DSPG - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for holding. And welcome to the Q4 and full year 2019 DSP Group Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. [Operator Instructions] I must advise you that this conference is being recorded today, and I would now like to hand the conference over to your first speaker today, Tali Chen. ahead. go Please

Tali Chen

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

growth forward-looking on we engagement statements fuel remind the and to our Before being we initiatives will pipeline and final that this in the Unified be conference upward would making customers, XXXX, U.S. our in for begin, strategic in about of guidance recovery optimism XXXX, you of call, of revenue being with in about during financial like an quarter XXXX, I Communications first growth Europe revenue trajectory segment drivers, momentum and growth

forward-looking assume update no statements. these to obligation We

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

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

Ofer Elyakim

and us Thank press by for opportunity reviewing everyone thanks you, finally, would today. full providing begin our plan; to of and distributed results then I had the like our which and year, the Tali. progression context earlier you our I the we to for Good that release joining hope commenting our quarter fourth business morning the read outlook. on this for morning.

the about the fourth our will our provide Dror the with of full financial and first XXXX. quarter year for results for and short comments detailed outlook quarter a while, In you

guidance fourth while XX% Our $XX.X sequential results grew by million were revenues by of basis. declined X% year-over-year of a on most on metrics, ahead financial quarter

quarterly high of revenues gross GAAP initiatives, revenues. This with quarter reaching and to drove two-thirds XX.X% respectively. for from accomplishment our million margin XX.X% and expansion We accounting ended growth and the record $XX.X non-GAAP

SmartHome, gross product XX%, XX%, all and Growth revenues grew initiatives margins momentum the throughout technology maintaining IoT which representing SmartVoice, benefited year quarters, XX% Unified growth Group from sustainable marks revenues each of Communications and while driving positioning a from annual and across financial level of total segments. AI of respectively. succeeded XX% a engineering to plus leading and solid XX% With year-over-year $XX.X million discipline. initiatives solid in XXXX in by and itself as DSP voice company, the

$XXX.X the level basis of flat gross demand non-GAAP revenues and segment We growth a by shortfall initiative the in XX% of surpassing increased and driving year-over-year experienced XX.X% of XXXX revenue that annual in growth the ended GAAP revenues and year on a to record XXXX, the still despite year-over-year and million, high in with respectively. margins Unified XX% Communications we XX%

Lastly, ended of generated we year, operations cash million. with million $XX.X $XXX of from during cash balance the the year a flows and

have secured and the and we strategic of We of with the thrilled momentum new acceptance are technologies new and excited our customers. about number products engagements by

XXXX the our center and user CES were At solutions took interface integral of in voice AI January, that. part stage, an and

leadership best-in-class technologies Voice show, and our and successfully IOT. During for we AI the demonstrated

and leading mobile enterprise, of brands, number and presented hearablesapplicationsand newly IoT, our computing, across Communications Moreover, providers, service integrating by few a OEMs we Unified a record here consumer and are SmartHome, products leading tier-X products examples. launched SmartVoice,

Samsung, voice GoPro, and and to with array leverage market SmartVoice of TCL AI in are products to design as solutions application a and plus and driving Tier differentiated including UI that brands broad Logitech, Today, our voice highly such vendors our by Facebook, XX bring over XX and X Lenovo, innovative solutions AI products. Arlo,

service and Tier-X ADT selected to more leading IoT OEMs SmartHome as providers the driving take growing France technology, in in ULE our and and primary segment, product ODMs in including U.S. our ecosystem. three wireless an Orange their In role ULE the active

established with leading enterprise Communications, leadership ALE, all position we In Avaya, top NEC. Yealink, the seven the engagements securing by of Cisco, Poly, and our OEMs Unified Mitel, including

These exceptional primary along trajectory growth going our driver forward. their our business validates our will with of continue success initiatives become that engagements design pipeline strategic the and achievements, of upward solidify our and

