DSPG forecast $37 million revenues in Q2
1 May, 2016
The revenues from its voice enhancement processor - which has been integrated in Samsung’s Gear S2 Smartwatch - are expected to amount to $4-5 million in Q2 2016
The revenues from its voice enhancement processor – which has been integrated in Samsung’s Gear S2 Smartwatch – are expected to amount to $4-5 million in Q2 2016
DSPG Group announced 27% decline in Q2 revenues compared to the same quarter last year, to $27.7 million. This decline is attributed to the current weakness in the cordless telephony market’ its main source of income. The company has also been heavily affected by the much discussed slump in mobile growth. Nevertheless, the sales of components for VoIP and Smart Home markets increased by 43% in Q1 2016, to $12.8.
First quarter of substantial mobile revenues
The sales of VoIP chipsets for office telecommunications continued to lead the new products category, and the revenues in this field grew by 38% in Q1 2016 to $5.1 million. Mobile market sales generated $3.9 million, 14% of total Q1 2016 revenues – this figure represents the first substantial contribution of this sector to DSPG’s revenues. The revenues from IoT components grew by 127% compared to Q1 2015. Router revenues on the other hand declined by 44% to $2.7 million.
Voice activation of Smartphones and wearable devices
DSPG unveiled the DBMD4 voice processor in the Mobile World Congress held last February in Barcelona, intended for smartphones, wearable and IoT devices. The DBMD4 is a miniature processor smaller than 2 mm, which enables device activation and operation via voice commands while maintaining extremely low power consumption and high performance using pre-process algorithms such as noise reduction, beam-forming and Acoustic Echo Cancelling (AEC). One of the processors compelling features is that it enables the voice activation of devices in “sleep mode”.
During this quarter, DSPG has received a contract to supply a leading Chinese Smartphone producer with VoIP processors. DSPG’s VoIP processor enables HD quality calls, improved graphics, and high security level and background noise reduction in conference calls.
In the IoT arena – DSPG has received a contract to supply Swisscom, a major European mobile operator, with DECT/ULE processors. These will enable the operator to offer HD quality calls as well as IoT applications using home telecommunication Wi-Fi frequency routers.
Growth in new products, recovery in the Mobile
DSPG CEO Ofer Elyakim said: “We achieved record revenues from new products initiatives of $12.8 million, an increase of 43% year-over-year, propelled by HDClear. However, this progress was more than offset by softer demand for cordless products, where revenues declined 49% year-over-year. This decline was expected, but was in excess of the secular decline trend of 10%-15%. The difference is primarily attributable to an inventory correction cycle, which should be exhausted in the second quarter.
“We expect momentum in our new products to continue during the second quarter and beyond supported by further market penetration for HDClear, share gains in VoIP and significant design wins with major global telecom providers for IoT and home gateways.
“The combination of new product successes and our anticipation for gradual improvement in the cordless phone market, starting in the second quarter, has DSP Group well-positioned to achieve solid sequential revenue growth. We believe that continued growth of our new products will be the key to driving overall growth and enhancing profitability going forward.”
In a conference call held by DSPG following the publishing of the quarterly report, DSPG’s Corporate Vice President of Finance and Chief Financial Officer shared the company’s projections for Q2 2016. DSPG expects revenues of $35-37 million: gross profit is projected to amount to 42-45% of turnover: operational expenditures are, excluding accounting expenses of $1.5 are expected to amount to $13-15 million.