DSPG - Earnings call transcript Q3 2017

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Daniel Amir

Thank you. Good morning, ladies and gentlemen. I’m Daniel Amir, Corporate Vice President for Business Development at DSP Group. Welcome to our Third Quarter 2017 Earnings Conference Call. On today’s call, we also have with us Mr. Officer; Executive Chief Elyakim, and Mr. Ofer Chief Levy, Financial Officer. Dror

the like you will by that Before projections making we this segment remind would these I for that obligation financial and our our the we begin, and during optimism XXXX, to conference statements. that statements drive about quarter about incorporate forward-looking technologies fourth of anticipated forward-looking including be in revenues to demand in new product are market products offering XXXX We for no assume market. update design wins to and general call, our

factors For herein, could more information risk XXXX about the to SEC refer and the risks factors made filed. and reports statements XX-K in have our that Form forward-looking the discussed affect please other we

turn Ofer like over Ofer, call Officer. Executive would Elyakim, Chief floor I is to the Now to yours. our the

Ofer Elyakim

our provide business In a will guidance almost quarter thank Good would third then for our press joining were you the plan, and the comment opportunity and of Thank context to detailed hope that for ahead third you fourth progression and results distributed on results you, every today. today. everyone, we outlook. our with in XXXX. that and our comments Dror while, our you by We achieved outlook short of finally, Daniel. financial on the financial quarter reviewing I to that of begin earlier had for provide quarter read for morning, the us like release financial I metric. results

while decrease $XX.X increase quarter to related the ended million, of diversification product our with of XX%, midpoint in revenues launches Third of year-over-year quarter eight mainly and X.X%, our the third of The sequential revenues that in representing demonstrates our objective based of million to a We were accounting revenue SmartVoice demand Moreover, single total sales. mostly cordless technology. our ahead SmartVoice our XX% the our quarter, our product. segment. for Office/VoIP for momentum for announcements new in for of of product we revenues product SmartVoice $XX expected are shortfall of revenue products including sales, results XX% during resulted solid With accomplishment ago, a expected you record in new than Better there guidance. was on months product. of meeting the business of strength just Total revenues inform and based accounted new were six delighted SmartVoice new the on our and offering.

and SmartVoice declined year-over-year, on by positive the product momentum by sequential growth. sequential continuing X% increased but delivering X% Office/VoIP with a New solid and revenues basis,

our mainly fourth forward,, decline on Looking factors. we expect a quarter seasonal to basis, revenues to due sequential

improvement SoCs, points a for of per following XX.X%, The and is basis earnings cordless record product for sequential of mix third in $X.XX. demand to better in XX-year non-GAAP quarter and resulted drove share our weaker first gross margins XXX VoIP quarter. two, lower non-GAAP demand a Operationally, a products number high

with specific Now updates our to in SmartVoice. starting provide each segment, I’d like progress about

guidance range. quarter, totaled SmartVoice high-end were our and the products the million During at our of of $X.X sales

product successfully to happy our to during product, brands, product. report that smart speakers, on IoT diversify application. and are based we known of plan range of the launches pleased on and new leading We of third And including different world’s SmartVoice wide with such some covering a technology a inform base tablets, OEMs, as DBMD electronics SoCs quarter, revenue our number you record eight consumer wearables the I’m our to smartphone with executed

battery-operated range hardware that have enhance from built covers for comprehensive a devices microphones user the known offering and voice to to We by Moreover, high expect to OEM software end interface and performance product dual ones. algorithms shipping to multi-microphones smartphone and applications. both that all for year eight customers single broad or we

In mobile end year. win addition, as expected a much larger which for design extent smartphone a and year to announce is high-volume next product of leading are this a with early very results we OEM, the as to excited a contribute major to to our

noteworthy quarter, our the we During SmartVoice a had number developments of in category.

its black DBMD First, action our camera voice GoPro handsfree using SoC launched activation. Hero X for

Second, Samsung Voice. SoC our chose the launched run new Gear its smartwatch, Sport, Always-On to DBMD and