SmartVoice. with to Now, the I’d by segments business move like update on to starting

decline During a representing a approximately year-over-year the sales million from XXXX, $X.X quarter, X% while quarter revenues growth of a of SmartVoice basis. XX% on sequential the fourth of we products of of representing generated versus

SmartVoice delighted with and revenues are XXXX. of growing We by record reaching versus segment the XX% million the XXXX performance in of $XX.X

During the engagements leading our following product we by new as consumer with reach brands electronic quarter, to launches. expand continued demonstrated the and product

voice high-performance launched our integrating innovative Dimmer processing Facebook Alexa highly system, learning our a audio Portal cancellation. services SoC. with SoC voice our leveraging beamforming, videoconferencing noise Decora support advanced TV, audio with Leviton coupled algorithms voice reduction, featuring machine echo launched its its and and

small products Libris the drive SmartVoice performance, launched response the of ability system, emergency personal our with cost. including its KX optimized Nortek wins performance and depth, the continued devices. bar long supporting for our These features. achievements, for the power coupled low in while the Oppo footprint, adding demonstrate smartphone, and and market, recent life listening strength, selected on Numera for franchise hardware are The the always battery to algorithms raising far-field down and while our and Edge quality consumption, smartphone diversity to newly SmartVoice

create machine innovative is as to voice voice. applied At solutions frontier now learning CES, we demonstrated expertise are in our how the next AI we to leveraging

processing algorithms use gets reduce and make concerns, of hardware consumers’ and edge performed bandwidth, to the and address privacy latency, AI to at optimized efficient better must more coupled to tightly As more available be requirements. meet associated

consumption. solutions our for that as AI new applications. to while our accurate Edge of power suite biz lowest address all a broad such pivotal continue that will SmartVoice exciting the and detection, and of create for with growth a maintaining product We be continue powering to the beaconing, to driver, need array applications devices, We portfolio increasingly will believe algorithms a acoustic rising proximity, enrich sound more, hardware

to on In while of we on million, $XX.X a fourth decrease Moving sequential year-over-year the XX%, revenues a year-over-year a X%. flat Unified the increase revenues achieved of million, $XX quarter, of basis. the Communications segment. with representing We year ended representing of

revenue, timing segment of results year, this as we shipment IP uncertainties lines phones and in confident IT a are the remain design dual while the as meaningful its market war as already high-volume card originating by we to well launched spending, these shortfall is of way X in series XXXX secured including launched revenue with from phones displays, complement our a attribute by And portfolio. well we secured other to for OEM a in related to mass in expected orders enterprise X to the XXXX additional delay UCaaS to a highly IP propelled a concerns, disappointed that trade weakness Tier mainly on-premise that OEM Tier new as and designs of contribute we in commenced of ODMs this the that recovery two new and

revenue in confident are that and this engagement we Communications segment performance Unified are for the on our pipeline, year. Based growth positioned our well we

SmartHome to our Turning line. product

year During a grew XX% Full of XX% revenues and representing million an on year-over-year increase the increase of fourth of quarter, year-over-year. XX% revenues sequential we generated $XX.X in by basis. SmartHome a $X.X million

market ULE's During Group pave broad which U.S., accomplished the a DSP Americas. first we for should our milestone the for win path quarter, the significant adoption event secured and in the in

technology. ULE our IoT camera. a wireless ADT, demonstrated as sensors has a incorporate as of as connectivity security hub security primary our moreover, its service CES includes system, leading well provider U.S. selected the for that The which technology also will was announced these some its devices offering. of lineup and And it new at SmartVoice

technology are achievement and excited adoption expect the this by This the additional of of with the We the well additional product momentum as product ULE brands, new faster by service as expansion leading propel evidenced ULE wins provider. also momentum by and launches. is following ecosystem to and

