Q3 2020 DSP Group Inc Earnings Call
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Maybe send her. No, ma'am. Thank you for standing by and welcome to the Q3 2020 BST group earnings conference call at this time. We are in a listen-only mode after this speaker presentation. There will be a question-and-answer session and to ask a question during the Q&A session. You will need the press star and one in your telephone. I must advise you said conference is being recorded today, and I like to have the conference over the receiver today. Thank you, and please go ahead. Thank you Maria. Good morning. Ladies and gentlemen, I'm Kelly Chen corporate vice president and chief business officer DSP group Welcome to our third quarter 2020 earnings conference call on today's Call Log. Please ask mr. Chief executive officer and mr. Chief Financial Officer before we begin I would like to remind you that during this conference call. We will be making forward-looking.
In statements including our financial guidance for the fourth quarter of 2020 recovery from near-term weakness in the unified Communications product line as early of the fourth quarter and internet off beer optimism about our business outlook for smart voice and smart home believe that the research of of demand for cordless product will accelerate in the fourth quarter smart voice being. Ruth driver of the Museum's at the ADT launch will take the test for you at least drop market adoption in the US and the security industry and optimism that our products and technologies will play a pivotal role in The Accelerated voice-centric Market Trend which positions the company for sustainable long-term works. We assume no obligation to update these forward-looking statements or information about the risks and factors that could affect the for statement maybe ring. Please refer to the risk factors discussed in our 2019 form 10-K another sec report.
Now I would like to turn the call over to offer a Lackey our chief executive officer offered the the freezer.
Thank you, darling. Good morning everyone and thank you for joining us. I hope that you have the opportunity to read our press release which we distributed earlier today. 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 are also in a short while draw will provide you with detailed comments when our financial results and the outlook for the fourth quarter or third quarter results were impacted from short-term business destruction as a result of the condemning while highlighting the Strategic importance and long-term potential for our audio voice and connectivity Technologies. We ended the quarter with revenues of twenty six million dollars meeting the midpoint of our guidance range revenues declined by 16% year-over-year and by
8% sequentially
We're disappointed by the stop line results, which was negatively impacted by an expected yet acute decline in our unified Communications Revenue depend Emma continues to impact the global economy and many aspects of our everyday life.
We're gradually adjusting for a living working studying and other routine to coexist with a pandemic consequently. We're seeing positive sign.
Which which are advantages to our business.
That arise from the following voice Centric Trends. The first one is a surgeon voice calls.
Due to the ongoing social distancing restrictions voice Communications have become more Central Park Associates surveyed leading telecommunications providers office and reported that the from home lifestyle has driven dramatic Optics invoice calling in all forms, according to the report voices literally became a Lifeline so many with call volume and duration as much as tripling versus the year-ago. The second trend is voice user interface evolvement into a must have feature potential health hazard associated with touching common surfaces of accelerated the adoption of voice as the user interface for a broad array of products. And the third is the gradual return to the office businesses are gradually transitioning to Hybrid models that combined
Virtual and face-to-face interaction this shift should stimulate investments in both on-premise and remote work infrastructures.
Our customers are aligning their product planning to capitalize on these voice-centric Trends and we are seeing some near-term benefits already evidence. No third quarter financials associated with strong demand for smart voice and cordless products while industry-wide supply chain constraints are placing certain limitations on our product deliveries were experiencing improving and market demand across our different segments propelled by these authors. We send your friends and we expect our fourth quarter revenues to grow both sequentially and year-over-year.
We're excited about the momentum in our business as our products and Technologies continue to play a pivotal role.
Capitalizing on accelerating voice-centric market trends we believe that our leadership invoice a i i o t and hearing Bells following the acquisition in a successful integration of sonship positions as well for sustainable long-term growth now I'd like to move on to the business update by segment.
starting
Smart voice during the third quarter we generated record high revenues of 7.2 million dollars from sales of smart voice products representing a year-over-year increase of 45% in a sequential increase of 82% This achievement is underscored by the month Milestone of shipping the 100 million smart voice and demonstrates the importance that voice user interface plays in a wide range of products offered by Leading over Ms. Including Amazon, Facebook Google GoPro Lenovo Leviton Logitech Samsung and many others.
