Q3 2019 Earnings Call
Welcome to go first quarter 2019, DSP Group earnings Conference call. Please continue some side presentation will begin shortly.
Good afternoon, ladies and gentlemen, thank you for standing by welcome to today's third quarter 2019, DSP Group earnings Conference call.
This time, all participant on listen only mode.
Presentation, followed by a question answer session after which time if you wish to ask a question you don't need to press star one on your telephone I must advise you meetings being recorded today on Tuesday. The fact of November 2019, and I would now like to have the consent <unk> costs a day Hollycon. Please go ahead.
Yes.
Thank you Ed.
Good morning, ladies and gentlemen, I'm totally chin corporate Vice President and Chief Marketing Officer at these speaker.
Welcome to <unk> third quarter 29, <unk> earnings conference call or what do they of course, we ought to go live was asked Mr. Offer you King Chief Executive Officer, and Mr. Dror Levy Chief Financial Officer before we begin I would like to remind you. The during these conference calls we wouldn't be making forward looking statements about or financial guidance for <unk>.
What their 2019 recovery from near term, we can see the unified communications product lines 2020 confidence about our sustainable revenue growth Smart voice senior revenue driver optimism about our engagement pipeline and design, we've seen Rossini should people for the remainder of 2019 and 2020.
And ramp up schedule I, suppose product, incorporating our technology and deposits people impact on revenues, we assume no obligation to update these forward looking statement.
Information about the reef can talk towards it could affect the forward looking statements. Maybe mean, please refer to the risk factor disgusting, our 20 <unk> from Kentucky and other if you see report we fight.
No I would like to turned a corner over to offer you a scheme or chief Executive officer offered the floor is yours.
Thank you thought here good morning, everyone and thank you for joining us today.
I hope that you had your opportunity to read our press release, which we distributed earlier this morning.
I would like to begin by reviewing our results for the fourth quarter, commenting on the progression of our business plan and providing context for outdoor in a short while throw will provide you with some comments on our financial results and outlook for the fourth quarter over 20 910.
We're pleased with our fourth quarter financial results that were ahead of our guidance on most financial metrics.
We ended the quarter, we thought the 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.
$18.7 million, which accounted for 60% of total revenues.
Increased by 5% when a sequential basis, while declined by 1% versus a year ago.
Growth initiatives benefited from solid results in our smart to voice product line and the recovery in our smartphone product line.
Which offset most of the expected weakness in our unified communications product line.
Moreover, these favorable mix of products drove GAAP and non-GAAP gross margins to 15% to 15.8% and 51.2% respectively at the high end of <unk>.
We're thrilled by the recent proud of cutting edge product introductions.
By our technologies.
Like tier one customers, including commercial shipments starts over high volume IP phone design win in the third quarter. When do you not thinking which is expect to contributing a meaningful way to our 2020 revenues.
<unk> communications product line as well as other noteworthy product launches by Foley and healing.
Number two record number of innovative product launches by leading tier one brands, including Gopro, Lenovo PCL and others embracing voice user interface and <unk> all the edge driven by our smart voice technology, thereby solidifying our leadership position in Threeq promising new market vertical.
<unk> entertainment cover us and tablets, which together accounted for over 70% of our smart voice revenues.
The adoption of you really in new product and market verticals, including smart home like controllers home security and industrial.
Okay.
These strategic wins, along with our exceptional pipeline of design engagements.
Solidified our success in transitioning ourselves into a rising voice and I don't see technology company. These development further increase our confidence that we are on the right truck to return to sustainable revenue growth.
Now I'd like to move onto the business update by segments, starting with Smart voice.
During the third quarter, we generated revenues of $5 million from sales of Smartpoints product.
Representing a year over year increase of 64% in a sequential decrease or 7% following a record second quarter.
We continue to expand our product reach and establish our leadership in three market segments.
Entertainment, which includes remote control set top boxes entities.
Outlets and cover US nothing aggregate accounted for over 70% of total Smartpoint segment revenues. This achievement is further demonstrated by a record pace of innovative product launches by leading tier one customers.
Yeah. The camera market, we saw a record number of new and innovative product that leverage our smart voice solution to deliver a natural robots and high quality far field and two way voice capabilities, including Gopro that launch its hero HR block with high fidelity.