Golden and our leak new devices of technology in-wall switch, dimmer, SmartHome line in-wall for Mark water ULE an plug-in detector. switch including plug-in selected its wireless dimmer,

security siren which water sensor or smart control that security keypad technology, system includes leaks the of smart all window allows keypad ULE detect run as our on well of a technology. as garage a a sensor launched door sensor, Ooma ULE to a already Ooma’s based and sensor, motion door our

and of XXXX the the product We in growth traction heels a both for the of Europe and are ULE, beyond category optimistic momentum U.S. on about design in and this strong

And now update market. on phone to cordless the an

total year-over-year revenues fourth to was quarter Our fourth with in by only XX% revenues. for revenue of and line our declined million accounted $X.X X% phone expectations. quarter Cordless cordless

decline For million of pattern generated the to revenues our is year of XXXX, decline XX%. of a secular XX% which business year-over-year line in $XX.X full XX% cordless with the representing

to continue in manage prudently profits and growth future rich well this cash business growth reinvest our flow fuel its initiatives. to We performing

of should first midpoint to X%. guidance of The also our quarter. million, update account of revenue customers to of our that account the guidance first XX% Now for the revenues the received $XX in our growth $XX be of growth Taking for a first revenues. to midpoint expect million initiatives and outlook we this implies range we into implies for assessment, range from an focus on the own the XX% year-over-year quarter our quarter

To the of to engagements. design year. number performance a summarize, growth strong will we our as are market X revenue this to growing these to that the wins are and excited on success expected of which as accomplishments response solid products our technologies, the believe, future by contribute pipeline heels Tier well and of We solidify

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

Dror Levy

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

acquisitions standard new leases. provide the as item, differences results expenses GAAP will related expenses as and line as related U.S. long-term For that item, to each compensation previous a included exchange rate line equity-based I related to in accounting the to the well

of in were XX.X%. Gross compensation $X.X margin expenses compensation million. included margin quarter amount the R&D quarter, the equity-based $X.X Our expenses million, for quarter million. of revenues for the of fourth in million. $X.X Gross XXXX the expenses $XX.X was the including amount for equity-based were

acquired of amount and Operating intangible of expenses were including the $X.X expenses million. of assets the the million million, amortization in $X.X quarter for amount in equity-based $XX.X compensation

$X.X Financial new quarter differences Financial standard accounting quarter. for a income for quarter the exchange related income results These from leases. long-term rate to of were GAAP exchange million excluded was related included rate the our for million. to the $X.X differences

deferred tax expenses compensation equity-based million. Income in $X.X benefit changes includes the $X.X and in tax taxes net assets from the related million resulted of and benefit intangible was a for quarter to amount

of intangible $X.X exchange amortization was of the loss including the in million, $X.X differences compensation equity-based tax amount assets $X.X million, million. million expenses of effect of Net $X.X million, and $X.X of rate benefit

net per $X.XX compensation deferred I was EPS per With was diluted income quarter. impact the just income was GAAP for for of and the items $X.X on quarter, Non-GAAP $X.XX. items and positive share was of excluding described EPS share. the taxes excluding just no these I equity-based the million non-GAAP earnings The negative described $X.XX the these the share per earnings expenses

GAAP see current to this non-GAAP with that we SEC on Please a Form the full presentation. for reconciliation the morning report X-K of the filed presentation

Now, turning sheet. to the balance

representing the at quarter, to a million $XX.X days to million, of end at of of fourth the XX accounts compared XXXX receivables $XX.X the quarter level end the of of decreased third sales. Our

inventory Our a days. from level at $X.X million of quarter end representing to million, of XX third the the $X.X decreased

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

position of equipment. of the million million the for following; Our of cash million property marketable securities quarter from cash was was and operations. in the of amortization provided the of million cash during of purchase affected exercises was employees; received and securities. and $XX.X by change options by marketable by value cash $X.X $X.X was and used $X.X market