Fourth, our brand Third, technology provider DBMD user for solution four audio and enhancement. voice leading SoCs OEMs, its our SmartVoice and smart Voice SoC incorporating Japanese and technology our running leading a launched and speaker and Alexa an streaming OEM our voice-enabled innovative including module. multi-protocol selected voice DBMD SmartVoice Services. for launched selected Wireless, top a IoT audio embedded leading interface Amazon Fifth, tablet media product Libre

an LISNR SmartVoice created acoustic data our low-power also transmission, based advanced Finally, technology. on

Looking of the level the million our fourth anticipate that ahead a we sequential $X.X will increase $X.X to on quarter, basis to million. revenue to

our below of to While which shortfall delays the fourth million SmartVoice our that is we in full-year to guidance $X results shipments exceed or temporary annual will revenues, view SmartVoice this quarter. suggests timing meet in as come in related goal, slightly and our

revenue expect an category. a We our future of future with important our SmartVoice broad contributor growth this the highly and array product success in applications of be business confident growth to remain and exciting to

Office VoIP Now segment. moving and to and the

Tier with by position as the demonstrated We endpoint with design in as continue customers. OEMs, our other the several leadership pipeline unified well market, X to strengthen growing communications as

customers. of $X.X in VoIP an guidance to million. revenues represent the X Tier $X.X For expected than revenues the previous surpassed Contributing year-over-year were $XX.X of quarterly to of demand we first from our ahead our better $XX and million the XX% results result for This million sequentially. solid of million XX% well time. increase third quarter, is

our a During leading business and its of the DVFXXXX began shipment conferencing quarter, OEM DVFXX X Tier on flagship customer system based new SoCs.

revenues the implies sequential million, be VoIP VoIP We quarter year-over-year $X versus of $X well guidance. of to midpoint current fourth X of growth These expansion design a to We into in product our Tier DECT an which product pipeline, launched solid of seasonal its roadmap DECT increased revenue and such market decline additional and expect voice XXXX basis. WXX product. million new expectation is positioned we quarter Yealink go video revenues targeted our phone, to traction to our targeting we the in confident conferencing Due SoC our small hand at the and project with growth that to with in on which medium addition, a fourth SKUs, IP endpoints. remain on trends, – come. are In range product as, new addressable of systems for businesses, launches years customers for based the XX% and and with hand

gateways. Now update an which IoT to I and with gateways, segment, includes on the start will home Home cordless. home

revenues home of by $X.X million sequentially quarter third year-over-year line by X% X% increased and and was Our gateway expectations. our with in

assessment, a home of backlog slower ramp $X.X than which to new current of our range the gateway million customer, be takes expected our in revenues provider $X.X and into Tier our fourth one service expect to quarter of X consideration Given we million.

Turning IoT. to

leading home quarter, momentum Telekom, third are pleased and And SmartHome increase represent trials. adoption services Magenta evaluations providers additional for OEMs in were and ULE revenues we during an XXXX various of the field optimistic phases and XXXX with ULE. our will wider out and based smart Several and XX% year-over-year, providers that Deutsche with that We previous down launch adopt XX% product our feedback the guidance remain leading ahead are home For on million roll and smart of market at service $X.X European followed driving sequentially. while service timeframe. has ULE IoT the of technology

with pleased positive better for also for to the and systems smart are and interface office home We enable a home voice user engagement interface adding traction IoT. to user

new engaged voice. best-in-class meaningful ULE coverage. develop connectivity support as as in voice SmartVoice building always-on combines that high-quality customer We and wireless see control technology, battery-operated for to IoT is with as projects devices growth recently for have our this solution well functionality, which in ideal two-way voice devices, uninterrupted several audio two-way smart opportunity ULE that assistance another We with

announcements. we During the third two quarter, had noteworthy

solution. device premier of gateways launched native connected innovative to kitchen kitchens their chosen management by a initiative. Things, of a ULE supplier been Howdens of family support fitted UK’s joint has Cloud ULE First, our facilitate The Joinery, company, featuring based largest on IoT IoT solution

an a battery-operated and IoT is combined voice Philio-Tech powered exhibits DSP Greenwave our device after can SmartVoice. service Systems, both provider assistant Second, voice ULE ULE assistant cover The Platform. and on going strategy Group’s opportunities AXON This we by product its where of technologies. SmartVoice