Audio using three microphones and best in class.
No suppression and its cutting edge camera, the Max featuring 360 degrees audio combining inputs from six microphone using our low power DSP and our multi core machine learning I still see.
The launch of three new IP camera products like a leading IP camera OEM.
Number two we continue to enhance our leadership position in the PC tablet market and reached a record number 17 different topics model by leading consumer brand based on our smart voice technology, including the Novas launch of with Google Voice assistant enable yoga smart.
Tab and an eight smartub pcls launch or Alcatel Threed. These 10.
And a leading mobile OEM that launch another new line of tablets based on our solution.
Number three in the entertainment domain and number of new device launches, including a highly innovative high quality video communication product by leading North American platform company.
Moreover, we formed a partnership with DSP concept, a leading provider of all do development. It was an IP to deliver accurate highly reliable 360 degrees policy both controls for applications, such as TV set top boxes home gateway.
So far.
That often operate in high knows environment.
Lastly, and leading Chinese platform vendor selected our smart voice solution for its new hands free voice enabled remote control.
These wins.
Combined with the recent wins into smartphone market, including two new model by awful the Reno too and the real next.
Continue to demonstrate the depth.
Strength and diversity of our smart voice franchise.
And our ability to drive down power consumption, while raising the bar on quality and performance for edge devices.
A good example of this capability is our newly launched BB empty seven platform.
We drive high quality audio and machine learning by leveraging.
Low power Multicore architecture.
The B M. B seven is an ideal edge AI professor at the time during which more content and data are being generated by end by edge devices.
With a myriad of highly integrated sensors.
With rapidly increasing compute performance from Microwatts now they're building these edge devices, many applications and capabilities that once could have relied on a gateway remote server or cloud connection can now be performed locally.
As a result for complex analysis and a high processing on the on the edge devices are now possible with zero latency with a much higher degree of security.
And with more efficient use of available bandwidth.
We would advance processing migrating from the cloud to the edge. Our customers are taking advantage of all solutions unique combination of high performance and low power consumption and are using them as platforms upon which to develop advance.
Context aware audio and voice processing applications.
We believe that's our smartphone.
Our smart voice business will continue to be pivotal growth driver.
Covering a broad array of exciting new applications.
Moving on to the unified Communications segment.
Third quarter unified communications revenues of $10 million increased by 13% on a sequential basis, while declining 18% year over year.
Impacted by an expected near term weakness.
At the same time, we continue to strengthen our leadership position in the unified communications market and expand our reach into new customers and product categories. The few notable achievements include the commercial shipments thoughts over high volume design win in the third quarter.
Product is expected to contribute in a meaningful way to our 2020 revenues.
Following the launch its VX the 230 day IP phone based on our Dvfninety nine SLC, yielding loan sheets W. ATP and enterprise <expletive> typing multi cell system based on our Dcxeighty one in a major Chinese vendor that launch a line.
New IP phones based on our DCF associates.
The unified communications market has been negatively impacted this year by a build up of higher level of inventories in preparation of the U.S., China trade war and further exacerbated by weaker than expected demand for end product.
The spending by businesses so often during the past two quarters. However, based on feedback received from customers, our promising design pipeline and new wins, we remain confident.
We are positioned well for outperformance and revenue growth in 2020 .
Turning to the two our smart home product line.
During the third quarter, we generated smart on revenues of $3.8 million.
We're presenting a year over year increase of 1% and a sequential increase of 4%.
The smartphone product line comprises of big Julie So sees that are integrated into home gateways.
Sensors.
We're very pleased by the improving business trends and solid traction for smartphone product and expect the positive momentum to pick up in the fourth quarter.
During the quarter, we had the privilege of hosting Orange and Deutsche Telecom in a privately hosted event.
If a consumer electronics trade show in Berlin.
During which both shared their smartphone journey and the reasons for selecting you really as their primary I LT technology.
The excitement around you really was palpable.
Its potential was being more widely realize as I think when activity and voice user interface vastly converge.
We are pleased to see you release, increasing adoption and growing ecosystem as evidenced by the following wins and product launches.
Leading home automation company in Europe integrated Uli into its blinds Motors solution. This is a new product category for you Lee and is a testimony to the momentum around Julie and the need for more uli supported product.