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

are be expenses, range compensation and to in projections, expected as Our amortization impact to $XX are million. the expenses $XX including first acquisition-related million the equity-based follows; quarter of revenues of

our expect margin XX%. be in gross to the of We range XX% and

be to in runrate expected of range million are our to $XX expenses the than $XX million. R&D higher

$XX are to to be year, For level of $X R&D the the to quarter. million expenses expected remainder of back million per the

range Financial million. are to to range expect expected expenses be income $XX $XXX,XXX $XX range the the in to We of Operating $XXX,XXX. of to do be expected is not million outstanding taxes on for in to shares. any in and or have of XX a to million on the shares be basis income benefit million XX non-GAAP is to the tax expected quarter shares

million include; intangible quarter of first assets. of projections amortization Our $X.X

cost forecasted expenses expenses equity-based projections quarter $X.X total sold to million; $X.X compensation the of million first include also $X.X Our million. and $X.X following to R&D expenses; goods for million include includes include million. $X.X amounts operating

I now, up would And please? for open line questions the Operator like to answers. and

Operator

your question And from ahead. line comes Matt Ramsay Instructions] first from Cowen. go Please [Operator of the

Your open. line is

Matt Ramsay

was well, about to it and out. ADT like win your starting you very that talk great it of could win, hear at maybe Thank is a design size much. CES, Ofer, for the it bit of little expectations foothold, bit a about as a the rolls ULE get to as obviously seems you design

of on as the on and And their and Thank I think you. our then maybe one? mainstream be mistaken, DIY in platform I at ADT differences sort secondly, opportunities you platform, platform if what between am DIY talk the mainstream and well, it’s might could there’s the if not

Ofer Elyakim

Matt and question. thanks your for Hi,

So, the of both part technology with Connect indeed, the and have technology. relating is leading mainly designing SmartHome we -- Maison that Protegee all are telecom to and SmartHome we the SecuredHome securitized are a both one security couple the SmartHome and also, on entire years where last was and were today which the that based of ULE mainly a providers, Maison Telekom. of are service and which direct, was [indiscernible] addressing And Magenta Orange of and ULE and excited, European ULE Deutsche momentum, for phenomenon

is made requirement market and for and the technology’s to the unique significant believe U.S., characteristics the we’ve of of efforts and form support for the in promote And voice that XXXX, service the security a in nature actually, technology during its we key providers. – voice

It – and and with capabilities professional many a do are public the with vendors security is certain level service used today respect have system of from addressed is will use we to ability security to install ability certain that subscribe kinds security case see coming both look today two by all security services to a it, of get purchase all of basically in at monitoring to in and access domain, a be markets. the this security major traditional, And that service deployed to a level retail, the by system additional different a when we brand a versus very this and home way that providers. Do-It-Yourself, markets important the different

ULE see And and look more market be when the continued of this well will that and professional at great growth U.S., about believe opportunity there the existing we a SmartVoice, like security technologies, the as adoption with XXX million our security. products a market for in as by households, including in DIY, for we we

professional are such and providers which also side is today that a see brands DIY ADT. burgeoning, and the new service security market definitely of see and course as market by fairly there that significant of We lot stable activity the we handled is addressing of and lot a initiative, this is

I expectations would have say the SmartHome still driver impact too what to that to is that revenues see year. we view, From of it be, in this a say would expectations being point definitely the our but early

almost the every could existing that to with the well as sensor, expect you rich sensors both do each many volumes. from smart fairly and chipsets system the are content well the ULE as As is in voice here prepared capabilities, understand comments shipping in see also numerous we CES is basically as that as dollar so of from with

to has bellweather closely as it DIY have far, be next to the a can, engage with to we this our what with that to provide years. that as and natural we we we is course see addition can the but product provide ability hopeful try opportunities plan are the believe type will also the that then of solution support service be information we there part This highly two-way retail, We provider and now will in we following that this as much two of market, penetrate in further side as professional very definitely you leverage of will will chosen monitor hitting Edge. for also for this other operating activation, done the this of on participants voice, AI market well what the and very lot this capabilities is this applicable and voice and many for so also

of seen and you’ve that lot CES. very about we So, I momentum, are at a the excited that think