The record smart Voice results this quarter were driven by an accelerated demand for devices incorporate incorporating voice user interface as consumer and shifted in favor of devices that Embrace such interface during the quarter. We saw solid demand for the following applications. The first one is tablets or we've seen a surge in demand for this product category largely driven by work from home and remote learning which propelled the need for smart screens. We expect them trained to continue as the pandemic lingers interests in view. I and voice call enhancement in the PC and tablet is robust and during this quarter Lenovo in a leading mobile OEM launch the number of new tablet products based on our smart voice solution leveraging are offering as a leading supplier for voice use birth.
To face and Edge AI solution the second one is cameras COVID-19 has prompted an increase in contactless home deliveries Thursday as well as increased demand for do-it-yourself home security as a result more homeowners have installed smart cameras to take advantage of advanced on site and cloud-based capabilities in particular. We've seen growing interest in our two ways voice and view. I solutions for cameras to support use cases such as front page story and dialogue mode during this quarter a leading security camera brand launched two new cameras with our smart voice technology in addition GoPro 609 action camera based on our smart voice solution. The 3rd is horrible.
The work from home environment drove increased demand for hearable products such as true wireless stereo and other types of headphones Jack recently entered into this rapidly growing Market through the acquisition of sound chip and today are offering includes the industry's leading low-power voice expertise with wireless capabilities and best-in-class digital hybrid NC along with the acoustic system level design to drive best-in-class voice call Quality of Life playback and ambient noise cancellation in summary. We are excited about the growth and momentum of our smartphones business on the hills of the above number of the treatments coupled with accelerated voice user interface adoption and the growing Traction in the Hairball Market, we believe that our smartphones business will continue to be a pivot table.
growth driver
Enabling the broad array of new Innovative applications now moving onto the unified Communications segment third-quarter unified Communications results were disappointing wage has really impacted by an expected shortfall in demand for our unified Communications associate.
As the workforce transitions to work from home revenues of two point six million dollars decreased by 75% on a sequential basis and by 74% year-over-year, however, based on customer focus and channel checks. We are seeing indications that the excess inventory was mostly depleted and the and the supply-demand situation rebounded faster than anticipated with improved demand from businesses and government institutions moreover of businesses around the globe are gradually returning to the office and adopted an adopting a hybrid model that includes both on-premise and remote work this strength to stimulate budget to shift towards renewed investments in on Prime infrastructure leading to a gradual recovery in this segment starting already in the home.
With water and into the new year despite the challenging business situation our customers continue to launch Innovative solution designed for presume Ur small businesses and remote work users leveraging our Technologies notable achievement included a tier-one OEM that launched its top-of-the-line IP phone based on a PDF 101 chipset for enhanced communication be linked launch a professional handset. And this is the first product to integrate the new highly Advanced package plus audio codec based on our solution and the third is Panasonic that launched the first sixteen line sixteen handset single-celled a solution based on our life.
Depending me cuz also created opportunities for the unified communication industry newer players as well as the markets incumbents are in the process of offering purpose-built designed to fit with the hybrid working model dsb group is at the Forefront of addressing these needs and is well-positioned to intersect with his mom transition to our best-in-class product offering for unified communication and point as well as portable terminals headsets and a eye on the edge in summer. Despite the acute short-term weakness. We experience in the third quarter where we remain confident about the recovery in the segment supported by a strong Market position in a solid engagement pipeline turning for smart home product line during the third quarter. We generated smartphone revenues of three point seven million dollars off.
presenting a year-over-year decrease of 3% in a sequel
Should be Crystal 14%
These declines were mainly related to Temporary delays in new product introduction mostly associated with the pandemic nevertheless. We are bullish about the solid construction for smart home product and expect the positive momentum to pick up in the fourth quarter due to the pandemic people across the globe the globe are communicating through voice calls from home at unprecedented numbers and duration deprived from direct physical presence household find that voice College the universal need for communication and social connection. All leading service providers have reported spikes in voice call traffic on mobile home fixed-line networks consequently service providers are optimizing their infrastructure to deal.
