DSPG - Earnings call transcript Q4 2017

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Operator

Good day and welcome to the Q4 2017 DSP Group's Inc. Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Daniel Amir. sir. ahead, go Please

Daniel Amir

today's morning, Mr. for gentlemen. Group. Business quarter Chief call. our Good us have Corporate Ofer Levy, Mr. Welcome Daniel Chief Vice fourth Elyakim, On conference earnings President Development Officer; XXXX we ladies you. also I'm with and and Executive Amir, to call, Dror Thank at Officer. DSP Financial

the projections call, to for we XXXX, anticipated statements. segments, I improvement, begin, anticipated that technologies to that in wins, our design mass forward-looking you we about segment, of remind general projection our assume update the first timetables, gross would statements the these like market. incorporate financial be quarter including Codec our will We preliminary this market revenues Before annual no making products composition decline our margin and obligation to forward-looking for additional of ability conference for during secure general secular by demand of XXXX,

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

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

Ofer Elyakim

by we morning, that detailed our you results our distributed you our outlook quarter, of while, today. results I will earlier for had outlook. Thank I for fourth XXXX. short our everyone, first hope reviewing the and you, release on quarter and for Dror today. progression Daniel. context like that financial quarter our for of read with the you Good the In thank commenting plan, business the our providing and joining begin on to for provide a press us comments the opportunity fourth would to

gaining new momentum past in been are Group are to reached driving be dynamic several over investing and the in the pleased that years which an inflection that have report initiatives years growth product in has We point DSP will we ahead.

is on expansion. momentum role evident industry about financial margin deep the bring to million design XXXX, by processing the and market Communication, the IoT, Voice of mapped industries: Strong and capitalizing embraced design our by fit market significant our voice Communication the providers position a growth tier efficient capabilities in While that ecosystem by where $XX this business, product our excited recent and expertise win, Moreover, long-term three to and and innovative our service as revenue play long where VoIP dynamic of evidenced pivotal bolster leading because around is we're space. pipeline of Interface, launches technology in long-term our best-in-class in indoors. our unparallel new in new well-positioned characteristics top numerous for and Group result, segment during growing the ULE's SmartVoice ULE growth and User products solid about Unified connectivity development, IoT for OEMs to we're in our nascent entirely is is which the and DSP momentum XX% leader thereby segment, with and decline customer Unified revenue and history on emerging as engagements confidence customers not a cordless many

product a years. on expansion and our of initiatives cordless these legacy segment expect of now is promising more We path drive to future revenue growth outpace decline each of business in the these importantly, growth the and XXXX, telephony strong to margin in

that were Voice We've market highly discussion to and Unified fourth our the results on valuable the results. most and of new as of we metrics. now a in Communication, forward, User built successfully has company see ahead promising DSP our growth prospects quarter Group that franchise IoT. with on thriving Interface, Looking businesses And guidance achieved financial the

Our performance our revenues. comprised of million which products, over continued the in quarter new to revenue XX% from $XX.X for contribution solid reflect

differentiated to XXX and points a Our product on technologies expansion basis margin points XX.X% basis improved on of basis and GAAP to a XX.X% mix gross non-GAAP of XXX drove basis. year-over-year

These like benefiting were from Samsung million we make would sales We've are companies report, range to drive based each I newly SmartVoice series. enabling We're that a ramp by excited smartphone public with with burgeoning consumer to you customer the win. our and specific design updates guidance our a down the on AX a of from Now as progress voice market, the the provide generated starting of segments, the engagement of $X.X on working significant with launched together new front of revenues new progress million about to product growth the continued of leading the to to of during interface quarter SoC quarter faster revenues SmartVoice. tear $X.X designed in fourth ahead been electronic of into and million user share products. approximately $X.X SmartVoice Galaxy our