IoT of and on phone And following our of that year-over-year this of an growth the we and a million inventory in We business IoT expect $X.X for believe sequential adjustments decline the quarter months with some revenues and fourth stronger softness our to relates the temporary to $X.X for nine at now, update is a market. cordless million. For customers. XX%, range our first

revenues in Our third a expectations. recovery due quarter anticipate for XX% fourth our to result increased end targeting products sequential the total slightly quarter, seasonal revenues. on year-over-year, will sequential the European by as market. some were XX% we on basis, In weaker shortfall. revenues cordless end below while U.S. Cordless that for accounted the revenues by mainly offset of that of basis quarter Cordless third decline declined cordless demand by revenues our a market were XX% demand a

new highly revenues, outlook fourth is which summarize, design in IP results cordless quarter, revenues to in expect our solid third quarter pleased line To on our to our our sequential over segment. execution basis million. Voice are as telephony included well into very wins major taking in record and perspective, to down as However, SmartVoice update for highlight our in a about a we segment, the with to revenue the and expectation we believe quarter $XX to near-term from diversification which with long-term position to financial revenue decline an XX% and decline. drive million of in for outlook. us the revenue beyond. across we short- full-year some and XXXX new segments we both that well new and our margin XX% growth $XX our and and remain range product our be be our optimistic year-over-year to about a our product business consideration expansion outlook Despite headwinds, for and periods XX%, expectations a on products expect now, on And annual the initiatives, cordless while Based for revenues by

Now I yours. floor to to over Dror, Officer. would Dror, turn call Financial our like Chief the is the

Dror Levy

of Ofer. statement quarter for bottom. will the now to income the I you, Thank third XXXX from top review

For each expenses acquisitions. line including related previous GAAP as decline item item, to I will expenses, well compensation the results, as equity-based provide and U.S. the

of of compensation million. $X.X tax were quarter expenses equity-based expenses $XX.X million. of the an equity-based intangible the for margin of for million. $X.X were the million in expenses Financial quarter margin million. for expenses of Gross related XX.X%. third $X.X benefit $X.X was amortization $XX.X million. the amount quarter included deferred in acquired and expenses the amount expenses resulting including including Gross revenues quarter the expenses total million, and changes quarter Our of to assets Income for million. the million in amount the XXXX $X.X tax of quarter $X.X intangible taxes the the from R&D were in in assets the was compensation $X.X equity-based amount were income for income million, for $X.X Operating the equity-based in compensation amount included and compensation

presentation. $X.X the resulting diluted million, million. described $X.X $X.XX. $X.X benefit a share, net expenses this EPS non-GAAP net amortization SEC items was items quarter. the compensation filed expenses impact Form quarter taxes $X.XX. the of The the these changes million was of presentation intangible these assets was negative see The to with amount Please assets on compensation non-GAAP $X.XX equity-based Our report per EPS was reconciliation equity-based million, including The GAAP of the full was of million. excluding income GAAP and tax excluding per current income, for $X.X of of of earnings of the X-K the was for acquired $X.XX, the the from morning and amortization impact for in just $X.X negative deferred on on non-GAAP share the in the I’ve we intangible income that

Now turning to the balance sheet.

the of a represents quarter. the second the of level to Inventory end sales. receivables compared from million accounts of This $XX.X of slightly days of $XX.X the at increased at representing million the days. in end million $XX.X increased $XX to quarter a to of second the level XX third XX Our quarter end million,

million Our XX, of decreased $XXX.X and total securities during as by were XXXX. the level quarter at million cash the marketable $X.X September of third and

affected working was common equipment; average of options quarter was purchase of changes; amortization the for from employees; used used $X.X was during position for cash mostly cash $X.X repurchase a change our was approximately million per of in of property securities. million of the securities by capital of marketable following and million cash $XX.XX an was and Our at XXX,XXX $X.X used stock million operations, by shares price $X.X exercise share; cash by and received of items: million representing of market marketable of value $X.X and

you Now would I the with of fourth to like projections XXXX. provide our quarter for