With the growth in voice calls the integration of dig into home gateways and enables higher quality of service portability more reliable Communications and a full home coverage while offloading the Wi-Fi networks. Notably during the third quarter. Your Telecom launch its speed preferred plus a premium Gateway for Wi-Fi networks. Integrating are actually assisting
We're also pleased to see you release increasing adoption and growing ecosystem as evidenced by the commercial launch of att's you will eBay's do it off security system. The Blue by ADT system is available online on adt's webshop and at Best Buy and includes a line of you know, the answers and usually based Hub usually offers unmatched benefits to the security industry. And we believe that these launch will pave the paths for you has brought me that option in the US generally and the security industry more specifically moreover during the quarter. We joined the connected home override team or cheap in English. Do you speak group will contribute its expertise to support this project that was founded by Amazon Apple Google and the zigbee alliance with the goal of developing a royalty-free wage.
IP standard that will improve interoperability among smart-home protocols
We're up the Mystic about the designing momentum and growth of this product category in the in the fourth quarter and Beyond based on strong traction of deck Julie engagements in both Europe and the US and now to an update on the caller's phone market during the third quarter. We experienced solid demand for all this product that increased by 2% year-over-year and by 26% on a sequential basis cordless accounted for 48% of total third-quarter revenues as social distancing work from home remote learning and other outgrowth of the pandemic simulated a Resurgence in voice traffic this Rising Tide Is Lifting all Boats off and drive and accelerate the demand for all this product these be group as the market leader is benefiting from The increased demand for quality product and looking for job.
Could we expect the trend?
To accelerate and now to our outlook for the fourth quarter.
In life of the improved and market demand across our different businesses while taking into account some setbacks and risk related to an industry-wide supply chain construction. We expect our fourth quarter revenues to be in the range of $29 to Thirty 1 million dollars the midpoint implies Revenue growth both year-over-year and sequentially moreover. We expect that our business has to account for $54 to 58% or fourth quarter revenues in summer.
We're going through a period of Rapid change and unprecedented adoption of new technology that highlights the Strategic importance and long-term potential DSP groups. Audio voice and connectivity Technologies. We're encouraged by the improving momentum and business trends.
Particularly, the move towards a voice Centric future. We are confident that our leadership invoice Solutions position as well for sustainable long-term Revenue growth now, I would like to turn the call over to draw or Chief Financial Officer draw the floor is yours.
Thank you all so I will always use the income statement for the 4th for the third quarter 2020 from top to bottom for each line item and we'll provide the US gaap results as well with your base compensation expenses included in that line item the expenses related to the sound chip and other previous Acquisitions or reverence for the third quarter of 2020 was twenty-six million dollars 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 and amortization of intangible assets related to some ship acquisition in the amount of Point 1 million dollars or in the expenses were eight point 1 million dollar including equity-based compensation expenses in the amount of point nine million dollar and amortisation of intangible assets related to the sound chip acquisition in the amount of Point 1 million dollar.
Hopefully things expenses for the quarter were fifteen point five million dollar including equity-based compensation expenses in the amount of 2.3 million-dollar amortization expensive like to the sound chip and other previous acquisition of point, six million dollar and transaction expenses related to the acquisition of censorship in the amount of 25 million dollars a month.
Hopefully think expenses on the notes got basis, excluding the items mentioned above were twelve point four million dollars.