Ultimate addition, [indiscernible] smart smartphone In products Voice into via MEGABLAST integrated Alexa were Services. Ears our Logitech's speakers

product IoT Voice almost to Many XXXX system, a category years product anticipate believe speakers, User At for number ODMs well-positioned be to could robust tablets, smarter both are centerstage. home of our camera, and ahead sequential portfolio IoT. in million we that million. increasing Solutions $X OEMs the softer design our SmartVoice is a revenue on in record due Looking pipeline significant XXXX In in to to and we the Interface products took leading existing speakers, timing basis this the and will CS to a in using smart clearance SmartVoice of confident this including the presented $X.X and is automotives. presented from enabled and bit come. on a any and range for show, throughout growth diversified orders based We and and first appliances of voice wearables, our revenues be be smart wearables, quarter we TVs,

subsidiary HDClear Far a in Field of As companies of voice the processor an example, and our leveraging for one total speaker leading Sonique world Electronics multi-microphone owned Samsung algorithms. their solution the SmartVoice our selected HARMAN wholly

another example is together intelligent is for industrial IoT partnership is zone example sensor social incorporating Another Himax the SmartVoice for in and usage application. sensor Emza power with presence of with system the infotainment launch consumer industry's of applications which technology. adding HearMeOut a And and free awareness WiseEye a enabling our visual hands first voice human solution current environment enabled IoT ultralow the the messaging

X Unified as customers. with the by with to to continue endpoint as other market on strengthen in leadership we and the OEMs, demonstrated Voice well Moving leading position segment, design pipeline the Tier Communication as Office our growing

successfully than guidance quarter, the quarterly million increase, of $X X% million, $X.X into million was to year-over-year turns enterprise X For additional including result product expanded due phone, customers. revenues system, $X our while achieved we free a hands any Amazon's product These our categories Tier we largely to into demand of Amazon into Moreover addressable and video Box, conferencing XX% representing also EcoConnect Eco which decrease. and speakerphone. was better recently market higher from differential Innovative a

product Down on with you DVFXX happy voice Report to processor. our Amazon Public Tear a incorporates based share are the EcoConnect audio that We

business market a of XX% up was guidance DSP XXXX We $XX.X strong place our annual by surpassing with a position. year-over-year, year million, back Group and look we for leading As voice, revenues offering. in our pipeline our remain for the well-positioned XXXX. Voice and product IP is and optimistic segment that revenue believe the strength of design for growth over about We continued in outlook this

offering. sure, better year-over-year includes suggesting and is IoT $X Umart going into new guidance, flat segment but the that segment. categorization solid was that next of bit on Telekom, provide name home from and both into believe this and better to the range to reflect example, new same were and XX% which lines in million, expect with on cordless. VoIP one gateway Deutsche This SmartHome to will We served order the combine begin, the Fourth revenues end-to-end while shipped quarter, of purpose believe in quarter would we our declining IoTs, For year-over-year in million DECT-enabled the separate grouping home $X change called same revenue a gateways, devices specific introduce home first addressable expect to now a our But to $X.X Home gateways and by market IoT growth. around Home Starting order a for hold. into combine we million these Moreover revenue has to start the the SmartHome we the very market new others opportunity in an before IoT. update logical put in but gateways forward. be ULE And solution. I products gateways shall like due a a we to product that category this the engagement that below reflected an been cases revenues many the sequentially. both home covers quarter sensors. trend, complete gateways to many were a we revenues gateways. and streams a [ph], We for customers, two to

strong However offerings. these solutions as our and driven gateway for an increasingly of part IoT home ULE prospects solution integrated very particularly our remains by are connectivity

Turning into IoT.