Matt Ramsay

Thanks, the Ofer there. for all detail

some As ask were get out XXs remember well in of of front I my now to low conversation you low the the are mix that but the on Obviously, about of we and gross if I might your forward follow-up, you I and a the how mix Dror, done business so far when growth us you helps, think commentary margin. having you. wanted company are to the gross XXs, going would Thank above maybe could of of separation and margin trend, be on wonder margins those just DECT how us the give remind there businesses, how helpful. collection

Dror Levy

Thanks the Matt. for question, Sure.

so, you midpoint and already And it of look first average in were is at in XXXX. when into XXXX, quarter all, we first better the as of XX% we see where than the is saw, you

look number to already to to are closer XX%. like and is which improve we margin So, year, we something even looking throughout XX%, we we can maybe improve that believe the when this

are Overall, two factors. as indicated, there you rightly

is products of one SmartVoice, SmartHome initiatives tend presentation, that our say [ph], is is something also better where have revenues, see proportion the margin. The In and we Communications, also demonstrated of this the like from first, see increased. gross Cordless we to the I increased growth year-to-year, like this and would the in the mix and that that Unified

from as said something XX%. went took percent about you also This one is up, thing. -- We to XX margins

The growth other XXXX see revenues. we that thing in of expect is to

the or also of on once also the factors, mix in some So, the also fixed fixed; gross main to first and revenue improvement all and would the a throughout year. portion is grows, of goods have margins revenues. level margin, I expenses of the on our quarter gross and proportion two impact the are expect decreases, so the of this cost say this These we

Matt Ramsay

Thanks it. Appreciate again, guys.

Operator

ahead. question of and you, Please go line your Schmidt Lake next Thank from of Street. comes the Jaeson

line Your open. is

Jaeson Schmidt

questions. taking excess the Hey guys. really is cleared the XXXX. my that start Thanks for I inventory Communications in you now channel inventory just impacted on segment. know, to Unified I want out Do though? think

Ofer Elyakim

Hi, Jaeson, I early your on cleared fourth the last this year quarter understood if correctly, was inventory question or the or so we that whether even of XXXX, excess saw not. is

And market you category from pile dynamics, the accurately perhaps to, quite this our based was challenging inventory get outside offshore. started for on need war the them China and mentioned, originated concerns year about understanding we and year the trade calendar as with have as the so, this that goods of XXXX, of

won’t and supposed was that were end tariffs there actually concerns to in any the at was the the they day, a during signed. hit tariffs that year, deal October, be then, to future the subject these then continue of category So this and

because market during place. in we IT XXXX, this the really these it’s that today So and slowed multiple of that again, very hit retail. channel tariffs down the where has inventory, till the way also have unlike in depletion are a not you actually layers much way end-customer But a we visibility clear inventory. that into From a took reach also and spending slower category never this saw we

where belief inventories based believe of that are closer our level. inventories we lower they meaning normal of that started much we year, the We are check last much, were much, when levels in on the much and than to are

now, right during inventories execution don’t excess issue inventories this we so, year. as or And an see the for

there growth we late very year are for are believe products new the production, a was this good that we that design confidence last positioned our that a actually And mass year into of growth and in in with well in throughout production up be lot prolonged any to of now with pipeline win basically that in revenue is new now will mass ability category builds and weakness this fully that ramp XXXX. if mitigate and

sockets we way couple our that the think hopeful fuel to that year, outperform secure during to ability lucrative more next And will this are up very able I a years. in will and of that even also be our in we expectations

Jaeson Schmidt

Okay. just a That’s as very then, And follow-up. helpful.

QX? I think And last in that SmartVoice over expect you XX%. relatively Curious stable remain XXXX? was quarter, what non-smartphone in within to composition applications it was if

Ofer Elyakim

Yes.