Can I say income for the quarter? What point three million dollar income for the quarter included $1000000 of the exchange rate differences related to the accounting standards for long if he's exchange rate differences were excluded from our non-gaap results for the quarter income tax benefit for the quarter was Point 1 million dollar income tax for the quarter included benefit from the first taxes changes related to intangible assets and equity-based compensation expenses in the amount of point two million dollar.
net loss
Well, one point nine million dollar including equity-based compensation expenses of 2.4 million dollar amortisation expenses related to the township and other physics acquisition of $5 transaction expenses related to the acquisition of sonship in the amount of Point twenty-five million dollar exchange rate differences in the amount of Point 1 million dollar and Thursday. If it's related to defer taxes in the amount of two million dollar non-gaap net income excluding the items as just described was one point three million dollar get blood pressure from the quarter was eight cents the negative impact of equity-based compensation on GPS was nonsense. The negative impact was amortization required intangible assets. GPS was three cents the negative impact or transaction expenses VPS was one sent the negative impact of the exchange rate differences on VPS once once a month.
And the positive impact of the changes in deferred tax asset was $0.01 non-gaap diluted income per share excluding the items, which is described was $0.05 for the quarter. Please see the current report format cater to 5 this morning for a full conciliation of the non-gaap presentation to the documentation. Now turning to the balance sheet bank accounts receivable is the end of the third quarter of 2020 increased to eleven point six million dollar compared to ten point six million dollar at the end of the second water representing a level 40 days of same inventory slightly increased from 8.1 million the end of the second quarter to eight point two million dollar representing the level of 58 days.
Our kitchen marketable Securities decreased by 17.4 million during the third quarter and where the level of 120 point 1 million dollar as of September 2020 or cash and marketable security position during the quarter was affected by the following two point nine million dollars cash was used by by operation off due to changes in working capital 14.2 minute of cash was used for the acquisition of sonship. It closed during the quarter point. 1 million dollars cash was used to purchase the property replacement point two million dollars cash was a change in the market value and amortisation of marketable securities.
No, I would like to provide you with our projections for the fourth quarter of 2020 or fourth quarter quarter projections, including the impact of equity-based compensation expenses off and the position related to motivation expensive or assume revenues are expected to be in the range of $29 to Thirty 1 million dollar. We expect gross margin to be in the range of 50% and 52% or in the expenses are expected to be in the range of eight million dollar to 9.5 million dollar operating expenses are expected to be in the range of fifteen million dollars to eighteen million dollar Financial income is expected to be in the range of $300,000 to $500,000 taxes done in, expect it to be approximately 3 million dollar on the non-gaap basis.
the show
Sending or expect to be approximately 25.5 million shots or fourth-quarter projections include point four million dollar of a motivation of intangible assets and the the directions also include the following amount forecasted for equity-based compensation and intangible assets related to the subject acquisition. The cost of goods include point two million dollar R&D expenses include point nine million dollar to 1.1 million dollar sales and marketing include point seven million dollar two point nine million dollar and the gene including a point six million dollar two point eight million dollars, and now I would like to open up the line for questions and answers operator, please.
All right. Thank you. Ladies will now begin the Q&A session. If you wish to ask a question, please press four. And one in your name. Once again star one. If you wish to ask questions, our first question comes from the line of Anderson from birth security. Please ask your question. Yeah, thanks for taking my questions. I wanted to start with some of the elements of the guidance. I wonder if you could give any directional commentary on the non-turbo the segments on a sequential and year-over-year basis and then within that on cordless, it looks like you'll be up significantly year-over-year. Obviously the segment that's declined, you know anywhere from 15 to 20% off a few years. It sounds like some of the underlying trends that have changed. So I wonder if you could sort of speak to what you've you now is maybe the short and medium-term Outlook of that segment in terms of dead.
You know your rear trouble. Thanks. I'm going to follow up after that.
