DSP Group Inc. (NASDAQ:DSPG) Q3 2019 Earnings Conference Call - Final Transcript

Nov 05, 2019 • 08:30 am ET


DSP Group Inc. (NASDAQ:DSPG) Q3 2019 Earnings Conference Call - Final Transcript


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Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to today's Third Quarter 2019 DSP Group Earnings Conference Call. At this time, all participants are in listen-only mode. [Operator Instructions]. I must also advise you meeting is being recorded today, on Tuesday, the 5th of November, 2019.

And I would now like to hand the conference over to your host today, Tali Chen. Please go ahead.

Tali Chen

Thank you. Ella. Good morning, ladies and gentlemen I'm Tali Chen, Corporate Vice President and Chief Marketing Officer at DSP Group. Welcome to our third quarter 2019 earnings conference call. On today's call, we also have with us Mr. Ofer Elyakim, Chief Executive Officer; and Mr. Dror Levy, Chief Financial Officer.

Before we begin, I would like to remind you that during this conference call, we will be making forward-looking statements about our financial guidance for the fourth quarter of 2019, recovery from near term weakness in the Unified Communications product line in 2020, confidence about our sustainable revenue growth, SmartVoice being the revenue driver, optimism about our engagement pipeline and design wins and growth initiatives for the remainder of 2019 and 2020, and ramp up schedules of products incorporating our technologies and the positive impact on revenues.

We assume no obligation to update these forward-looking statements. For more information about the risks and factors that could affect the forward-looking statement made herein, please refer to the risk factors discussed in our 2018 Form 10-K and other SEC reports we have filed.

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

Ofer Elyakim

Thank you, Tali. Good morning everyone and thank you for joining us today. I hope that you had the opportunity to read our press release, which we distributed earlier this morning. I would like to begin by reviewing our results for the third quarter, commenting on the progression of our business plan, and providing context for our outlook. In a short while, Dror will provide you with detailed comments on our financial results and outlook for the fourth quarter of 2019.

We are pleased with our third quarter financial results that were ahead of our guidance on most financial metrics. We ended the quarter with total revenues of $31 million, representing an increase of 7% on a sequential basis and a decrease of 5% year-over-year. Revenues from growth initiatives of $18.7 million, which accounted for 60% of total revenues, increased by 5% on a sequential basis, while declined by 1% versus a year ago. Growth initiatives benefited from solid results in our SmartVoice product line and a recovery in our SmartHome product line, which offset most of the expected weakness in our Unified Communications product line. Moreover, this favorable mix of products drove GAAP and non-GAAP gross margins to 50.8% and 51.2% respectively at the high end of guidance.

We're thrilled by the recent round of cutting-edge product introductions, powered by our technologies by Tier 1 customers, including commercial