A leading European OEM launching new Uli based flight Bob.
As part of its successful smart home offerings in Europe .
And then industrialize LTE company selected our Uli technology for its cutting edge factory automation solution that was launched during the third quarter.
We're optimistic about the design momentum and growth of this product category in 2019 and beyond on the heels of a strong traction for you will in both Europe and the U.S.
And now for an update on the cordless phone market.
Our third quarter cordless phone revenues.
I was in line with our expectations cordless revenues declined by 10% year over year to $12.3 million and accounted for 40% of total third quarter revenues.
Now for an update on our outlook for the fourth quarter.
Taking into account forecasts received from our customers and our own assessment, we expect a fourth quarter revenues to be in the range of $28 million to $30 million. The midpoint of these guidance range implies a year over year revenue growth of 11%.
Driven by solid demand for our smart voice and smartphone product.
And our expectations for year over year revenue growth in the unified communications product lines, which together more than offset the expected cordless market decline.
The midpoint of guidance also implies that growth initiatives should account for 64% to 68% of our fourth quarter revenue.
To summarize we are excited by the market response for our new products on technologies.
And believe they will solidify and pave our future success driven by solid pipeline of design wins with leading Oems, which are expected to materialize gradually during the remainder of the year and in more significant way in 2020 .
No I would like on the call over to draw our chief financial.
Officer floor is yours.
Thank you also.
I will now review the income statement for the third quarter of 2019 from top to bottom.
For each line item I would provide the U.S. GAAP results as well as equity based compensation expenses included in that line item expenses related to previous acquisition and the exchange rate differences related to a new accounting Starbucks related to long term leases.
Our revenues for the third quarter of 2019 were $31 million.
Gross margin for the quarter was 50.8%.
Gross margin for the quarter included equity based compensation expenses in the amount of point 1 million dollar.
R&D expenses were 9.2 million dollar include Nick equity based compensation expenses, the amount of point 7 million dollar.
Operating expenses for the quarter were 16 million dollar, including equity based compensation expense and the amount of 1.8 million dollar and amortization of acquired intangible assets.
Most of point $1 million.
Our net income for the quarter was point 4 million dollar.
Net income for the quarter included point 2 million dollar off exchange rate differences related to a new accounting standard related to long term leases. This extends a defensive were excluded from our GAAP results for the quarter.
Income tax benefit for the quarter was <unk> point 3 million dollar and include the tax benefit resulting from changes in deferred taxes related to intangible assets and equity based compensation in the month of point 1 million, though.
Our net income was <unk> point 5 million dollar, including equity based compensation expenses of 1.9 million dollar amortization of intangible assets off point 1 million dollar.
Thanks, Sandra differences in the amount of bought 2 million dollar and the tax benefit effect of point $1 million.
non-GAAP net income excluding these items described was 2.5 million dollar for the quarter.
GAAP diluted earnings per share for the quarter was two cents.
The negative impact of equity based compensation expenses, hoping vps was seven cents.
The negative impact of amortization of acquired intangible assets on Vps was one cents.
The negative impact of exchange our defense.
It was one cents and the positive impact for taxes on these assets was one cents.
non-GAAP diluted earnings per share excluding these items as I described was 10 cents for the quarter.
Please see the cost report on form 8-K that too far to this is here this morning.
For reconciliation non-GAAP presentation to the got presentation.
Now turning to the balance sheet.
Well, we're conscious of it but the there was the third quarter of 2019 increased to 21.6 million dollar compared to 17.1 million dollar is handled the second quarter, representing the level of 63 days a sense.
Inventory decreased from 9.2 million dollar that over second quarter to 8.7 million.
Presenting the level of 53 days.
Our cash and marketable securities.
By $1 million during the third quarter, and whereas 11 of one I get to 20.9 million dollar as of September 32019.
Our cash among the securities position during the quarter was affected by the falling.
By $2 million off cash was provided the operations.
1.4, Mena Gulf cash was used for purchase a property and equipment.
0.1 in the Gulf cash received from exercise of options by employees.
And point why don't you know dollar was increased the market value in the monetization marketable securities.
Like to provide you with our projections for the fourth quarter of 2019.