Hi Charlie. Thanks for the question. So let me let me start with the with the last part regarding you know, the the cordless the midterm Trend. So yes, indicated a we are expecting kind of resurgence in a cordless and for demand to pick up considerably going into the fourth quarter. So sequentially it should be kind of roughly out or slightly above the third quarter. We actually believe that the this level of demand should continue also, you know, we don't really have a much visibility into the first quarter but based on the level of demand and actually are somewhat inability to actually address all of the demand. I believe that also the the coming quarter or two following the fall should also be a fairly
Silly strong with respect to a to coalesce. So at the moment and based on what we have seen and you know, we are also looking at whether this optic in demand is associated just with the fact that the supply chain is now, you know running at Peak capacity and perhaps companies over em during you know components for inventory but no the from what we can see is that everything is actually being used to meet kind of the whole days and and the. After the holiday. So a lot of these products are even shade by are so there's a it's it's really based on them on some actual demand out there that is based on a lot of the topics that we discussed, you know, the significant increase in voice calls the fact that you know, this device has used widely birth.
and people are probably you know, go
To like replacement cycles of you know all the with new. So this is with respect to coalesce and on the other the other part so I would say that you know, we're seeing we're seeing a nice recovery in unified Communications as as as indicated. So it does seem that the excess inventory was depleted. I would say faster than than expected. Yes. I think that Q3 revenues came, you know lower than what we had originally anticipated but would be definitely see a very strong rebound again not to the level of the you know, a irregular Market, but still a, you know a recovery that is probably you know showing
You know an industry decline of 25% right now and you know, I think that it will it will increase and and and continue to the recovery into the next year at least from what the information that we have today.
So this is encouraging in number two is on the smart voice and the Smart Home Products, which we believe, you know should should show your of your growth wage on both categories. And so this is this is right now, where we are, so I hope I I answer the two questions.
No, absolutely. Thank you for that color Oprah, and then for my follow-up your gross margins have been remarkably stable despite a lot of volatility in the business mix, so, I'm sort of curious if you could maybe talk a little bit about what's going on there that was sort of thought perhaps cordless had a lower gross. Margin if we just go back two years ago, but it's it's a higher portion of the mix yet you're able to keep these wage these gross margins about fifty. So I'm just sort of curious a little bit out of color what's going on there? Thanks.
Yeah, so we do expect to our gross margin. So as indicated, we reported non-gaap of 51.6% and indeed these are dead higher than what you know, we would have originally reported the visa visa to mix but I would say that the allowed kind of composition of the smart voice as well off some contributions Revenue contributions from the acquisition of sound chip. And these these contributions are mainly royalty. So they're not associated with the club with much cost of good. So these are much higher gross margin than our corporate average. I would say that these to you know work on the contributors to a better than expected or better than average for such a such a product mix. I would say that, you know looking forward. It just shows you kind of birth.
And the value that we're providing.
Our customers and I think that the nothing has changed from the the way, you know, the the cost margins are you know segmented between the two different projects to the I owe 80 businesses running at much higher than the corporate average while call this is still lagging and running below the average but I think that as long with Better Mix and we've even more exposure to the higher profitability products, you know, gross margins could continue and improve and you know, we we do want to see that Trend going forward.
Great. Thank you so much.
Okay, thank you. And your next question comes from the line of least?
Hi guys. Thank you for taking my question. I'm asking this I'm on behalf of our Rodger Gill. And so my first question is what do you guys expect the unified Communications to recover and what do you think will happen is recovery.
Thank you for the question. So as indicated it were expecting a recovery already in this the fourth quarter meaning the October 3rd December quarter, and we see or expect to see a significant sequential increase from Q2 to Q4. We still expect that to be slightly below or still below the fourth quarter of last year, but we do expect the recovery to continue as indicated earlier. There are some constraints with respect to age or ability to deliver product. I would say that you know demand has recovered much better than what we than we expected. You know, when we spoke about three months ago and had the call if we were thinking about the recovery, but not as sharp as the recovery that we're seeing and the drivers as I've indicated a is there is a better demand phone number.