So, towards And XX% for was it composition, the with that respect believe categories, non-smartphone allocated actually, was a the smartphone product non-smartphone. cameras year, and the roughly evenly and versus SmartVoice to XX% the quite for smartphone I XX% XXXX, entertainment. tablets,

if product. for And look TVs, would and smartphones XX% their assume the it shy the smartphones date tend model. of was launch about are that QX, These non-smartphones. on and over-the-top usually remote And controls I lifecycle to XX% the and per to I depending is at fairly short fluctuate will

will think continue - be there And so, there be I fluctuations this also year. to will

and on assume to and We year a it split non-smartphone the of value three which in be and is believe I and saw the these to would see be incorporating well over are the lot the instance we we of of of about that of tablet think you next favor a side. franchise There, side, the this more a the the as many entertainment lot a that capabilities products believe for I camera there around growth businesses grow lot that building is as lot actually side. ability pillar front will XX-XX next as in of But AI. will

audio there capability always do think be This whatever elements believe I replace with will be a smartphone that I that listening element. and will that the the And phone on inside proposition with sensing voice and beyond lot analytics that acoustics. well lot of will be there. can a a So, the audio you the driven waken analytics value to the with more will major value edge AI audio be or and on front,

let’s ultra-low lot while of screen front do new an that itself. to ability to hardware on lack edge-to-edge, value to the the ability all the of the create of The device at install ability say the smartphones, for power, supporting more and a any requirements

key we that in So believe forward. franchise going continue with our our role a will play growth SmartVoice that, to

Jaeson Schmidt

Okay. lot. Thanks a

Operator

your Thank next line from of you. go question comes And Charlie Company. the of Anderson & ahead. Please Dougherty

Charlie Anderson

taking So will be It for ones how how what’s the rest up like impacts questions. on and thanks be based sequentially touch actually maybe initiatives maybe quick. a going much percent both year-over-year? Yes, my Couple you will as there? that’s growth can on of if wonder on real on guidance the year And looks of revenue that that up? if the cordless

And QX? year. on more R&D, for in But rest that normal back order level I created of the you thank to boost for it the am just commentary levels that Thanks. the the will what go kind the of was of then, secondarily, the curious

Ofer Elyakim

Charlie. you, Thank

the latter maybe, with we question. of start part your So,

First, with respect R&D to and OpEx.

will believe this certain doing and be we R&D average. expenses that high taped mainly expenditures and we tape that take the during out basically be QX are higher commented, and this we temporarily Dror it As have quarter will than a to QX out of because

And to normal. go they are back expected to

non-recurring expenses. these the So NRE are of on The type front. more

cordless where the other of had do is. care And and basically with So your QX. to this QX takes R&D and the guidance in expenditures for OpEx

and very of trend kind that vis-à-vis is there little line we the have cordless fluctuate there. will control So, again,

and this XX%. we are in the modeling, think guys to decline that model I believe should you I XX% also

we now, level and not a in there declines of change the right So, be yes, do fluctuations. see will

with low in that’s was slow, way was artificially to appreciate of maybe year-over-year can comps. the the kind mismatch QX last you recovery As and respect

like an don’t see But I just in easy comp change QX in and the QX. also So, trend. a

increase that, are or between what type of XX-XX see think more the is that initiatives mix a should going proportion to further maybe year, growth trend that. into we than the in this I

and in QX that there that hard see see we this why I are good be kind these think of would the expected are and in momentum fluctuations these of actually to year understand backlog. to we in kind cordless good are trends quarterly very

allude forward. can I across we to model XX% the But that. is explanations to And going decline way I for our year that is continue growth have of what - margin should and XX% the that also growth healthy expansion how believe the only in right we no believe this this real trends is XXXX. kind the gross expansion. initiatives see for we And