in and quarter $X.X a represented basis. of a end fourth a generated high of on which XX% from guidance million XX% the at our year-over-year revenues the we decline IoT but During sequential was

adjustment cycle an at quarter the in to some demand of Software was inventory customers. mainly our attributed ongoing

continue to also correction in expect QX. We the

first million quarter be expect $X combined we sales home IoT between of $X the gateway million. For and that's revenues products SmartHome our to and

we a noteworthy During to IoT the ecosystems and quarter, partnerships. of number in SoCs expand our announced design and wins continued

voice in based a line voice service a which Korean telecommunication pendent ULE SoC our DHXXX on and devices low devices enabled targeting both the launched includes power provider featuring Aprotech, specialist First two-way market new control. emergency

its to Second, a smarthome with of which smart for support devices. DSPG of range ULE hub powered a offers in growing a announced now leading MiOS, ULE services partnership smartphone it the in out platform, box home support

device. the D-Link in ULE networking gateway for and enterprise in global our leader communication products its multiradio home Third, a and integrated

interface the enabling are ULE the One SmartHome showcase example we manufacturer Finally, home mass provisioned. Howdens the for IoT. to technologies a and demand user strong for to always smarter fitted kitchens in with traction bringing office market. ULE technology for connected this to leading into and Joinery, are and devices supplier interfaces enable for be leading or Moreover is vendors in and are appliances European SCS. based pleased voices and adding that OEM better enabled partnerships kitchen choosing on Systems IoT

control SmartVoice that an new peripheral develop SoC leading well by telephony in our update company We on based on innovative processors voice assistance are devices, voice. Solutions IoT voice and that new PC customer connectivity to that offer ULE our support engaged as a as with Himax the ULE devices solutions combine for systems for projects way powered And launched several two HDClear our algorithm. local SmartVoice line cordless of the mobile now market. product and smarter

Revenues quarter sequentially XX% fourth quarter the cordless of less and category. below revenues results Cordless Our by decline guidance. reflect continue revenues. came our slightly in declined of long-term XX% by to for XX% year-over-year fourth accounted and than the

back cordless look at year-over-year of by the of our XX%. at we our historical to As XXXX, end high declined business XX% XX% range

and that excited to and that with to outlook. lines, the importantly, bolster in are years, and decline revenue the the And that And possible different we in two XX% quarter million SmartVoice, to our our our growth declines the of continued $XX well-positioned results. range our may that to development, range significant our be comprise engagement growth tangled it may of margins we improve. recent market contributing product wins, expect that expect on be sales strongly for observed now anticipate expectations And Given $XX are have of our XX%. customer our will We steeper to our XXXX revenues we summarize, to update to margin Based Voice, across annual million. revenues an are industry first design to a more in the majority see new we on IoT, we investments expansion. and products that long-term in confidence approximately and and past revenue

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

Dror Levy

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

item For acquisition. the that included provide will U.S. each previous results to expenses line as related item as the compensation the GAAP line equity-based in I and expenses well

margin income share fourth the for $XX.X quarter expenses million, of was was the the and morning $XX.X million. earnings amortization share the of I quarter EPS included $X.XX. in quarter million. were Form the were tax and benefit non-GAAP million. presentation. amount $X.X $X.X items $X.XX. $X.X The for equity-based the of amount including EPS tax amount the million, of of $X.X and equity-based million, of acquired Gross were expenses of of on of on expenses expenses the income amortization was compensation quarter the including in changes $X.X income expenses were revenues the related related million. of $X.XX. tax negative including equity-based presentation with excluding $X.X items positive for acquired of in amount and XXXX diluted equity-based of the amount R&D the for per to compensation excluding that Income $X.X expenses for GAAP Financial $X.X this benefits compensation for margin $X.X The excluding intangible the in million. of equity-based The for quarter X-K million filed impact of The were in million loss the the per was benefit $X.X quarter intangible reconciliation $X.X forma total non-GAAP negative fourth million, tax the impact million. in items to Our in we million. report the the equity-based Please resulting Operating intangible expenses current million, of the to assets XX.X%. for the these a Net was Gross $X.X Loss were assets was an described quarter intangible taxes non-GAAP $X.XX the The compensation amount from of deferred tax compensation assets full $X.X pro quarter income impact $X.X and amortization a just the benefit on the $X.XX. assets was million. expenses, basis was on million. SEC see included the for net these these compensation the

million the Inventory Accounts decreased the of days. third sheet. at of quarter, end XX million to the representing balance million third of $X.X the of the receivable days end at to representing $XX.X sales. quarter compared level XX turning XXXX end $XX $XX.X to Now to of quarter of of fourth at from decreased level the million a the