For the coming from you know large Enterprises as well as a governmental institutions and number two as I think we're all Witnesses seeing is the gradual return back to the office and as the office Front was neglected from let's say early March, you know until you know, perhaps last month. I think that you know is a return to kind of on Prem is also, you know highlighting the need for on Prime investment and and I think one of the benefactor he's he's the unified communication endpoints moreover. If collaboration sessions in the past when using real collaboration tools when using technology we're bringing it with third parties, but not with you know employees and colleagues in today's world. Even when you're having a call from the office in most of the cases you are conferencing dead.
people that are working from home and so the need
For more collaboration and points increases and so I think all of these are our drivers and I think that in addition we also included some some other kind of purposely built hardware for them you work environment meaning rather than having a person being very close to the desk and the PC, you know, having better tools to in a much more productive call with the ability of the camera to track the person with the ability of a microphone array to provide much more robust and and high-quality capabilities Advanced algorithms that will suppress the noise, you know, and you know, everything that has to do with you know, putting the graphics in the best possible way. So I think all of them all of these are a really good contributors that are driving this recovery
Got it. Thanks for that. And then for my follow-up question, I'm could you please speak a little bit about maybe like that? What do you expect to see from the smart smart voice attached great on smart phones and personal products for next year. And how should we think about the market size for those?
Yeah, so on on the tablet PC market, I want to say that you know this year. We are seeing you know significant growth and I think that you know, this is off everywhere, you know, as every person needs a screen whether it's for work for studying for you know, any other activity.
So in in this uh a market segment, we're seeing you know much greater adoption of the voice user interface as well as voice announcement. You know, many of them will not really made or designed to conduct and you know, the the primary purpose of using these devices is ready to go on these unified communication applications and I think that the need for significant upgrade in terms of the voice quality in terms of the you know, the video conference of these devices is on the right. So these are key drivers, I think for that industry am seeing that everywhere across, you know are different customers. Um, I think today on mobile phone smartphones the voices user interface and newer on the edge capabilities, you know are also reflected in all of the high end and I would say in many of if not most of the, Michigan
Smartphones and we're seeing that also a penetrating into headset. So a lot of the true wireless stereo headset what we call the bugs are also embracing these capabilities and many more functionalities to be, you know, environmental aware to enable, you know to enable much better listening experience. So to actually amplify certain signals that a person perhaps would not, you know be hearing well enough and so a lot of AI and a lot of view I you know, the ability to do simultaneous translation et cetera, et cetera. All of these today are are a features that are highly sought-after for the next gen z a bad.
another area that we're
Seeing a very nice a emplacement is this you know kind of professional more professional working class of products as discussed if off voice and video conferencing so cameras that can track a person from afar so you don't really have to sit next to the Monitor. And in order to be heard. You can actually roam around you can see the comfortably a far from the device but still, you know, the other side will see as well as or even better when they see you in front of your monitor. And so all of these devices are are embracing view I and you know, the capabilities around our smart voice are you know, the algorithm front so all of that is I think is in the club next year as well as I think a significant increase in the number of headsets that will incorporate the ambient noise cancellation, which is a market that we're now gradually, you know, yep.
Bring into and you know two products or actually three products or have already been launched with our with our products with our technology inside.
Got it. Thank you very much. That was all for me.
All right. Thank you. Your next question comes from the line of Matt from Cowen and Company. Please ask your question.
Yeah, hi. Good morning, or good afternoon router. This is Ethan cutkosky confirmat Ramsey. I just wanted to follow up with regards to some of the the upside and strength in the smart phone smart voice business. I was wondering could you guys specify any particular wins driving that momentum and then in the past you guys have sort of a stats as two smartphones versus non smart phone application was wondering if you could kind of parse out a breakdown between the two buckets in the quarter.
