Israeli DSPG reports a 70% increase in new products revenues

31 October, 2016

The revenues from new products sales reached a record of $16.6 million, colluminating to 43% of total revenues. The company continues to expand its product range

The revenues from new products sales reached a record of $16.6 million, colluminating to 43% of total revenues. The company continues to expand its product range

DSPG's HDClear chip
DSPG’s HDClear chip

Herzliya, Israel based DSPG group, a producer of multimedia chips, has finished Q3 2016 with a revenue of $38.8 million, a 10% increase compared to the same period last year. The company’s net profit amounted to $4.5 million, a 175% increase compared to a $1.7 million profit in Q3/2015.

The quarterly report reflects the continuing trend observed over the last few quarters – a decrease in the sale of DSPG’s traditional products – mainly chips for wireless phones, which are still the company’s main source of income, and an increase in the sale of new products, including chips for VoIP, mobile and smart home products. The revenues from new products grew by 70% in Q3, reaching an all-time record of $16.6, amounting to 43% of total revenues.

An increase in net profits

The sales of VoIP chips for the commercial market continued to lead in the new products category. The revenues from this field grew by 23% compared to Q3 2015, reaching a record $7.7 million. The revenues from the mobile market reached $4.6 million, 12% of the quarterly revenues. As for smart home products – IoT related sales grew by 5% compared to the q3 2015, while the revenues from router related products grew by 36% reaching $3.1 million.

The impressive increase in new products sales improved DSPG’s net profit, improving gross margins to 45%, compared to 42% in the same quarter last year.

New contracts in the VoIP and mobile markets

In the passing quarter, DSPG won another major contract with a leading player in the VoIP market. DSPG will supply the company with chips for high end conference call systems. DSPG will also supply a leading American producer with HDClear chips, these will be integrated into a new product. DSPG’s HDClear chips enable voice activation of devices in a loud environment, promising low energy usage.

The partnership with Samsung deepens

One of DSPG’s most notable achievements is its deepening cooperation with market leader Samsung. While Smasung’s flagship debacle, the Galaxy Note 7 is now infamous. The device was recalled due its self-igniting battery. Nevertheless, its release was a great achievement for DSPG, which HDClear voice processing chip was integrated into the flagship device. Samsung’s upcoming smart watch Gear S2 will include a DSPG chip as well.

Growing smart

In Q3 2016, DSPG continued to expand its activity in the smart home arena – a major new growth engine for the company. Australia’s major communication provider launched a new package which includes DSPG based cordless phones and routers. Swiss router producer ADB launched DCET chips based home routers as well, which enable HD sound pared with countless future smart hope applications.

Two other producers, Taiwanese Sercomm and German EUROtronic chose to integrate DSPG’s ULE chips in their new IoT sensors for home use. In the US, Roc Connect offers its customers ULE chip based online support service for smart home applications. The ULE chip developed by DSPG enables telecommunication providers to offer customers smart home and IoT applications using wireless frequencies, using a home router, which communicates with sensors integrated into home appliances.

2016 mobile revenues outllok: $15 million

Ofer Elyakim, CEO of DSP Group
Ofer Elyakim, CEO of DSP Group

Commenting on the results, Ofer Elyakim, CEO of DSP Group, stated, “We are very pleased with our third quarter results, in particular our achievement of 10% revenue growth year over year and a solid 340 bps improvement in non-GAAP gross margins to 45% and a 720 bps expansion in non-GAAP operating margins to 11.9%. Moreover, we are similarly delighted that our new products are well received in the marketplace and strongly contributing to our revenue and profit, with Office/VoIP and HDClear posting record results, and new product revenues achieving a record high of $16.6 million, representing an increase of 70% year over year.”

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