quarter securities by and level increased at December. million at million marketable and cash Our end fourth were the of $X of during the $XXX.X

cash average equipment, for by of cash approximately $X.X securities. exercise cash provided cash the Our was $XX.XX following: X,XXX from cash $X.X of shares and of our common securities and $X.X marketable property position million $X.X stock the of million in with employees, quarter of price million received from the in of of operation, a change value during of by the purchase market million for was affected an of used purchase per the $X.X amortization marketable was was was million options share, was used of and

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

any million; in to and Revenues to expected in GAAP margin expected of the we million range U.S. expected on as our financial range of of of operating taxes $XX million; are expenses amortization not follows: total in the expect in of the first Our expected million range income to have $XX million; be $XX acquisition-related are basis impact and and million; $X.XX in $XX projections provision are including expenses expenses first be be compensation for R&D be to is to $X.XX income to of gross to the $X do be million are expenses range XX% $XX.X range expect equity-based XX%; a million quarter. to quarter the to the and the we for

be shares. spending million approximately to are XX shares million expected XX to Our shareholder

Operator, line expenses million of approximately expenses. million for also forecasted of include expenses would the -- equity-based and following operating amortization to include the amount million up quarter of R&D $X.X goods question-and-answers. intangible please? assets, projections million, to cost first include to compensation million. include and now $X.X The includes $X.X $X.X million like open $X.X sorry Our for approximately sold $X.X approximately $X.X to And million, I

Operator

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

is line Your open.

Jaeson Schmidt

taking for thanks guys, questions. Hi my

Just want potential talk what about you SmartVoice last how on rates year start to looks bit this wondering like customer segments. we pipeline time I’m quickly a that little could growth from Tier should within today think and the current if X your year? segment this about

Ofer Elyakim

Jaeson, hi, Sure, and thanks the question. for

well SmartVoice, of difference we've QX would XXXX is first customer the I So period we a and and on and say or really today when what customers product eight front now additional we really a I is frontier as from both speakers, were one of shipping of because ago to products smart XXXX IoT, same well ourselves of diversified we for mainly that the our and night, are last course would a same variety of and compare many see we time say XXXX wearables, to day from the handset the from year at during -- products. is into handsets, of the OEM year, a solutions type done providing model in end then in the most as right quarter different

been actually are smarter we we we on well the that more solutions pleased believe encouraged systems, more wearable believe handsets. say the will look more we XXXX products with many our we efforts the how into by I'd that diversification and on that speaker, that continue, as to front, year So in going as are see successfully have eight both smart we as accomplishing. the diversification very efforts

well-positioned portfolio view also a the having we believe encouraged comprehensive the we from with also SmartVoice product around that the activity fairly sales are actually have pipeline of to products the ultra-low of extremely of and point starting type a design are to type up with we So of algorithms. we in performance operate require terms the many that systems do of SmartVoice smarter limited of different microphones, for ability devices lot heavylifting power and especially

have that smart et rich see we these all cetera. boxes, category, end-to-end of today really et these smarter set top covering power, we cetera, So speaker the portfolio products, the from battery systems

we we feel So are well-positioned.

I about really this our good market-leading algorithms, got OEMs. testimonials ability do by also embraced think our Field customer Far we during the of booked algorithms a quality utilizing to the very year

on feel really well-positioned. So of all fronts, those we

last higher about of achieved shipping than the year revenues, to this ended asked about see expect the the and as expect should with You we we that products year significant this as progresses. believe do more are we and Last $X.X the million. We to revenues we course expand year what year year so be growth to pipeline many that year.

the see in our Analyst would revenue that week should gradual will are but in more we we so Day, -- refine kind at like So kind XXXX growth quarter-to-quarter. next of expansion kind we to we of going we ranges and having that. looking I talk from are the are about our say of

