Nov 3, 2014
Executives
Dror Levy - Chief Financial Officer, Principal Accounting Officer and Secretary Ofer Elyakim - Chief Executive Officer, Director and Member of Strategy Committee
Analysts
Charles L. Anderson - Dougherty & Company LLC, Research Division Joshua Buchalter Bob Sales
Operator
Good day, and welcome to the Q3 2014 DSP Group Earnings Conference Call. Today's conference is being recorded.
At this time, I'd like to turn the conference over to Mr. Dror Levy, Chief Financial Officer.
Please go ahead, sir.
Dror Levy
Thank you. Good morning, ladies and gentlemen.
I am Dror Levy, Chief Financial Officer at DSP Group. Welcome to our third quarter of 2014 earnings conference call.
On today's call, we also have with us Mr. Ofer Elyakim, Chief Executive Officer.
Before we begin, I would like to remind you that during this conference call, we'll be making forward-looking statements about our financial projections for the fourth quarter of 2014, optimism about market opportunities for our new product lines that should allow us to resume revenue growth, timetable for product ramp-up and mass production of products incorporating our technologies by our customers, the ability of ULE and HDClear technologies, optimism about our successful turnaround and ability to meet key milestones, enter into new market domains and create new revenue streams. Actual results or trends could differ materially from our forecast, including the impact of reductions in lead times and inventory levels of our customers and their customers, continued uncertainty in consumer demand for traditional cordless telephony products in our major end markets, unexpected delays in commercial launch or mass production of new products incorporating our technologies, the growth of new market verticals, our ability to manage operating expenses, our ability to secure additional design wins and general market demands for products that incorporate our technology in the market.
We assume no obligation to update these forward-looking statements. For more information, please refer to the risk factors discussed in our 2013 Form 10-K and the other SEC reports we file.
Now I would like to turn the call to Ofer Elyakim, our Chief Executive Officer. Ofer, the floor is yours.
Ofer Elyakim
Thank you, Dror. Good morning, everyone, and thank you for joining us today.
I'm glad to open this discussion about our third quarter financial results, and I hope you had the opportunity to read our press release that we released earlier today. I would like to begin this discussion by reviewing our results for the third quarter of 2014 and then comment on the progression of our plans, including design wins and recent market developments for our new product offerings.
And in a short while, Dror will provide you with more detailed comments on our financial results and update you on our outlook for the fourth quarter. We are very pleased with the progress we've made since the beginning of the calendar year and, in particular, during the third quarter.
As you know, we have been very focused on pursuing 2 key objectives. One is prudent execution focused on profitability, and the other is monetization of our new product initiatives and thereby building a solid base of new revenue streams that will enable us to resume revenue growth.
Our third quarter financial results exceeded our guidance in almost every financial metric. Third quarter revenues of $36.7 million were well ahead of the midpoint of our guidance range.
Our revenues for the third quarter were up by approximately 4% versus the third quarter of 2013 and up by 1% sequentially, propelled by strong demand for Voice over IP and home gateway products. The high revenues, combined with lower operating expenditures, resulted in non-GAAP operating profit of approximately $2.3 million or 6% of revenues.
This represents our eighth consecutive quarter of non-GAAP profitability and the 10th consecutive quarter of non-GAAP net profitability. Our cash and marketable securities balance decreased to 1 point -- $117 million from $120 million at the end of September.
And while we did generate solid cash flows from operation, we also accelerated our share buyback activity during the quarter and bought back more than 500,000 shares of our common stock for total consideration of $4.6 million. Since the initiation of the share buyback program about 11 months ago, we have bought back approximately 1.8 million shares of our common stock for roughly $16 million at an average price of $0.0889 per share.
Before moving to an update on each of our business segment, I would like to remind you where we were at the beginning of this year and where DSP Group is heading. We are still in leading market position in the DECT market.
And despite the maturity of the cordless market, our cordless business continues to generate strong cash flows and profitability. Concurrently, with maintaining our core business, we have been steadily reinvesting our profits and resources in our future growth, building 3 new product initiatives.