and $XXX,XXX, would to please. of approximately of assets fourth GAAP expect expected $X.X as $X.X following $XX outstanding are projections in amortization is the in amortization sold range gross quarter $X.X U.S. expenses basis, impact compensation to to be Our amounts up of of are million $X.X projection for to and And forecasted expenses range million our to range be and shares million of be of acquisition-related follows: $XX approximately million. Operator, be to on income compensation $XX for include include and $X.X are to margin the the The expenses approximately for answers. quarter of Cost equity-based XX.X a expected also R&D the million million. XX we provision the in million; R&D expected expenses shares to $XX The expected and the shares. QX be to include intangible include of including to is to million taxes now, revenues equity-based income Financial and open of questions range are $X.X million I XX% for expected operating $XXX,XXX the to expenses total to expected expenses million the to like be million; range total expenses. for the operating in goods $X.X lines be approximately include $XX million, million to $XXX,XXX. in XX%; the are to million,

Operator

We Instructions] go Thank our Please Lake you, Jaeson sir. from first from Schmidt [Operator will sir. Markets. take question Street Capital now ahead,

open. is line Your

Jaeson Schmidt

taking for smartphone win thanks that just the design OEM. of guys, start announcement with I my Hey, a with questions. want to new

with is if this or customer a help Just wondering this worked you customer? curious if that the is opportunity could previously win? of if brand-new us with, you potential a size And

Ofer Elyakim

Hi, Jaeson.

call, our who be more. the in won’t is. So be say, thank But able contribute But it you for a hope we now, right revenues. very to design will the able share fairly say is exactly I question. we Unfortunately, that it nicely that to next XXXX would to conference sizable should, I

is of So units. million XX million units XX this opportunity over an over – well

Jaeson Schmidt

helpful. landscape you if you’ve about seen if SmartVoice? That’s wondering competitive the could And changes? just And major then in Okay. talk any

Ofer Elyakim

absolutely. Yes,

seen point the low-power include that kind kind some as can in market. has products. to of many competition kind cetera, building prepared the – into of these of that the been view, starting there’s of let’s I two would battery-operated working smart intelligence of as market of the and a et lot view, invest we such created companies different in of way, segments, range kind that that future a of the you battery-operated interaction of from nice the products say, support landscape, high-end sure this of devices in and voice, assistant. each into high-end devices a cover can remarks, there increments kind user each as to of but the well a that which voice of kind From the driving – a mechanism category been have And smartphones, the different as providing form indicated this cameras, of understand, where line of greatly are addition in smart both of voice new that market by lot around artificial this a user that competitive say, a in smart the the we remotes, in with lot in my midrange kind as year-and-a-half attracting So these in as on has, right doing a devices, of voice interface of in roadmap of have our algorithms a very varieties. devices more entrants. microphones, via and SoCs, so participate pillars the competitive speakers we way market in the drive I’ve lot burgeoning to in a on my interest in And action pretty to with in for of wearables, different that on areas can from, control, or comprehensive command of last potentially play is I’m interface and can sensing way portfolio will respect to one of in a

trying category. are So different in are both processor SoCs. this are the kind are build point activity for of many of positioned, view believe the of the best-in-class more products a the application companies now, well portfolio from a have to lot that of that seeing or consumption market we audio from that we we that type of ranging side from today originate side targeting power voice or SoC the that I vendors

in battery-operated. performance design definitely we reduction good in market. echo a lot our great still cancellation drive algorithms winning to believe devices do and the of and us noise keep very can wins our Number we So ability helps and two, acoustic investment this in that

Jaeson Schmidt

all after queue. I’ll you ramping to should to in about one products? Do the add needing And have jump the count opportunities significant last and you we you. your think head these OpEx go for new anticipate XXXX? me, Thank in Okay. back How in

Dror Levy

Hi, is this Dror.

our the OpEx and fourth at the assume $XX.X million, we are range this also guidance of going the at a range you closer for third of to the of, quarter, forma OpEx basis. if forward. say, pro should the also in $XX million into of the look I I would so So that midpoint take quarter terms And be we account in quarter that should

we answer do opportunities. order question, these to your in not all So to we that expect to support need increase OpEx

Jaeson Schmidt

Okay. guys. Thanks lot, a

Ofer Elyakim

Thank you.