Our fourth quarter projections, including the impact effective based compensation expenses.
And acquisition related amortization expenses are as follows.
Revenues are expected to be in the range of $28 million to $30 million.
We expect our gross margin being the range of 49% and 51%.
R&D expenses are expected to be in the range of 9 million dollar to $10 million.
Operating expenses are expected to be in the range of 15.5 million dollar to 17 million dollar.
Financial income is expected to be in the range of 0.5 2.7 million dollar.
We expect a tax benefit of approximately <unk> point 2 million dollar on a non-GAAP basis.
And our shares outstanding are expected to be in the range of 24 million shares to 25 million shares.
Our fourth quarter projections include point $1 million formal possession of intangible assets.
And also includes the following Gamal focus that for equity based compensation expenses.
Cost of goods sold includes point 1 million dollar.
R&D expenses include 0.5 2.7 million dollar.
And operating expenses include 1.6 million dollar to 1.8 million.
No well, we'd like to open over the line for questions operator. Please.
Thank you, ladies and gentlemen, like to ask your question. Please press star one on your telephone and.
No.
You can cancel your request to us and the time.
Bypassing the key to once again to start one for question.
And your best requested from the line off.
Please go ahead.
Thank you very much guys.
I guess over one of the things that I wanted to ask about is the voice business, obviously had some challenges and your script you talked about some of the inventory correction things that have gone on in the market.
Maybe you could give us a little bit more.
Granular insight as to how you're seeing trends in that business from sort of a design win and pipeline point of view of products with the big customers and.
What gives the visibility that that market does improve as we go into next year, given it's a pretty big part of the BNL now thank you.
Thank you Matt.
So with respect to the voiceover IP and unified communication business line.
What we've seen.
At the beginning of the year was it the build up of the.
We have inventories in anticipation of the these trade tensions and in preparation for the ability to sell products and escaping the potential terrorists and.
I believe that the across the supply chain.
Inventory was built in order to support that.
And that's a just as a one factor in a way a limited or created the.
Limits to the demand and number two the other factor and I think we've seen it over the last two where GDP reports.
Is the slowdown in business investments and this is going to very clear to look at the Q2 in Q3, you as GDP and I can do that in Europe , the business business investment is already and negative.
So I think that both of these are kind of created like it double crunch and kind of limited the 11 because of the man reduce the level the levels of demand.
Now when we look at the fourth quarter first of all we do expect to see a return to year over year revenue growth.
This is point number one point number two.
Is that as we've updated view for the last I think two quarters, we did secure a fairly significant design win which is both high volume and high value that.
It gives us all the confidence we need that the despite the market situation.
And the lackluster demand by businesses, we are well positioned for growth next year.
And as you know the this is a fairly significant design, probably one of the largest if not the largest in this industry.
So.
This is so roughly when you think about opportunity to market, we are growing by increasing our market share.
In in the is the unified communication business.
In a way, we can grow and out perform kind of the market the market growth or decline.
Got it now that that's really helpful color there.
As my follow up question I wanted to talk about the smartphone are the smart voice business.
And good to see network.
Looking at kind of progress there I wanted to talk if you look out over over the next.
The 24 months you.
Deal like that business growth is gonna be driven by sort of smartphone and smart watch type applications with some of the bigger customers or is this.
Business, that's gonna likely be driven and the growth be driven by a more diverse set of sort of non concentrated.
Thank you.
Sure. Thanks, not so with respect to our smart voice business and.
What we have been doing over the last couple of years is trying to build a much more diversified.
Business, whereby we diversified both from the customer standpoint, as well as from the category standpoint.
We believe that voices user interface and the you know the processing goals of audio and acoustic on the edge is not just a matter of the single device category, let it be smartphone or oral wearable, it's actually broad based and we see voices user interface and today.
A lot of kind of the acoustic classifies entering into almost any type of consumer electronic category from appliances to kind of smart devices, a pretty much broad base and I think that when we're looking that kind of where we deliver value and the progress that we sold we would like to.
To see ourselves as that as a vendor as the merchant silicon vendors that can address all of these opportunities and we see a lot of opportunities as you can see during this past year. We've built the acquired the franchise in a three major markets. One is the camera side. Another one is in the.