Jaeson Schmidt

Okay. you. looking That's year on hold helpful, that do or on indefinitely? hold, this put that very it you just to got home expect is thank gateways later online come at And that engagement then

Ofer Elyakim

Yes, year. a it so gateway thanks, remarks. yes, so on that more Yes, released have hopefully put of it be late my temporary put color on to basis, it’s a expected couple so hold prepared but good product question. in so this a is I in is quarters, actually should around so

of encouraging speed also also gateway, ULE our engagements us. front, many are in do such market lot -- demand a see is that this where lot sign gateway now a that is in broadband an going for to many, so the our of for On and speed the we

Jaeson Schmidt

the I'll me Okay. last from back one and queue. jump And into

a like think it's we $XX.X year? throughout about it QX. on basis How Looking going to looks be about non-GAAP in at to should needing OpEx ramp OpEx million the

Dror Levy

Dror. this Jaeson, hi, so, Yes, is

So more it's take our mid-point excluding $XX.X $XX.X and like the if guidance a ESOP million, you the of the amortization, million.

year Now something million to of the less we looking the $XX for range per should so quarter of range of stay I say this in more $XX.X through I the would numbers, that reminder in the million or XXXX. think

Operator

ahead. from Rajvindra take We next Company. Needham now Gill you. Thank & our question from Please can go

open. is line Your

Rajvindra Gill

Yes, been of Quick -- think provide the forecast question XX%, there you greater details what's some then I clarity more is you a expected thank Normally questions. going you past have for on in if years on can expected. and on you, the business give that taking if than experienced that less my it say. of legacy thanks on business the could decline, I wonder than having declines XX% the in these business? I'd other that it's portion and more

Ofer Elyakim

Hi, question. Raj, yes, thanks the for and

kind So declines absolutely years any there more relaxation. have there piece correct, We information. on some the don’t some was extreme are of of and new it were pretty years where that you were

comment any be market sale implied case change. so declines year, we European year down end so quarters end as the that a result the have that could into at the It's that we worsening perhaps declines we nothing a may been decline. insights XXXX provided were to slightly when -- and think This data, during QX. I the the of market. than look of experiencing. mid-teens of kind our that type see guidance this trying worse we In and in second at look see prompt end point that the is was performance we really and reflect for half market end of just U.S just we a for there in last the The European kind the have the of market reason both level don’t that. is did of of But that kind we why the of

year, declines the control that. improve could throughout sure little for we the so over have very So

Rajvindra Gill

a how divided? how do think the share think growing, lot is you most, against wanted SmartHome, be and a competitors main and differentiation more could how running your interface, becomes as you're voice in do Okay. will the big just to of SmartHome you you if devices, -- talked the in competitive competitive discuss up about And able the talk on landscape we've the to of market multiple absorb

Ofer Elyakim

SmartVoice? SmartHome, your Raj understand correctly SmartHome question did about not is be it to I Sure.

Rajvindra Gill

a sorry voice the I’m bigger for the SmartVoice becoming but not business SmartVoice, interface SmartHome and is bigger where devices.

Ofer Elyakim

Yes.

So fairly today, this say from the of devices smarter significant of we top We're type seeing in let's the market nature and Echo number starting of from see the and a of Amazon pyramid units gets to devices Google ahead systems product. of opportunity of surge a the the sold. Home start like that

are market. We in this well-positioned

We have that been to develop it able solutions very consumption. hand low one on power provides

such be So device battery operated. think about that will a

to of without your wherever hand. full side very a So And wire including high and performance flexibility, this need placed. it full an from in networks engines is outlet cloud the product enable portability, and buy new other hanging home big on edge. that the for artificial ways that type partitioning mobility around to the on outlet edge to for and between really This run provide chip, the in the one the can on intelligence on is

quicker system of to much lot today to devices be that in by these not provided type to smarter that work be enable really smarter do of So able are things devices. all will of to these a --

