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 ofSoundChip S.A. , closed earlyJuly 2020 . - Cash, deposits and marketable securities of approximately
$120.1 million as ofSeptember 30, 2020 .
Management Comments:
Commenting on the results,
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 overIP (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
Third Quarter Non-GAAP Results:
Non-GAAP net income and diluted earnings per share for the third quarter of 2020 were
Earnings Conference Call Details
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 EPS
The 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
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 about: (i) the strategic importance and long-term growth potential of the company’s audio, voice and connectivity technologies, (ii) decline in
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THIRD QUARTER 2020 RESULTS - INFOGRAPHIC
CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) |
||||||||||||||||
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| 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 | |||||||||||||||
| 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 | ||||||||
CONSOLIDATED BALANCE SHEETS (In thousands) |
||||||||
| 2020 | 2019 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents Restricted deposits |
$ |
16,648 517 |
$ |
28,737 518 |
||||
| 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 | ||||
Source: DSP Group, Inc.