Tablet PC market and the third is in the entertainment market. You know these markets were fairly small a.
Revenue drivers for us a in 2018 and there this year as you can see from the third quarter. It's 70 over 70% of the total revenue and in the second quarter. They comprise around 60%. So I would I would tend to believe that the you know our growth can.
Renewed growth in this market, we've come from a diversity of different products and for sure yes smartphone as.
It's Ron.
A lot of volume.
We still be an important category as well as wearables about that I believe that a we're also going to continue and diversify into many additional it product category for instance, I would say that's one of the is very clear if products that they are going to become another vertical is.
Here are the loyalty the headset market the all the true wireless cyber threats as that we're seeing launch in the market. All of these are also going to embrace a lot of voice user interface and the you know acoustic detection and a on the edge low things that I believe DSP group could be a leading.
Vendor for and this is another product category that I believe it will be addressing the next couple of years by us with our new product portfolio.
Thank you very much ofer I'll get back into queue I appreciate it.
Thank you.
Next question is from the line.
Please go ahead.
Thank you and congrats on the strength and growth.
Okay.
Question on the.
The gross margin profile of the company going forward.
It was the with the gross margins.
Starting to kind of inflect and moving higher as the growth drivers represent about 60% of revenue.
Are there more kind of drivers to the margins going into 2020.
How do we think about gross margins.
The next.
One to two years.
Any question any thoughts on kind of.
Other drivers to margins now that we have about 60% is growth versus 40% as legacy.
Yes.
Thanks, Roger yet thanks for the question about the gross margin so as you've seen a there has been a very a direct correlation between the percentage.
As a growth initiatives as percent of our revenues and the gross margin trend line and the you can see it into our infographics and in our Investor presentation, and we've been able to drive gross margins from a you know the mid Thirty's now too.
50% range.
And I think that a lot of it had to do.
With the fact that the we have presented and introduce new valuable technologies to the market.
And with those we were able to drive our gross margins higher and the today even today when we're looking at the mix of the 40% correlate 60% growth initiative still cordless is running at much lower gross margins compared to our corporate average and the growth initiatives are running higher.
So from that perspective, yes, as the trend line continues and as a our revenues will be most strongly skewed towards growth initiatives. We believe there is room for gross margin expansion now there are two additional things that you want to bear in mind. When you think about gross margins one is revenue growth.
Both in our cost of goods and not all the cost are completely variable. There are some six components. So as the revenue growth becomes a driver in RPL, our gross margins will improve as a result, because the six part of the cost of goods are not going to change bye bye bye that much.
And so there are factor on the overall cost of goods will be lower and margins are going higher.
And the third part is and I think that you were also able to see that day.
In our.
For its over over the past here.
We have will start gradually moving into a much more kind a higher higher content higher value.
Market segment. So in all of the markets that we then third we started from a very from the fairly low end the place where you earn the least safety and it's kind of the most competitive area.
And gradually bye.
Demonstrating our capabilities by driving performance and quality, we're gradually moving higher too much higher or more.
Lucrative.
Product segments, where where we can we can earn more for the technology that we bring and the capabilities of voice engines are our low power our AI on the edge accelerate or as our noise cancellation all of the all of the things and the attributes the DSPG is bringing to the table are today, earning.
Such higher a price a in the into sockets as we're competing for.
Yes, Thats very helpful. Thank you and in terms of your competitive positioning in smart voice.
Clearly.
Voice processing noise cancellation is starting to.
Pick up in these devices.
Wanted to get your sense in terms of the competitive dynamics and on the smartphone side.
And other opportunities in the wireless wireline and untethered.
Your phone market.
Where we are seeing a lot of traction with for instance, Apple Airport grows.
For your noise cancellation or you are any of your voice processing capability in that market.
Yeah.
Thanks for that so with respect to our smart voice business first of all and I think that you've seen it.
Our in our comments a during the last three quarters, we see a lot of convergence. So whatever is being done in a delivering excellent quality low power voice user interface with a lot of.
Excellent fulfill capabilities is not only a matter of kind of the consumer product. It's basically much more broad based since you. Finally today in enterprise brought our findings in the industrial product to find it everywhere and so you know our smart home franchisees.
Becoming more successful because voices are interfaces.