Sure. So I think that you know, the the main the main drivers for that for that growth in the smart The Voice segment were as indicated, you know significant volume increase or increase in demand for you know categories that are around the tablet PC area that incorporate are smart voice. I think this was the largest wage category in the third quarter and number two was the camera Market cameras that do incorporate to a way voice. Oh a, you know a super White Band voice capabilities with no noise cancellation view wise et cetera et cetera. And I think the third it was a you know, the hearable side so it you know off to wireless to two headsets that that incorporate technology from, you know, three bad models that were in today to some additional head.
That the we are shipping technology. So this is
The three main categories that all the drivers I think that indicated in the last couple of photos that today the smart bulb is mostly really Diversified. You know, there is a there is not really one customer. That is the you know, the key customer or like the 50% customer for the catalog. You know, I would say that we're at much better it pays today where you know, there is diversification by customer and also by the end application with respect to the mix and you know, the mix of the percent of smartphone versus non smartphone. I would say that perhaps this year smartphones will be less than 10% of the mix.
Yeah, absolutely 10% of the mix.
Okay, great. And then I guess as my follow-up on unified Communications. I know you guys you guys mentioned some some improving College friends, but given kind of the fluidity of the environment. I mean, what are what are some of the things that the the large customers are kind of comedic getting to you guys, um, you know, that that kind of rely some of that Improvement, you know, so I would say that, you know, everyone is still very much cautious and and it runs along the the supply chain. So, you know last quarter we reported about you know, our expectation for Fairly sharp decline the fact that they you know inventories and Supply chains have to be readjusted to new demand level. However, you know what we have seen and what we're still seeing dead.
Is that this rebound happened quicker and stronger than we anticipated? I think that in the area where we're seeing today a sharp rebound or recovery. These are places were a demand was I want to say completely disconnected and so
almost all the parts that we're shipping at least to the best that we understand and from the checks that we've done, you know are going straight to to customers. They're not really being you know, they're not really building, you know, bustle stocks or protecting against, you know, something that will happen in the future perhaps, you know in the winter pandemic, you know, supply chain disruptions et cetera. But as I said, I think that right now most of the market participants that got hit pretty badly, you know during the first and second calendar quarter of the year, you know, our our you know, putting a more cautious tone, but I think you can also see from you know, the the recent reports by some of these Market participants. They are mentioning that there is an improvement and there is a certain rebound and you know businesses are consuming birth.
You know governments are.
Are consuming so I think that this is a driver for the rebound and last but not least. It's really that you know hybrid model where you know, people are returning to the office the office, you know wage is relevant again, not at the same level that it was in, you know freak over there, but I think that you know this recovery will you know mandate need for you know, A Renewed investment also on the on Prime side. So I want to say that these are kind of the key trends that are guiding this this recovery.
Okay, great. Thank you very much.
Thank you. Once again, after a reminder that those who wish to ask a question, you might need spread far and one in your telephone your next question comes from the line. Is Jason from Blake. Please. Ask your question.
Hey guys. Thanks for taking my questions. Just sticking with the unified communication segment. Certainly if there's probably been some projects that have been pushed out. But have you seen any projects? I canceled at all?
Hi Jason, so to be very Frank. No, we have not seen any programs being canceled on the country.
I think that we are actually seeing you know, customers really sticking behind the their plans to invest and build devices and refresh a certain models for these markets and also, you know the need for very fast adaptacion to kind of the new reality and the fact that they what works for us and you know with the this kind of very fast sleeping too soft clients cetera professionals need, you know life or you know, you know, you know intuitive higher-quality High productivity type of devices and you know, so we're also seeing a lot of these designs design for kind of the work from home and you know pursue mer, you know devices that are kind of portable that are like over-the-top birth.
In a way, you know integrate very nicely with the PC with a video screen with the TV with the set up box. So that people can actually communicate on small screens large strong, you know at their desk dining room outdoor bring it to the office take it to a conference room. Take it wherever they go and really achieve the same look and feel the same quality level. So I want to say that so far we have not really seen any project cancellation and on the country. We're actually seeing more projects that are basically the need to adapt and you know take the products and the product roadmap to kind of the new opportunity which is Thursday is kind of hybrid the fact that you know people will you know, be both on and off and so so this is these are the trends that we're seeing.