Operator

Thank you.

go from from Ramsay question ahead, Please comes next Canaccord. Our Matt sir.

open. is line Your

Matthew Ramsay

year-over-year and just Thank like at Thank look third Obviously, the business added you growth if Ofer, look back are for products headwinds you those guidance quarter, could in next looks and much go and between and new in it maybe a But over together just could at growth mix taking of little business flat overall is Samsung at the step of results about quarters. the you guys products maybe bit. both questions. very the the you for you products some the my sort business categories. of the sort telephony quarter talk about as years? the how fourth about of the new there time you. changing the thinking And the are couple through of year-over-year the they

Ofer Elyakim

thank Hi, the and for you Matt, Yes. question.

product about for couple how is a absolutely it of in XX%. about business more this and this from that, must And you’re execution that, to is new flow a And of lose mix, a eight the business, by that what year which exactly we’ve were there of main way correct quarter. in where high is the different So, of we rates One kind is of we portfolio been our our I cordless, itself businesses to call smartphone the of of and declining looking be that and the new customer. in we we from this kind declining – and business, done. this respect two have we’re XX% we did with at these here. of reporting the think three mature to and model and the in generating product conference And months, pillars. $XX years, looking domain, at I which XX learned need lot of cash that’s and has product And then, course at about way, diversify are a kind kind last over built we like third we have in have launches million think just of about revenue to last shown declining year,

a a our have So side, lot gradual see it like much basis as segments number of to the say, kind of the leaders in growing makes Voice kind growth seen foundations product a our of about with our over and abilities and I we’re of design and of smartphones. in pretty would optimistic to in design usually we are more, much what of IP market a more revenues resume them solid our each number to targeting on on us market the kind sustain different wins, continue ability now, wins

it is, modeling and revenues. forward do it onward, next significant. like products. point to way become that we’re the it to coming majority decline see anticipate And that easier of like much will way revenues with the are significant, new offset we will to products cordless for new become from we figures expect So year’s from is be we’d a this want that, account less and dollar – new absolute The that will rates see less decline will in would

I be winning it our to where number are And growth think smartphone right vulnerability ask we the gradual show think would nice very customers. of lot a Voice quarter-over-quarter. say our it able happening in to we’re category, last service for going that it’s say many sure, now, new going the kind And become diversified. over talking product and that IoT, about talking about after we’re that, if we see I SmartVoice So right me year. if to is providers, IP, you business, of is I will more about was to And same diversified now, business the that, lower a I would it’s, than of if much portfolio

that hope I question. So answer did your

Matthew Ramsay

an of around maybe on the the fourth think I one, might and given how comments. longer-term questioning you in But sheet I look versus bit just more here, little year? business really secondly, – just business appreciate million last forward questions. do Yes, a expenses. R&D might QX on guidance, for growth the very side the to I of these of might opportunities a the much Thank the able that the balance pile new ahead? into all commentary I follow-up guess, I in if shortfall mean, the you operating you I so. potential thinking higher a guys guess, some to start mix be changes follow-up for on with the capital have business. about areas? the I about cash as in you And have need the you. accelerate wonder seasonality we what quarter with you wonder about are Thank here a the I where on $XXX couple help then and us Thank of to invest you. we growth these guys some just guess,

Ofer Elyakim

Sure.

of years QX and the slightly kind is Voice seen the comes during of sort QX, at some cordless, I as quarter, to So of would of the first on so said color past a years, for seasonality, we behavior, the in last year. couple most look the VoIP, lost have way, we where the seasonality with say lowest like point seasonal we part. of QX over think, respect On over kind for kind we I two when in that, in below the

should a in we first side, the a product QX. three account a that bit what model to it’s probably I’ve the and So in have taking of In On as be did that seen and see gradual see throughout traction see as do And way you year, mainly when that. you of in kind part into adjustment. nice result I in of remarks, commented we kind SmartVoice a down, leveling hope on some quarters the inventory year. be of definitely of kind think, a IoT, my next we very continuing little segment, to we that growth could of now