In demand and together with usually you get kind of the winning combination.
In the a unified communication markets are.
Smart voice products are being introduced and embrace.
And as well as in the kind of general kind of consumer product market as you as you.
Seen or heard from our from our.
Comments earlier, so we believe that.
We are well positioned in these domain both from the fact that we have the ability to converge. This.
Technology with many other technologies that we have in house.
This is the DNA that.
So you know we came from and our ability to do that across multi segment multi cast is proven so when when I think about kind of the future and I think about smartphones and I think about is the headset market I see a great opportunity for for a company like DSPG to continue and May.
Excellent progress and.
And deliver a lot of innovation and enable our customers to to provide a much better higher quality products.
Great. Thank you very much.
Thanks, Ken.
Your next question is from the line of Charlie Anderson. Please go ahead.
Yes, thanks for taking my questions and congrats on the great results.
I wanted to start on usually wonder if you maybe just update us on the North American when that you had described to maybe a few calls ago kind of where that stands in terms of ramp.
Then just generally the pipeline for for you all the opportunities than they've got a follow up.
Yeah, absolutely. Thank you Charlie so with respect to.
The U.S. service provider opportunity.
What we have updated you in the previous quarter in second quarter was that we have the a one is fairly strategic and we believe very important win in the U.S. as we started.
Focusing on marketing efforts say on the U.S. market.
And we believe that the service provider represents for US It is very strong and good opportunity to bring the technology it to get it much more widely embraced in the market. Now is this design and then this is good engagement is ongoing we believe that the.
It is on track to launch in the first half of 2020 .
And we have I think is very good expectations from kind of the same.
The business momentum that we can generate the is from that the we we feel that the you know the customer.
Feels very highly about the decision to go with usually on the expense of some other.
Technologies that were under consideration and we believe the fact that the voice user interface and voice communication is becoming a very important part of driving smart home and Smart security services, you will definitely has a great room and place a to grow and.
Getting bracelet by wider.
Array of devices service providers et cetera, et cetera. So we feel very strongly feel we're on track we're supposed to start seeing results in the first half.
Great and then for my follow up.
Turning curious on use of cash I don't know if I caught if there wasn't a share buy back on the quarter, but maybe just update us on capital allocation use of cash.
As it relates to buyback versus M&A, you may be looking at any update there would be helpful. Thanks.
Yes, so for buybacks, we did not go any buybacks during this quarter lots into when we our the latest spend that we initiated was about a year ago and we'll have initiated whether prices are much lower sola currently around the plan is running a way below the threshold is actually well below the current share price. So we're not buying back based on.
Tenbfive plan that we have.
This is situation for that we did then the quarter as I said with a positive.
Cash flow from operations as we expect the this will continue throughout the years overall for Q4, we also expect generate the cash flow from operations and to increase.
At the level of cash and securities.
The company.
As we work with missions for there's nothing that's really a quarter sabadell now but.
Certainly this is something that we are looking into two are open now that there is also said the business is more stable aware now.
Looking into additional ways to grow the business and this is certainly something that is also on our lifetime.
Great. Thanks, so much.
Thank you.
Our next question is from the line of Suji Desilva. Please go ahead.
Hi, all for hydro.
Just real quick question on the fourth quarter guidance at the decline sequentially can you talk about how the four segments.
Progress roughly in that decline.
Yes.
Hi, Fujian.
So.
With respect of fourth quarter with regards so.
Say that kind of we're guiding for 28 $230 million, which at the midpoint suggest the in 11% year over year growth.
Or 29 at the midpoint, which is a.
Lower than.
Sequentially lower than to 31 for the third quarter.
We look at kind of the mix, we were looking at about the generating about tours of the revenues from the growth initiatives.
And we're seeing today I would say fairly kind of strong momentum in both the smart home and the smart voice.
Product lines.
We're expecting to see a recovery a year over year recovery in the unified Communications segment, which is I believe that could indication even though when you look at the numbers last year, they kind of they did suffer from the buildup of inventory, but still you know we're seeing a pickup in Q4 year over.
Here.
So in a way.
All kind of three.
Segments are expected to grow some modestly some more significantly.
Anacortes is expected to continue and decline in the fourth quarter and.
This is kind of the mix and kind of the trend lines.
