INVESTOR PRESENTATION APRIL 2017

Transcription

1 INVESTOR PRESENTATION APRIL 217

2 Forward Looking Statements This presentation contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if proven incorrect, could cause DSP Group's results and projections to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact may be deemed forward-looking statements, including statements regarding market expansion of products for new applications and our ability to capture a higher share of those markets, market expansion in VoIP, HD Voice, home gateway and ULE markets, resumption of growth in home gateway revenues starting in 217, long term goal of 15% operating margins, and financial guidance for the second quarter of 217. We do not endorse the financial forecasts of any analysts or comment on them if they differ from our own projections. Nothing in this presentation should be construed as a profit forecast. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding performance. Information, opinions, and estimates contained in this presentation reflect a judgment at its original date of publication by DSP Group and are subject to change without notice. We assume no obligation to update any forward-looking statements or financial guidance. Risks and uncertainties that could cause actual results to differ materially include: delays in the introduction of new products; slower than expected change in the nature of the residential communications domain; our ability to develop and produce new products at competitive costs and in a timely manner, including VoIP, HD Voice, ULE and home gateway products; the possibility that such products may fail to achieve broad market acceptance; the anticipated annual decline of the secular telephony market and our ability to offset the decline with revenues from new products; our ability to manage costs; and assumptions pertaining to the level of demand for products that incorporate our technologies. For more information regarding the risks and uncertainties that could cause actual results and projections to differ, as well as risks relating to our business in general, see the discussion in the "Risk Factors" section of our Annual Report on Form 1-K for fiscal year 216 and other reports that DSP Group has filed with the U.S. Securities and Exchange Commission. This investor presentation is dated April 27 th,

3 A Leader in Chipset Solutions for Voice & Short Range Wireless Communications MARKET POSITION 2B Units potential For Voice Activated devices 48% Growth in New products in 216 >7% Share in cordless phone SoCs Targeting #1 Position in VoIP SoCs market FINANCIAL HIGHLIGHTS $119.8M Net cash balance $39.1M in operating cash flows in the last three fiscal years 44.2% Non-GAAP Gross Margins in Q % Total revenue share of new products in Q

4 DSP Group Product Line Segments Home Office Mobile Cordless Phones Gateways IoT Voice Over IP (VoIP) HDClear 4

5 25 Years of Leadership in Voice Processing VoIP >2 Billion Voice Processors Shipped to Date Strong Expertise in Voice Processing Algorithms Cordless Phones Mobile Devices IoT 5

6 New Products Growth Drives Gross Margin Expansion 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 12% 15% 88% 85% 21% 79% 28% 72% 43% 4% 57% 6% Q1 5% 45% 4% 35% 3% 25% 2% 15% 1% 5% % 37% 12% 39% 4% 41% 15% 21% 28% 44% 44% 43% 4% Q1 Cordless New Products Gross Margins New Products 6

7 Enterprise VoIP Targeting Market Leadership SAM estimated at $15-$2 million. Focusing on tier 1 s, that dominate the market with > 6% share Full SoC portfolio to address the majority of the market categories #1 market position in new VoIP design wins Market Size - IP Desktop Phone Units Shipment (M) DSP Group s VoIP Revenues (M$)

8 Mobile Enabling a Voice Activated World Enabling Always-On for voice activated world. Capabilities include very low power voice processor, noise cancellation, AEC, Speech recognition DSPG solution; Ideally suited for mobile, smart speakers, wearables, IoT and home electronics Announced three design wins for nonsmartphone OEM Shipments begins in Q217 for non-smartphone applications Smart Phone and Wearable Market Size (M Units) E 218E Smartphones Wearables DSP Group Mobile Revenues (M $)

9 Home Gateways Users Upgrading to HD Voice HD Voice represents a significant growth opportunity as carriers worldwide deploy the feature DECT integration into the HGW enables HD voice at home and IoT hub Growth expected to resume in 217 with new telco product cycle 1 5 Market Size (M Units) E Broadband GWs with integrated VoIP services DECT Enabled GWs DSP Group Home Gateway Revenues (M $)

10 DECT ULE Addressing the World of IoT 1 IoT Market Size Units (MM) High level of Security Ultra-low power Superior range 5 Interferencefree band Voice Expertise Video support E 218E 8 DSP Group IoT Revenues (M $)

11 Cordless Telephony Mature Business with Solid Cash Flows Leading market share with >7% of the DECT market Secular market is declining 1-15% per year. Solid cash flows funding new product initiatives Potential opportunity to include DECT telephony in smart assistant devices Cordless Telephony Systems Market Size (M Units) DSP Group Cordless Revenues (M $)

12 Financial Highlights

13 DSP Group s Long-term Business Goals 216 Long term goals Office Mobile Office 6% Operating margin Home Potential leverage on EPS X7 Home 15% Operating margin Office Home Mobile 13

14 Focused on Profitability $M $ $7.3 $8. $8.5 $7.8 $8.8 $9.8 $1.4 $ Net income EBITDA Operating Cash flow

15 Q2 217 Quarterly Guidance (Non GAAP) Revenues $3M-$32M Gross Margins 44%-45% OpEx $13.M-$14.M EPS $.1-$.3 15

16 Key Metrics: Free cash Flow & Share Buyback Free Cash Flows and Buyback Last Four Years (US $) (in ) YTD Total Free Cash Flows (*) $12.1M $9.M $9.9M $14.4M ($4.5M) $4.9M Share Buyback $3.4M $12.8M $13.2M $1.7M $1.3M $41.4M * Cash flows from operations minus Capex Total Cash Position as of March 31 st, 217 (US $) $119.8M 16

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