Charlie Anderson

so well. for you And replace few others there has optimistic Great. have it cycle are my but for of for pattern Thank this Unified large you replacement potentially a color. like you on sounded then, follow-up I also the much changed you know, year Communications. win as I in wonder the in something of has of terms the in incumbents? terms guys that

lined up the past Or XX is it sort well just so happen are months. of in that things

of Thanks. the time. that business trajectory sort commentary any over on of Just

Ofer Elyakim

we trunking believe new becoming UC do and disruption UCAS SIP first service market well a the media lot providers rich in as collaboration the a for of on And and or endpoints. changes Sure, all, lot with have or the we’ve seen major as-a-service Unified of front, I Communication we of the that the there seen of as see a both solution, part the market.

A conferencing et cetera. lot in-room of new endpoints other from headsets desktop, personal solutions, elements for to and conferencing,

and today most So, this comprehensive a driving investment product us has and requirements. the I have a also in investing that and is there way of portfolio change those that is of for technologies then think like lot been some companies market that, opportunities in perhaps and market – creating all a the meets

today, a is performing that looking solution. for stop for shop the really are for vendor we one this that quality, think I And any high market high

build in and supporting what domain a video making our way we capabilities, the sure So, upgrade quality and them quality, customers better enabling doing to partners, that solutions. our new we voice in this across better is, are are

and we’ve of then a And every long of tend design seen, as happen a and patiently will And this the pay we’ve refreshes has a near hopefully that type to in tail us market for out years. been long waited of future. type once where couple lot is a –

and sockets are merits will say, to – I win we So, optimistic that capabilities we the have very the be that all would we refresh. right for believe and available

Charlie Anderson

Great. Thank you so much.

Operator

not of Raji, Instructions] Raji go mute? you. & your can next Please you check [Operator comes from line question you of Please Thank ahead. Company. line is Your are open. Needham Gill the on

Okay.

Moving question on line your of Please from ahead. ROTH Sujeeva Capital. to Desilva go next the of

Sujeeva Desilva

SmartVoice, you or hope revenue can help fastest contributors growing Hi, the ones non-smartphone expect us understand. segment can Dror. me. which three and The hear Ofer. top maybe rank two are to XXXX in you in the I Hi, that you order

Ofer Elyakim

Sujee. Hi,

I main question right? around SmartVoice think segment, contributors in the was the the

Sujeeva Desilva

yes. Outside smartphones, Right.

Ofer Elyakim

entertainment little SmartVoice a a of One in those XXXX, outside franchises. smartphones, was of of includes which was so that million, take if these And the little is TVs, shy a ahead of $XX.X million to have we of smartphone. control. about bit non- remote key bit you maybe XX% smartphones. that way XX% XX% the in around close XX%, This side $XX.X is sockets, that. Tablets Yes, three XX% are so, generated we revenues.

other have Cameras are then about we and IoT. XX%

cetera. smart other and category will speakers et The IoT that hearables, include

of we I and part XXXX, do revenues become and generating to think well. meaningful there that hearables expect at a to that more wearables look business as when we start

five and of entertainment, we the make one to hope that of cameras. smartphones, key including the it categories, And tablets kind

are are today these categories of say, we five I kind the on. focusing So, would that

high ability solutions lot to issues a we the a power provide lot of on of future consumption the and of solve considerably, drop discussed lot field capabilities elevating classifier learning targeted is ability terms same value-added battery to AI operated in and a very far the really power using and the in on while a to the design edge, quality as roadmap and ability Our of the on-chip, run to time, machine conduct battery the performance, device. the

today. your that these on very for hope that are So, think answered all I we categories of five key I each questions, Sujee. bode of well focusing should I

Sujeeva Desilva

And customers? ASP opportunity? incremental being Is upgrade keeps that Is already an in You did, layer you edge there does just the feature is the these of you in or then, that feature of Ofer. that a kind or Thank you. AI platforms? in that kind by of if a that used inclusion when as that AIB would. upgrade, And revenue really

Ofer Elyakim

Yes, content. so – all, it the of first basically increase is does it

the the were the devices raise ASP we So for it that does in.

software that versus think the processor we whenever are a there versus on can likelihood of the type software capabilities a dedicated ultra-low-power machine AP. more on the chip, running that between, then of the is I just learning higher dilemma running selection a also, a such provide, of the chip for that it just running dedicated

production today, capabilities, a running and our And today running edge - in audio the on do event we are AI chipset. these ability and we are on analytics have the detection sound to do

Sujeeva Desilva

right, Okay, thanks great. All guys.