Okay, that's really helpful in.
Then just as a follow-up you mentioned some Supply constraints here in the near-term. Just curious if you could quantify what sort of impact that's having to the Top Line in Q4 off. Yes. So this is having so this does cap our top-line, you know without those constraints probably our guidance would have been up a page or two. I'm so there is definitely an impact to there are certain products that you know, we have you know, more limitations in terms of supplying a feeling the demand and I think that you know, this is not a you know, you're related supply chain concern. I think it's going to really suck a pretty wide wider industry that is not just semiconductor. It's also basic components. So there's definitely a a spike in terms of of demand and you know a lot of the Dead
I'll supply chain Partners or you know running at at you know, the maximum capacity of very close to that and you know getting capacities long as it is is is something that you that in order to secure you really need to, you know have real demand and not just you know, but Phil and so I think that we're fortunate to have a very strong partnership in our supply chain and to work with you know, really till 1 both sides and the back end. And so I think that without proven track record we're getting excellent support and you know, we do hope that we will be able to fulfill them the demand in the in the next, you know couple of months meaning you for an interview one time. But but from what we're seeing, you know, we're in Courage that you know, the business environment is improving and that you know, we are where we are and and we do hope that yep.
a lot of these constraints would be removed, you know during the course of the next couple of months, but as said right now the
The supply chain is you know big clogged.
Okay, that's it for me. Thank you.
Thank you.
Thank you. And your last question comes from the line. Please. Ask your question.
I owe for Hydra. So in terms of the the Outlook what what looking ahead to the first quarter of 21, what do you think friends are versus typical seasonality obviously a difficult time, but just to understand, you know, given all the puts and takes how we think about the first quarter relative. What would typically happen in a normal year seasonal wife?
Yes. Hi Suki, and in fact for the question, so as we're today, you know pretty far. So at least two months out of of the wage and also, you know, our average every time is roughly eight weeks or don't really have excellent visibility into q1. But from what you can tell from a long day, we did say that right now demand is higher than our ability to supply we are seeing very good momentum that looks to a big issue. You know, I want not just shortly. So not just a matter of 1/4. I think that we're seeing very good indicators is that you know, we should be optimistic about the. Beyond Q4 but from a backlog perspective exactly. The seasonal Trends it is I would say too early birth.
It it to kind of provide any real kind of.
Renewal information. So at the moment that I want to say that you know, we feel that we're very optimistic and pleased by the trends. We don't believe that they are kind of just took this type of trend. We we see that there are really needs and we also see the fact that our customers in most of the cases are actually, you know shipping by air that means that there is real starvation out there for product. So I think it's holidays and and perhaps Beyond so that makes us a lot more optimistic that you know, this should continue also in the period right after but to provide like real granularity. I want to say a little bit early but you know, so yeah, it looks very good.
Okay good and then specifically on the the headset segment and the the wireless segment, you know, what is the the the, you know a few customers already ramping there? What is the type of those revenues continue to ramp up will be a steady Ram from here. Is that a reflection quarter coming as you integrate sound trip and focus on the the forward opportunity.
Yes, so on on the heatable revenues and they these are reported under the smart voices segment. So, you know during this quarter. We we did see a month. It's pretty nice. I would say kind of the best quarter that we had for here above and not just because of the sonship acquisition. I think that also from Standalone perspective would it would also have Mark like a record of water for but yet again it were just starting so these are really really the inroads into this Market. I think that you know from a much better off with respect to kind of the the revenue run rate probably, you know second half of next year is you know, when we should start to see more customers ramping and off and you know, better better trendline, you know going into a of course, you know, twenty twenty-two. So this is where you know, you know a faster.
And the you know, it moves slowly drunk. They will take place.
Okay. Thanks again.
Thank you. Very no further question at this time that vehicle.
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