With will is early cordless in indicated around it’s anything either But anticipate indicate think how that see from QX like for we to or kind So then, hopefully, part, don’t and the exactly – inventory I anything orders And that increase respect now end of we in too business settling. beyond [indiscernible], seeing QX. shipments. to QX. what accumulation. in gradual the see we right most vis-à-vis will We would

might be $XXX of IoT there other some than million. balance around of where don’t place of And only should the second see question our is kind a that, on kind like around cash front impact of bit. the part little the QX. was that So your But we significantly anything the

buy last we that there years As view good back that I’ll we couple are we where I a our we And no own at can have tell believe done doing over you, because believe investment. trading. multiples, of the And assets we cash is, are we this it’s similar outside trading are to are shares. buy we when so, look to what

we building – are in interested So but diversity. more

do acquire, nice some there segments is our for we complementing where that that kind definitely, especially IoT. SmartVoice be expand. this there our assets building And are interested include that And in, see We’re in of that involved business, then of interested we product like around in we’re – to an more scale a would funding and once source business. that. in definitely area expanding And heavily this we is can we’re will the

Matthew Ramsay

on Thank That that. you much it. for was really very Appreciate helpful. expanding

Operator

you. Thank

Our next from & ahead. Dougherty from Charlie go Anderson comes Please Company. question

open. is line Your

Charlie Anderson

talk I my wanted bit profile sort to about the ASP a of for little Thanks questions. within Yes. SmartVoice. Ofer, taking

about? can type out then can I historically, headroom what of if the maybe maybe design to deliver talking functionalities, just codec are where earn with you’re there the and content today kind help their And we we something think, some kind then, increased of have of certainly you I sit if functionality? understand wins of multi-core seen of you you you with gaining, and sockets wonder some is be but $X, there that’s we for they grow have multiple sub dollars. us opportunities

Ofer Elyakim

Charlie. Yes. Thank you,

kind yet low-power for of the market. now algorithms, $X that, let’s like of the and change already of multi-core, profile, high-end, have these ASP still These dynamics of what the of so to experience one again we what type as of very smart more high-end right processing, a the course, But the cetera. so kind of of speaker, $X. consider kind some the as we user targeted kind of kind single-digits. assistant the products solutions requirements, number skew and go as type more the cores, call, that going of mic which category, and this the will of And have of digits. beyond of beyond where that, the of change, very a high-performance, we type beyond sold smart a go of two assistant the kind single have, we to SmartVoice kind call segmentation limited traditionally to so through category, for This target, and to category, towards of solutions. single low low respect of kind with multi-mix than the will in single smart So And go mid microphone right we with technology could the the third also will two devices solution. low-end, below one core we to from And low-power, in more category, range this kind slightly do kind et of for market like

Charlie Anderson

of from you here, the wonder smartphone of from just in you’re the would could think flagship smartphone about helpful? nice there drivers demand demand if And I seeing terms of be really companies maybe I if where pull terms in Thanks. there is a versus midrange, characterize functionality? terms out having Great. in Anything coming what win

Ofer Elyakim

Sure.

full is and rather just kind of kind the and the do assistant already are to type these and growing a of that we the OEM, with lot And of And is support are our smartphone, into midrange, flagship multi-microphone and are design a fact catch type designing – of kind high-end vendors, of limited a delivering characteristics of SmartVoice, the which trajectory kind also smartphones. interface. interest what of always-on flagship the will in understand in we’re interest more cleansing. of not you but solutions And kind just ranging the way what of solution the rolling into go see in midrange the interest need full of features for which for is we on is And are – a that these playing the kind more gradually ago, wins year, beyond voice, for user are from products the we as OEMs. part the on kind devices in so-called so the seeing terms kind more next-gen were, of midrange, chip market kind with will to and, up category. year the device devices of more very embraced in So solution that we of way view, next now engagement smart these call, phones is our solution, that, more single – singular high, full that will and hopefully, to of are a expect interest And voice kind broad. our out really from or

like does capability So a different deliverable of lot market is that something I versus otherwise. than even we what processor, for DSPG to in like though designing the much, is of other that of perhaps integrating do But can and kind very this differentiated of solution would see say, kind from is scratch this kind this that trend competitively do you of exist. our

Charlie Anderson

much. so you Thank Perfect.