And as you can see from our recent quarterly updates, these investments are paying off, and the contribution from these investments is increasing quarter-by-quarter. Moreover, growth from these new initiatives is already starting to offset the revenue decline in cordless telephony, thereby driving DSP Group back to revenue growth already in the third quarter.
We are optimistic that we will return to revenue growth also in the fourth quarter. We believe that the foundation of our new products, together with achievements in the form of design wins and new customers, put us on the right track to continue to realize strong demand from our offerings in enterprise VoIP [ph], Internet of Things ULE and Mobile.
We are confident in our long-term growth prospects and in meeting our business plan milestones across these market domains. And now we'd like to give you some more specific updates about the progress we are making in each of these segments.
In the home vertical, which is comprised of cordless phones, home gateways and ULE, we'll start with the DECT market. And during the quarter, DECT revenues accounted for approximately 80% of revenues versus 81% in the second quarter of the year.
DECT revenues were flat both sequentially and year-over-year. Sales of our DECT products for the European and rest-of-the-world end markets were stable, down 2% year-over-year while flat sequentially and accounted for approximately 46% of revenues.
Sales of DECT products to the North American end market showed signs of recovery and were up 3% year-over-year while flat sequentially. DECT 6.0 products for the North American end market accounted for approximately 34% of revenues.
Now our DECT revenues are mostly comprised of cordless phone SoCs, a relatively mature market which is in slow decline. However, during the third quarter of 2014, we were able to offset the decline in cordless phone revenues with an increase in DECT/CAT-iq SoC revenues, which brings us to the next topic, the discussion around home gateways.
So in home gateways, we saw a record quarter in demand for DECT/CAT-iq products. These products are embedded into home gateways of leading U.S.
and European service providers. Revenues for the segment grew by 93% year-over-year in the quarter and by 37% sequentially.
The popularity of high-definition voice is on the rise, as evidenced by 116 operators who have already launched high-definition voice on their mobile networks and cover approximately 75 countries today, followed by an additional 11 operators that have recently launched voice services over their LTE networks or what is called VoLTE. We expect the abundance of high definition-enabled networks and the burgeoning VoLTE deployments to take high HD voice to the next era and make high-definition voice as the default voice quality.
We expect that more service providers will make high-definition voice support mandatory in their home gateways and add DECT/CAT-iq connectivity to their CPEs. Now turning to ULE.
We are pleased with the market recognition and the growing customer traction of our ULE technology, which is targeted for the Internet of Things market. A growing number of players are realizing the key benefits that DECT and ULE bring versus other available short-range wireless technologies.
During the quarter, we continued to expand our ecosystem and made our DECT ULE available on several leading platforms. We recently announced that Qualcomm's Internet Processor utilizes our DECT ULE SoC for home automation and high-definition voice and that Intel's Puma 6 cable platform for home gateways support our DECT and ULE SoCs.
Moreover, we are happy to share with you that another leading service provider has chosen ULE for its home automation and safety services and is launching a comprehensive field trial for smart home using our ULE products. In summary, we are making solid progress through a number of engagements with leading security and telecommunication service providers, OEMs and ODMs and have already achieved the mass production milestone with ULE products.
Now I'd like to move from the home to the office vertical. The third quarter was a record quarter for our Office/VoIP segment.
Revenues were approximately $4.4 million, reflecting an increase of 130% year-over-year and growing by 15% [ph] sequentially, exceeding our expectations. Based on our backlog and customer forecast, we expect fourth quarter revenues to come in the range of $3.6 million and $4 million, slightly below Q3.
But more importantly, we are comfortable with our solid engagement pipelines and are well positioned for strong growth in Office/VoIP business in 2014 and to a much greater extent in 2015. We are also on track to secure additional strategically important Tier 1 design wins in the coming few months.
Now let me turn to an update on the Mobile segment. We see a strong interest in low-power voice processing, always-on voice functionality and more sophisticated noise suppression requirements.
