Stocks to Watch: DSP Group, Inc. (NASDAQ:DSPG)

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DSP Group, Inc. (NASDAQ: DSPG), a most important worldwide provider of wireless chipset solutions for converged communications, proclaimed today its results for the 4th-quarter and year finished December 31, 2K17.

4th-Quarter Business and Financial Highlights:

  • GAAP loss per share of $0.010 and non-GAAP diluted earnings per share of $0.060 compared to GAAP and non-GAAP earning per share of $0.060 and $0.130, respectively, for the 4th-quarter of 2K16.
  • Total revenues of $31.20 million, down 11.00% year-over-year, including new product revenues of $15.40 million which were up 9.00% year-over-year:
    º Office/VoIP segment revenues of $9.50 million, a year-over-year increase of 48.00%
    ° SmartVoice segment revenues of $2.20 million, a year-over-year decrease of 20.00%
    ° Home gateway revenues of $2.50 million, a year-over-year increase of 1.00%
    ° IoT revenues of $1.10 million, a year-over-year decrease of 54.00%.
  • GAAP and non-GAAP gross margin of 47.80% and 48.10%, respectively, 270.00 bps and 280.00 bps improvement, as compared to the 4th-quarter of 2K16 on GAAP and non-GAAP basis, respectively.
  • GAAP operating loss of $0.70 million and non-GAAP operating income of $1.10 million, compared to GAAP and non-GAAP operating income of $1.10 and $2.90 million, respectively, in the 4th-quarter of 2K16.
  • GAAP net loss of $0.10 million and non-GAAP net income of $1.30 million, compared to GAAP and non-GAAP net income of $1.30 and $3.00 million, respectively, in the 4th-quarter of 2K16.
  • Generated $7.10 million of cash flow from operations during the quarter, compared to $10.60 million in the 4th-quarter of 2K16.
  • Repurchased approximately 8,000.00 shares for a total consideration of $0.10 million.
  • Cash, deposits and marketable securities of approximately $129.00 million as of December 31, 2K17.

Full Year 2K17 Financial Highlights:

  • GAAP loss per share of $0.140 and non-GAAP diluted earnings per share of $0.170, compared to GAAP and non-GAAP earning per share of $0.210 and $0.360, respectively, for 2K16.
  • Total revenues of approximately $124.80 million, a decrease of 10.00% vs. $137.90 million in 2K16, including new product revenues of $57.30 million a year-over-year decrease of 3.00% when compared to 2K16;
    ° Office/VoIP segment revenues of $34.90 million a year-over-year increase of 31.00%
    ° SmartVoice segment revenues of $4.90 million a year-over-year decrease of 69.00%
    ° Home gateway revenues of $11.20 million a year-over-year increase of 2.00%
    ° IoT revenues of $6.40 million, a year-over-year increase of 9.00%
  • GAAP and non-GAAP gross margin of 46.20% and 46.50%, respectively, a 210.00 bps improvement, as compared to 2K16 on both GAAP and non-GAAP basis.
  • GAAP operating loss of $4.80 million and non-GAAP operating income of $2.80 million, compared to GAAP and non-GAAP operating income of $4.20 million and $8.20 million, respectively, in 2K16.
  • GAAP net loss of $3.00 million and non-GAAP net income of $3.90 million, compared to GAAP and non-GAAP net income of $4.80 million and $8.50 million, respectively, in 2K16.
  • Generated $8.50 million of cash from operating activities compared to $16.50 million in 2K16.
  • Repurchased approximately 0.40 million shares for a total consideration of $4.50 million.

Management Comments: 
“We are excited about our position and momentum in three dynamic industries: Unified Communications, Voice User Interface, and IoT, where our new products play an instrumental role. This is evidenced by: 1) strong revenue growth of 31.00% in the VoIP segment to approximately $35.00 million in 2K17, a market where DSP Group is emerging as a leader with many top tier customers, 2) several innovative product launches and product diversity in our SmartVoice segment whereby we capitalize on our long history and deep expertise in efficient voice processing to bring new capabilities to a nascent market, and 3) the growing ecosystem around our ULE technology, which is embraced by leading service providers and OEMs for its best in class characteristics which are ideal for wireless indoor connectivity. We expect the growth of these initiatives to outpace the decline of our legacy cordless telephone business in 2018. More importantly, each of those product segments is now on a trajectory to drive dynamic revenue growth and margin expansion in future years.”

GAAP Results: 
2K17 4th-Quarter Results:
Revenues for the 4th-quarter of 2K17 were $31.20 million, a decrease of 11.00% from revenues of $35.30 million for the 4th-quarter of 2K16. 

Net loss for the 4th-quarter of 2K17 was $0.1 million, as compared to net income of $1.30 million for the 4th-quarter of 2K16. 

Loss per share for the 4th-quarter of 2K17 was $0.010, as compared to basic and diluted earnings per share of $0.060 for the 4th-quarter of 2K16.

Year End Results:
Revenues for the year finished December 31, 2K17 were $124.80 million, a decrease of 10.00% from 2K16 revenues of $137.90 million.

Net loss for 2K17 was $3.00 million, compared to a net income of $4.80 million for 2K16.

Loss per share for 2K17 was $0.140, compared to basic and diluted earnings per share of $0.22 and $0.210, respectively, for 2K16.

Non-GAAP Results:
Non-GAAP net income and diluted earnings per share for the 4th-quarter of 2K17 were $1.30 million and $0.060, respectively, as compared to non-GAAP net income and diluted earnings per share of $3.00 million and $0.130, respectively, for the 4th-quarter of 2K16.

Non-GAAP net income and earnings per share for the 4th-quarter of 2K17 excluded the impact of amortization of acquired intangible assets in the amount of $425,000.00 associated with previous acquisitions; equity-based compensation expenses of $1.30 million and changes in deferred taxes related to intangible assets acquired in previous acquisitions and equity-based compensation expenses in the amount of $303,000.00.

Non-GAAP net income and earnings per share for the 4th-quarter of 2K16 excluded the impact of amortization of acquired intangible assets of $425,000.00 associated with previous acquisitions; equity-based compensation expenses of $1.40 million and amortization of a deferred tax liability related to intangible assets acquired in connection with previous acquisitions in the amount of $99,000.00.

Non-GAAP net income and diluted earnings per share for the year finished December 31, 2K17 were $3.90 million and $0.170, respectively, as compared to non-GAAP net income and diluted earnings per share of $8.50 million and $0.360, respectively, for the year finished December 31, 2K16.

Non-GAAP net income and diluted earnings per share for the year finished December 31, 2K17 excluded the impact of amortization of acquired intangible assets of $1.70 million associated with previous acquisitions; equity-based compensation expenses of $5.90 million and changes in deferred taxes related to intangible assets acquired in previous acquisitions and equity-based compensation expenses in the amount of $622,000.00.

Non-GAAP net income and diluted earnings per share for the year finished December 31, 2K16 excluded the impact of amortization of acquired intangible assets of $1.50 million associated with previous acquisitions; equity-based compensation expenses of $5.10 million; other income in the amount of $2.50 million related to reversal of provisions due to the elapse of applicable statute of limitations; and amortization of deferred tax liability related to intangible assets acquired in connection with previous acquisitions  in the amount of $352,000.00.

Earnings Conference Call Details: 
DSP Group will talk about its 4th-quarter financial results, along with its outlook and assistance for the first quarter of 2018, on its conference/discussion 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 800-281-7973 (domestic US) or +1 646-828-8156 (worldwide) approximately 10.0 minutes prior to the starting time. The password is 9471762.

 

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