Operator

Shusterman Thank you. ahead. of Needham. And from comes question Ari line the [Operator Please Instructions] go of your next

Ari Shusterman

Hey, guys. Good job on the quarter.

a and win So this business? go your this taking this pipeline Raji Gill. about Can business. design you year is the you seeing about business my Thank for Ari the question about is Communications Unified are you. question bit where talk And in on first

Ofer Elyakim

Ari, then question. thanks Hi for and the

we optimistic in this I business are that Unified are this outperform we for that believe to So, going Communications year. year, the

the that think, war due to XXXX shortfall see as as spending. mainly business related did demand, I well we trade the IT the experienced we to lower in

that are to UC the believe nice with shipping, be wins, well We that from additional segment. growth positioned able to are products we generate product today with the additional revenue a the we

inventory closer we when are made inventories that versus that the I ago. to the addressing year levels or of earlier, levels that significant the that at saw the excess think were just comments some believe today we normal

fronts, looking a growth this in coming ability and and that outperformance to business, well not from are mainly our at for year, revenue the ship positioned we year. believe shipping in by all hope were win this lot and last products we do they new So, are of that

don't I are just very, and year, and growth growth revenue UC that now, are they if very anticipate, we believe us able that believe even be the So, this are but in we our chances hiccups, optimistic. will revenue generate for certain will absorb we be to the which these ability to creating and right traction very the there good

Ari Shusterman

be means through are through plan in to new organic to target or further will beneficial that you a and markets I M&A whether that's if you new margin or believe that have Yes. And I targeting ask you follow-up future are to growth verticals the any verticals wanted thinking? expansion, there

Ofer Elyakim

not but Ari, hearing you well. problems – could I'm we some had sorry, we

repeat you can So, the question please?

Ari Shusterman

Okay. Yes.

So, margins? I plan and are was new that growth just if any to target to the future be would there asking markets verticals or you in beneficial that

Ofer Elyakim

believe which consumer behind IoT, that that many with the as Unified well service that provider, segments which of market the everything new includes this penetration, new we focusing also think broad SmartHome markets, Communication, today, SmartVoice, under – of business on consumer, market. array from as electronic different a professional I three industrial. are products. comes professional, I is umbrella,

think a headsets. as demonstrated that think need you to hearables a will lot mentioned, category differentiation capabilities market. And We to order will potential of and category, a I the a product around more believe saw hold glasses incorporate I CES, the this lot I be, to lot create technology growth and more in also in which at this from product of

And I well meet believe the equipped relevant technology requirements. Group that to DSP - relevant market with very is

to do processing We voice, markets the the in for low-power do years capabilities. value-added are low power, to of many of serving sensing ability

able if serve category that's that yes, look So, that And CES. products will seen to the believe you've a we us. new new at about a that for with be product as asking of category, hearables have launched product definitely several we does promising new it you're we

Operator

the Tali now Thank you. I to call like Chen. There over hand to are at further no time. back this would questions

Tali Chen

Thank you.

March Group County. will in to ROTH XX XXth DSP and in and DSP for XXnd for in quarter, interest days. March Orange back first Group on you the report in to participate look During you listening your Thank to Conference XXth Annual in forward the we

Operator

for and conclude does for participating ladies Thank today. you conference gentlemen. disconnect. you, your and That may now you Thank

DSP (DSPG) 3 Feb 202019 Q4 Earnings call transcript