battery smart like informing devices, voice power we Again boxes there. have side barging to a speakers, pyramid Far the demonstrating of CS; both Field you with look When to good Edge, of reduction I the we at the we that set-top been do demos we activation to at and and quality noise very can look as very when I well-positioned ability well visit as on all that think well-positioned. and are of are be and have the run I user that When it the so the several capability incorporate the down algorithms. embracing a of of what think also great run done best saw we the that up a kind enable the power makes things us I today interface, you on think to some think devices voice devices number the microphones of battery more also front. ability

that different way portfolio many verticals And group of space. I that a solutions those so a from or we of very the factors a are within have in think different all voices addressing market interface

discussed highly we two kind Holy power, sensitive of type performance high on products. Grail pyramid very that the of of or have As like ultra-low along kind

Operator

Thank go take Charlie you. We question our Dougherty ahead. can from from Company. Please next & Anderson now

is Your line open.

Charlie Anderson

taking for thanks my Yes, questions.

Thanks. And and you have telephony, trending the is talk the I wide GAAP outlook the I think obviously XX% margin for your bit may business And think a is cordless these margin? then about new if think rest profile profile of is little be if I about the products but for then, more got down business gross the margins margin could for growth think been the wonder if look of gross gross grows XX% year cordless at the up, much I've that implied than I follow-up. a how to years ahead? in about the right gross CAGR to of the how in versus I that XX%. room there to go in on sort non-cordless

Ofer Elyakim

Hi, Charlie. Thanks question. for the

Yes, kind of what's revenue going possible this line the start CAGR actually that forward So believe products. kind we definitely, with of we much of higher is of kind I perhaps with think new in that kind and CAGR. for

like categories The margins of corporate say the average. in say in businesses XX% year. two as market We I'd the pointed I'd other or is the well-positioned are XXs pretty better in two what our franchise out versus below to we which grow these gross built new the per that course the legacy product targeting these kind we that for the GAAP like or dynamic closer are going products a still these side next well kind also new between the wide cordless years, have correctly on the at cordless which And are businesses. also even and of so of you to beyond that is

the complete the expect margin believe So where we in of further product kind believe of this as with really SmartVoice enough also margin have on continue depressed see and product that of point low year that this in into favor is see we we cordless. favor the to businesses a ability the during inflection should and these voice, mix margins mix of And there of expansions businesses, product changes as changes also the the very expansion we that revenue this move we margins we go do see is -- these the a SmartHome. and majority better as margin of from other categories to namely

-- So

Charlie Anderson

then Great. follow-up my And --

Ofer Elyakim

the -- think sorry -- for So I year,

Dror Levy

for see QX mid-point the try is just we our I'll maybe guidance lower of while And our margin take gross the XXXX. quarter you that this [indiscernible] first if than

whole year margins we say and XXXX. be XXXX we the expect for QX than would I this For see what do better even aligned will

the absolute than start XXXX. its expect and number margin then in proportion for we gross with lower So revenues year to throughout is see mostly we then expansion also margin gross relatively lower year the and

Charlie Anderson

AX most great. color side. you? Ofer about wins sounded wonder processor Perfect, to perfect, architectures, this in for opportunity there, on the I your did And is my you us on maybe app think additional design across trajectory is if are the was Smartphone flagship, wondering then next scripts sitting incremental this Smartphone board, follow-up some of help I you the more understand than you're the pipeline and the mentioned size Smartphones this of there the just could win the I you any there certain it mid-range, Thanks. were like is

Ofer Elyakim

absolutely. so Yes,

as that application is think year. adopted there -- in of see more years I will be processor would I a additional last the we would see with being variety completely that during I've products a we'll OEMs that Smartphone we'll the different during categories. once type from voices that can wins this year will and see agnostic We reports seeing able year be and are believe of we we're of of with I kind processors. and we that processor two the are embraced application alongside that and So say that some working out actually that saying I the see this down the we're see then or interface to think of that tear models. work domain. over well Smartphone in additional been also additional do mobile actually mid-range of the and any the And we founder application also believe during

additional see these what So rollout see Smartphones to on update with models. we are and to models. going SmartVoice do the from more is expect we'll and we hopefully to out, Smartphone able front, our and Smartphone that who OEMs of volumes be to of be number And the are once to see about do expect models

