|
|
20,654 |
|
Long term prepaid expenses and lease deposits |
|
2,470 |
|
|
|
2,888 |
|
Total long-term
assets |
|
118,736 |
|
|
|
118,276 |
|
|
|
|
|
|
|
|
|
Total
assets |
$ |
215,664 |
|
|
|
216,473 |
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
Current liabilities: |
|
|
Trade payables |
$ |
11,197 |
|
|
$ |
10,708 |
|
Operating lease liability |
|
2,874 |
|
|
|
2,974 |
|
Other current liabilities |
|
16,534 |
|
|
|
15,724 |
|
Total current liabilities |
|
30,605 |
|
|
|
29,406 |
|
|
|
|
Accrued severance pay |
|
15,797 |
|
|
|
16,647 |
|
Operating lease liability |
|
9,182 |
|
|
|
10,075 |
|
Accrued pensions |
|
1,058 |
|
|
|
1,089 |
|
Deferred income taxes |
|
948 |
|
|
|
1,073 |
|
Other long-term liabilities |
|
1,945 |
|
|
|
1,945 |
|
Total long term liabilities |
|
28,930 |
|
|
|
30,829 |
|
Stockholders’
equity: |
|
|
Common stock |
|
24 |
|
|
|
24 |
|
Additional paid-in capital |
|
401,921 |
|
|
|
396,335 |
|
Accumulated other comprehensive loss |
|
(970 |
) |
|
|
(637 |
) |
Less – Cost of treasury stock |
|
(107,717 |
) |
|
|
(108,509 |
) |
Accumulated deficit |
|
(137,129 |
) |
|
|
(130,975 |
) |
Total stockholders’ equity |
|
156,129 |
|
|
|
156,238 |
|
Total liabilities and
stockholders’ equity |
$ |
215,664 |
|
|
$ |
216,473 |
|
|
|
|
|
|
|
|
|
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