That's a full Jay just to add on this one so if you will take the midpoint of our guidance for the.
Our growth initiatives, so you'll see that most or all of the decline between Q3, two Q4 is coming from Goldman Sachs.
So the total new product those initiatives are actually slightly growing and cordless is declining between the third to fourth.
Great. That's helpful color for sure and then.
The.
Smart voice segment.
What is the kind of mix of smartphone not non smartphone you expect longer term as you seem to diversify your and do you have the kind of employee and channel infrastructure in place to support the many categories you seem to be.
Going into versus having kind of dealt with large smartphone customers in the past.
Yes, thanks to do so with respect to the smart voice business and we ended this quarter with a with a mix of about 70% of the revenues came from non smartphone products and 30% less than 30% came from smartphone product we believe that.
No the scanner.
And.
70, 525 or are these type of three quarter, one quarter and skewed towards the non smartphone is going to probably the right way to look at US going forward. Now you are absolutely right that when we're looking at such a mix. It does mean that a lot of the.
Products and the designs that were going to engage with are not going to be as large on a per product basis as a win as a major when in the smartphone market and this is absolutely true. However, you know what do we have done a with respect to at the last couple of years as we prepare ourselves for these diversification and.
Actually drove it.
We have built the you know the ability to support a large number of product using very common SDK solutions that we're providing to our customers were also supported by a pretty significant.
Ecosystem of partners from design houses models and offers the value added resellers et cetera that are a significantly strengthening and enable us to really leverage the technology that we bring and deliver over a much broader based a customer base.
So I believe that we are well.
We continue and grow the business and despite the fact that you know about a three quarters all the business will come from I would say less volatiles part of the market.
That in a way kind of it can there you know help us im a absorb a lot of the volatility that is happening in the other force in the other quarter that is going to much more volatiles neutral and where you do need to be in the contest. The every other quarter to a business that is.
Managed in a more kind of solid manner and in a more stable we hope the in trend line.
Okay, and then last quick question on smartphone device sorry percent is non smartphone is any one of the three categories camera tablet and entertainment dominating that or is it roughly spread out and is for tablet notebook PC and opportunities that will be a large unit Tam.
Thanks.
Yes. Thanks, So just so I think this phenomenal the categories dominate and.
70% the over over larger than 30%. So I would say that you can think about it is split equally between these categories and then you put another other category for smart speakers and.
Okay.
Which probably is about kind of 10% of the over 70. So you can say about 20% for each of these a categories.
Cameras entertainment and tablets now when we're looking at that.
Tablet PC markets definitely we believe that there is a very good potential for us to continue and expand in this product category.
We believe that it far field voice is going to become a mandatory feature it from a perspective of voice user interface in this product line.
Just where do you think we when you're thinking about the tablet in the voice user interface category at the notion is that you do not consider that as a personal device, but much more as the center as domain controller that is driving smart security the smart home.
You know all the kind of the old you play back in your home and this is the place where you're in a way on one hand.
Stating the command, but on the other hand, a you know using the touch screen to see exactly what what is being what is going on and in a way kind of having to user interfaces in front of view and in order to do that you need the capability to drive it's from a kind of much more of the fall field rather than Aneel. Phil. So we believe that there will be a fly.
To kind of much higher quality and demand for more advanced features in these domain and this will create and it's already creating a.
Fairly a good opportunities for us to kind of penetrate deeper into the kind of the the the PC tablet market or as we define in Canada, the netbook Pcs.
Thanks, guys.
Thank you.
Once again, ladies and gentlemen.
And one if you have our next question.
And your next question.
The line of Jason Smith. Please go ahead.
Jason Sir your line is open please ask your question.
Okay.
Our next caller has actually disconnect.
Once again to the star one for any questions.
And it appears to have no further questions at this time.
So as a final reminder, ladies and gentlemen.
And one if you like to ask a question.
There are now filed everquest at this time please continue.
Thanks, operator.
During the fourth quarter DSP group will participate in rose new industry out in technology day on November 13 in New York.
At this point I would like to close the color. Thank you for anything in for your interest in DC Group. We look forward to report back to you in 19. Thanks.
Thank you that concludes the presentation today. Thank you for participating you may disconnect.