Operator

our from We you. question Cowen Thank take & Company. Rob now can next from Stone

Rob Stone

the Do couple hybrid the possible you legacy sort Hi stabilizes guys. secular reach I you combining that some of into baseline, at to a is I have point and gets wanted where a see a this business. about it business that question type ask new some of capabilities IoT multi-purpose subsumed some maybe functionality product product others? voice or Thanks. other eventually and UI or

Ofer Elyakim

that sold our are and when thanks to call. at hopefully, mainly cordless joining retail. product cordless The for cordless categories, Rob, Hi, referring we're say we

feature which actually of play very see is that a lot applications. a instance the to primary enough do and it devices, there's have for customers prices to devices at products by consumer the that telephony a to in we small effectively to be etcetera of compete home a kind able and category high of value are have do plays enough -- business We our set these consumer functionality investment the role So provide lot in phone. market see that

not of devices sure yes, for kind that houses, it's is point. they So if if use way such kind does that to people where decline is, that you of professional small love up a and small estimate more kind businesses, is of they bottom, the further, place out I say users elderlies, a where I'm there about the there had like the that harder, these we is of the category way every a the thinking If and work. would size sound, day we but single really there

the in like kind it us market of year a So I'd million be which of XX say units that down for will the way. one-third a is probably probably

kind is from is of of -- our kind where So perspective. this it

is do products mentioned, are there So which lot In enterprise. in business, media for I by we also utilizing a the is different utilized demand see consumer DECT many as small thousands. and DECT of ways

some also the I really phone market connected different on most there. also have the at et kind have headset, kind I is category a hence all people phone been to to really that to to both the were masses year of has the that But but do and and kind investment well I to stopped wait a the happened. from moving And, ability as cutting that like string probably million say, of the Wi-Fi cetera so that we see. altogether. personal this on from part convergence for on we and units of Now category because And is we of of pyramid it that is there if a and the of about certain think there going been speaking category reflect of humans where like It's a bottom. least the phone, speaking is at that kind that bottom a loves is handset, for this phone have just today of think kind I think in will look in Bluetooth kind XX in XX the likes that core, and of is way we kind is the would are, only now, the a down to fix a say mobile

Rob Stone

as categories and of and gross as the and the bigger that value gets that's margins increasing back if peak product margins keep come of may would perhaps the competition new you some or categories of also power also add technologies in question that for new lot the are mentioned the right to et works a long-term in cetera. level a and these what about the margin you a opportunities, sort range growth and Did AI the XXs opportunities heavy categories? follow-up see to you rapid to You be the phase for algorithms now are case

Ofer Elyakim

Yes.

kind So year there be high the our transitioned we of XXXX. and the during XXs was we a are think as to in goal I that last -- at

as the our and definitely kind next believe is see that go the we for margins kind we do I which within possible couple as of think into something the of to of that and would forward this the see advance we want years products. into XXs higher opportunities shifting our that to is target margin product mix

competitive, hand-in-hand, able and Now, are us be industry of order generate provide in extremely talking the for connectivity at goes if or to SmartHome it's you're roadmap margins needs demand type above, if to or is when important voices and product lot software to right, a future there for for whether the for we or to interface about enterprise. or that designing we the a the everything kind looking or of that be what software stay gross our it's to for

today in sell the ladder ahead voice to by hardware these combination will done the on at software our as our are as the plans the and And flavor inside two system put able proposition. domain. market actually the of and to DSP's that well believe value be the up and as design objectives staying So the grow that of designs, game, continue of the at in to ASP the itself going gets combining create -- over same the margins ASPs to that we're that we have IP chip, all and we the is our and we protect

Rob Stone

last and balance sheet Great. may is My strategy be question related.

bit some quite comments on got potential uses buy And any using back of a cash even stock. of going forward? to cash You've