Our HDClear technology is of an ideal fit. It includes a comprehensive suite of voice enhancement feature for mobile devices incorporating noise reduction, always-on functionality, speech recognition optimization and additional voice enhancement algorithms, all of which dramatically improve user experience and deliver unparalleled voice quality and call intelligibility for mobile device users.
Moreover, we believe that mobile device user experience and interaction is starting to evolve into more transformational signal processing, utilizing sensing fusion, powerful processing and smart algorithms into artificial intelligence or, in other words, connecting the device's brains to its 5 senses to create intelligence and reactions or awareness. This new level of transformational processing at very low power will enable devices to automatically detect user environment and preferences.
Devices will seamlessly adapt to the appropriate settings in the user profile, with almost no impact to the device's battery life. This will open up a new world of applications, profiles and new cool features that will essentially revolutionize smart devices into intelligent companions.
We believe that our DBM SoC family and HDClear algorithms can play an important role in this evolution. Now during the third quarter, we continued to make very good progress in our design-in efforts with mobile phone product of a Tier 1 OEM.
And very importantly, we are on track to meet our goal of securing design wins for our voice enhancement product by year-end. Now turning to our business outlook for the fourth quarter of 2014 and based on forecast we received from customers, our backlog and our own assessment, we believe that our revenues for the fourth quarter to be in the range of $34 million to $38 million.
The midpoint implied a year-over-year growth in the fourth quarter. In preparation for next year's opportunities, we're also expecting a small uptick in our research and development expenses in order to fuel our market penetration and our ability to address our product initiatives.
In summary, we are successfully executing our own business plan and entering the vital phase in our transition. Thanks to the relentless effort and hard work of our dedicated staff, DSP Group is gradually transitioning from a company with high dependency on and revenue concentration in cordless telephony to a company with more diversified revenue streams coming from new and growing market segments that should drive our growth forward.
We are well positioned to meet our goal of reaching an inflection point in our business and to resume revenue growth for the full year 2015, thereby creating meaningful value for all of our shareholders. Now I would like to turn the call over to Dror, our Chief Financial Officer.
Dror, the floor is yours.
Dror Levy
Thank you, Ofer. I will now review the income statement for the third quarter of 2014 from top to bottom.
For each line item, I will provide the U.S. GAAP results as well as the equity-based compensation expenses included in that line item and the expenses related to previous acquisitions.
Our revenues for the quarter were $36.7 million. Gross margin for the quarter was 39.6%.
Gross margin for the quarter included equity-based compensation expenses in the amount of $0.1 million. R&D expenses were $8.1 million, including equity-based compensation expenses in the amount of $0.6 million.
Operating expenses for the quarter were $13.9 million, including equity-based compensation expenses in the amount of $1.2 million and amortization of acquired intangible assets in the amount of $0.4 million. Financial income for the quarter was $0.2 million, with immaterial income tax benefit for the quarter due to a tax benefit resulting from the amortization of deferred tax liability related to intangible assets in the amount of $0.1 million.
Our net income was $0.8 million, including equity-based compensation expenses of $1.3 million, amortization of intangible assets of $0.4 million and tax benefits resulting from the amortization of deferred tax liability in the amount of $0.1 million. The non-GAAP net income, excluding these items I've just described, was $2.4 million.
GAAP diluted earnings per share was $0.03. The negative impact of equity-based compensation expenses of the EPS was $0.06.
The negative impact of the amortization of acquired intangible assets on the EPS was $0.02, and [ph] the positive impact of the tax benefit of the EPS was $0.01. Non-GAAP diluted earnings per share, excluding the items I've just described, were $0.10.
Please see the current report on Form 8-K that we filed with the SEC this morning for a reconciliation of the non-GAAP presentation to the GAAP presentation. Now turning to the balance sheet.
Our accounts receivable increased from $23.8 million at the end of the second quarter to $25.1 million, representing a level of 62 days of sales. Inventory increased from $12 million at the end of the second quarter to $13.9 million, representing a level of 56 days.