Operator

you. Thank

Desilva question take Suji go our Roth Please from now will from We ahead. next Capital.

Suji Desilva

Hi, Ofer. Dror. Hi,

some maybe term the So intermediate questions here. on

talked among which the new be us rank growth. more revs us the the one you versus outlook? you about the expecting will just – than understand you in which help are certainly you order to Can best products that would half help growth XXXX, the the think think, products, matures XXXX ones new think I drive

Ofer Elyakim

Yes. Sure.

the over right growth now, type mid-XXs I we kind and kind believe of or been has would grow So Voice from say of which a of growing base, kind of of we course, and should XXs rate. the XXs in that, in IP have the is,

kind was IoT on around We I it SmartVoice, that And kind dollar as depend course, the for a XXXX on a need side, really so our million. over for well we to some still we home of year of that of definitely of kind Then, below percentage million $X is of for is how does kind plan north the looks of next said, have And have profile SmartVoice we additional last be that, kind this kind of gateway, believe we’ll design growth. about But expectations our terms believe I kind this is – business the million. we see highest won’t that we of of growth But which is – have of flattish have number of slightly wise year. kind $XX $X growing. quarters, guidance from absolute the from then, of which growth averaging We kind given believe our of design This of would year been like. perhaps, based say couple is year. pipeline factors. see next has has, to positioned leader which in we to kind and of we the

so type the trend And there. be that I same believe line of will

expect lines. gateway, or home So it other lower in but we the smaller be than product in growth will do

Suji Desilva

the that design of or then, Ofer, as digesting helpful where come XXXX, Okay. support XXXX should And XXXX think it volume? those That’s in to similar or and accelerates thanks. specifically design a on to of color. period kind trying you are wins SmartVoice, more wins we in,

Ofer Elyakim

that, et product continue shipments, and expectation designs, So launches we will cetera. to wins, to converging more we converging is are I think, engagements see into more – our so design

customers cetera. see acquired design do existing et of their expect portfolio, the or acquisition, that customer we more So leveraging the occurring, to we leveraging next-generation perhaps new for that wins, just broadening existing

do we activity So expect category. to see the more SmartVoice in

Suji Desilva

question. quick last And

You is the or one had to timing Amazon and When continues think the seeing those do whether strong growth, a outside will dominate in potentially? unit Amazon. units Amazon know market Amazon speaker you competitors if outside wins robust a with lot Amazon we What’s of of the smart this market?

Ofer Elyakim

XXXX, of are kind XXXX, view seeing rates and have in that of I in kind these as probably better of of product the Yes. – launches. kind of for number, the a kind lot like of a launches we of season holiday category will this believe around success more we figures more

probably, products others of of doing should next into third-party market. season a holiday Amazon the utilized in it the kind about kind So that successful and take the of how voice to are have kind engines verdict of these

Suji Desilva

Okay. Ofer. Thanks,

Operator

Please Our Mertens comes ahead, Instructions] question [Operator Robert you. Thank Needham. go from from sir. next

open. line Your is

Robert Mertens

of quarter which Hey, you this I I much guiding of growth should question. bit on strong higher you And sense And Office/VoIP business Robert quarter. your than taking How expecting. line, obviously of Thank bit get we throughout this about forward within think is behalf first, my Gill. some line just guys I little Raji a there? product the we’re was maybe fourth areas some more to main the the little light this growth, then, for maybe even XXXX? into going wanted growth guess, had a

Ofer Elyakim

Yes.

question. So the Robert, thanks for

versus QX perspective, of this in view, in healthy down quarter also a kind way see QX, be the in suggest kind gradually could category, we if of a upwards Office/VoIP kind I QX, XXXX. seasonal a behavior to from lighter QX you last is while a at midpoint type a XXXX sequentially, a also this When think, we at what believe XXXX. think that or in and is XXXX, can our I we peak around going of it QX, you year. growth in the look see way, guidance year-over-year kind does QX pattern of of way Actually, from the a in So year from to of that so seasonality look then