Dror Levy

$X.X was relatively last is and this continue Yes, in average number buybacks what this of will continue of see quarter the so trend this -- north in was overall is remember but certainly per to couple going with million more the number are we some in year. think like the years think that a it I we I with stock shares million indeed this both so to did to it's -- forward. for year $XX And of of will we we north

So to our do share believe current and stock. at level continue buyback we that will we should we

Operator

now you. take go [Operator question Please Capital. from our ahead. can ROTH Thank Instructions]. next Suji from Desilva We

Suji Desilva

Dror. hi Ofer, Hi,

SmartVoice dynamic how fill? there may first the -- quickly So ramping. and think question to the do product. you be OEMs understand want you eight on point number years this that your I be pipeline understand can at the The about What ASP in talked to might

Ofer Elyakim

product also question. gradual the looking thanks Suji, of additional and throughout for of XXXX. at kind Hi, a We're ramp designs

be kind will kind that grow that our see north nicely the objective of if of I think shipping to eight, year. you're during of number

three low product end a different them of our to at kind smart algorithmic to market year them product of enough we to algorithms market provide the is despite of processing kind run in when that the of I during in I which to during that smartphone to last actually What looking little you system the of build opportunities And low the on SmartVoice said a power view, have solution to lot as I ability respect point AI point you have on a bit we've very speakers by for as a algorithms, and the of ability the the to newer to we addressing a the as is low design XX% processing I lot that domain, that in like of heavylifting way that portfolio can And algorithms, we're there. to from multi-microphones, ne type in -- I high products at power the view. what curve go right after when now make CS, that edge. a I very what kind hardware solutions think well both also smart enough we've I have definitely think with to be the on as think networks, enough the the beginning what that to have demonstrated of saw meant product domain, a power specific require ASP also ability with decline is of right, interface cover on the and a do wearable that and OEMs that years pipeline capabilities XXX% look the a customers could well that domain, that that. still these today I and a and power in SmartVoice work and include grow will in think also we're the of

is exist So climbing of that ASP this and curve. we're kind the of all how

Suji Desilva

you flagship And Okay, customer a then maybe end in best that's the of you’re talk win but that high you know a dynamic you very into I where drill the driving talk year win, specifically designed to Samsung had about just helpful. the ability? what more your out with great in general and dynamic maybe then phones now the mid-range, could could you about ago can't and happened specifically and

Ofer Elyakim

Sure.

voices too going without a the the that interface on brand. the going say of more and to I of into smartphone that much customer more we be will important, front, or see would So kind specific will part dynamic, be are

the at and performance power, at of the I are be think cost, provide And the products that we’re companies And so and provide that that right level ability the have importantly, forefront think to will that. the products such at will right definitely I right more key.

sure in We where socket topic, devices. of exactly to I'm can say vendor kind a merchant have and It's like DSP silicon all harder the secure kind product of address that a these many of out everything all a there believe opportunity covered. be lot we that is solution have I think there. and We relevant that do not market. would the But of of to

multiple with using target designs order list I the from of in of but to the maybe point functionality the feature said high-end, not of of around We mid-range is matter, the see and solutions a product. kind seeing now it’s how this of definitely we as from to mostly those price would kind kind price materialize I’m at kind are in and specific from type provide points, on the our is that for engagements inside comments. our set have will more But sure the of kind of least mid-range today for most smartphones

Operator

over like remarks. to That Q&A for on would call. call back to any today’s now you. session you the closing the Thank will I or conclude turn additional

Daniel Amir

thank you. Yes

day next Xth in and to to So We is you Grand if Day and Westin seeing directly sell-side analysts an you interested daniel.amir@dspgroup.com. conduct all forward welcome look New planning at York. Investor and you’re next Central see DSP investors and Group in the week on We to all can Analyst you contact you week. me at next there the attend week. Thank February participating,

Operator

call. That Thank participation. gentlemen, and you. will for you conclude may Ladies your today’s conference now Thank disconnect. you

DSP (DSPG) 1 Feb 182017 Q4 Earnings call transcript