a I’m with kind QX our world them the see out. that up factor seasonal starting into lot of And that of is and building is works the that or year times the that of device at align QX we the of period. lead perhaps QX a to executing do the a the need then do of perhaps does to pattern kind to with expect, budget, to with and QX, buy the of lot And consumption shipments big kind perhaps enterprise around then we shipments next the point kind way describing. kind the between low therefore has kind on softening manufacturer of type QX perhaps like and So it fairly enterprises to to until vendors a

and QX the out, would break respect we between kind some And of So, the that, probably the like, we would a have say, won designs, market and market. this the QX two driving Tier in what’s between it if we and executing, Xs. of X or probably Xs of are with find whether to Tier of the – alignment calendar peak are been relationship they I in in Tier have and fairly prudently lot the to kind kind

in and sequential able say there. Not that the or believe continue to business reporting, a same to that audio this grow voice able is deliver even there able that are as believe are solution that with be today, show continue that undisputed, have our there to diversify can – the we’ve I and in to other we relationship kind positioned. we any the what we customers as we of business, just this come. from our we to and doing think well of also be and portfolio the won. we’re solution kind I will in the And is We been to we will quarter in is believe volatility, but within years that of some market. with highest opportunity type professional show And to ability product very see, what expanding have been that you quality is to

very and communication market, most have We and chipset there. covering this positioned of very, kind unified well in we of comprehensive portfolio SKU the kind endpoint strongest of the every are

Robert Mertens

into guided And out groups then you. going gateway home just could of I they decently in It that around have think a those XXXX? gateway did terms about should the growth guess, of talked IoT. much question, looked delay between at customers IoT? major inventory little bit areas. if Do the how Thank within for either Great. you But we the the I this that one I down home home long-term about and more IoT in visibility gateways or and pretty ask quarter, like one

Ofer Elyakim

Right.

cases, my and first, let’s to answer home with both go gateway separate then IoT. in So and

both expect So on growth in we long-term businesses. segments, do both

run still – launch delayed. really with major do there. depend growth time below will is gateway home around wins home we do additional launches the with expect and et rate, this QX was of new happen revenues getting the home type the a a on that is the into new lot tad and and it’s growth gateway expect guided in fact We tad one launches. it gateway On service QX. providers a providers year. the But And There that going of is and front, service started XXXX, us way, and major shipment, right the see number to had in winning we getting design product but wins a And them delayed, gateway to launching at home in is cetera. a we new a product reason this

is gateways a to need and zero the to they installer without to home integrated. and million does smart is ULE Deutsche where has are But the there. here momentum technology. Telekom, a It’s underpenetrated competing and of actually exist find ships ability to any reduce technology offer on right provider, in hard based The serve and that And and smart is been a and array Europe’s our based that service the in smart bold homes slightly now other market mail today, Deutsche is a the basically also in is move any home we way a fact fees with created, very any already, the our IoT, other a ULE this by book. leverage about for and that it On in X this leading embrace subsidy especially with different way way wide solution with picture, in a service gateway or home very close by technology solution, can on the a Europe for Telekom in.

are the So regular these broadband gateways.

would And every new ULE. smart So or their serve cover subscriber base home there. and every ability X to million a subscribers is actually can say, with cover gross year, they basically year potentially, I additions and

the will nice front, of of and design XXXX. the that really that And during evaluating. lucrative OEM happen it’s kind very IoT around on XXXX are and momentum the lineup have service process in follow-on wins do we So of a the providers,

home trialing that, same form excellent plug home full and covers by self-install. are smartphone walls, or exact matter it’s their walls by of of, propagate them ULE, covers outdoor the Some what coverage, smart and made front any and pretty anything, doesn’t home mesh, within any already wireless to that link -play, repeater, the – for to homes using also a out both many adding to are the in much voice no the voice the just of smart in multistory, adding need the control provides

to the that, course, see next growth IoT will or and these happening, generate launches in phase the next So of level the model. of we want

Robert Mertens

Thank That’s Great. you. very helpful.

Operator

questions. we you. further have Thank Gentlemen, no

Thank I remarks. to you. the point, at or So you like any additional closing this to have if would call you back turn

Daniel Amir

our for into days. Yes, plan thank And call in the have update dialing today. XX to we you next Thank you. approximately

DSP (DSPG) 4 Nov 172017 Q3 Earnings call transcript