Our cash and marketable securities decreased by $2.5 million during the third quarter and were at the level of $117.4 million at the end of September. Our cash and marketable securities position during the quarter was affected by the following.
$3.2 million of cash was generated from operations. $0.3 million of cash was used for purchase of property and equipment.
$4.6 million of cash was used for repurchase of approximately 505,000 shares of our common stock at an average price of $9.1 per share. $0.1 million was received from exercise of options by employees, and approximately $0.9 million was change in the value of marketable securities and deposit.
Now I would like to provide you with our projection for the fourth quarter of 2014. Our fourth quarter projections on a U.S.
GAAP basis, including the impact of equity-based compensation expenses and amortization-related expenses, are as follows: Revenues are expected to be in the range of $34 million to $38 million. We expect our gross margin to be in the range of 39% and 40%.
R&D expenses are expected to be in the range of $8 million to $10.5 million. Operating expenses are expected to be in the range of $14.5 million to $16.5 million.
Financial income is expected to be approximately $0.25 million. Provision for income taxes for the fourth quarter is expected to be approximately $0.1 million.
Share outstanding are expected to be approximately 23 million shares. Our fourth quarter projections include approximately $0.4 million of amortization of intangible assets.
Our fourth quarter projections also include the following amount forecasted for equity-based compensation expenses. The cost of goods sold include approximately $0.1 million.
R&D expenses include $0.4 million to $0.6 million, and total operating expenses include $1.1 million to $1.3 million. And now I would like to open the floor for questions and answers.
Operator, please.
Operator
[Operator Instructions] We will now take our first question from Charlie Anderson from Dougherty & Co.
Charles L. Anderson - Dougherty & Company LLC, Research Division
So I want to start with, Ofer, your commentary about HDClear and being on track to gather design wins. Any added color on that would be helpful in terms of what types of devices you think you'll be able to secure in terms of design win.
And then also, there was a competitor who obviously has a lot of the share out there today in discrete noise cancellation chip, who had a pretty rough earnings and guide last week. I wonder if you feel like the end market is any smaller than it used to based on some of the commentary of that company.
Ofer Elyakim
Thanks for the questions. So with respect to HDClear, as we discussed and as we have reported during the last couple of quarters, we have been in evaluation and designing phase and have been able to increase the traction.
And we believe we are in good shape, and we feel that we are on track to secure design wins by year-end with a leading OEM. With respect to the additional color, so at the end of the day, for us, it's really our penetration and our entering into the mobile market and the mobile SoC market.
We believe we have excellent technology. We have very good benefit that the OEMs can get out of our SoCs and out of our -- from our algorithms.
We believe the end market is solid. I think that most of the commentary that was discussed was more around the tail of the 2014 cycle, less about the new product ramp.
And so I believe what we are talking about is really about kind of new products that are going to be launched in '15, in -- hopefully in early '15, and this is kind of where we are really focused on. We believe we have a very good and solid opportunity to penetrate.
And as I said, we are -- we believe we are on the solid track with the right set of products and a very strong road map ahead.
Charles L. Anderson - Dougherty & Company LLC, Research Division
Perfect. And then on ULE, you mentioned another service provider.
If you could give any color on that in terms of what type of service provider, what geography, how they're using ULE, that would be helpful.
Ofer Elyakim
Yes, sure. So in ULE, basically, there are a couple of updates.
First, as I -- as we mentioned in the last -- in the previous conference call, we said about a leading OEM. So that leading OEM is right now already marketing the home automation devices, the home automation boxes in the U.S.
market. They're basically coming in for the holiday season.
We already started shipping, of course, and this is what we've updated last quarter. But basically, they have started shipping products out, so we are very optimistic about the success of this product.
These products also include DECT cameras providing VGA quality, battery power, so there's a lot of new cool features that are enabled with DECT using the DECT range, using the lack of interference and also kind of using the bandwidth properly. I think they are -- they have made a very, very good system, and these systems are going to go to market in November.
And hopefully, in next quarter, we will also be able to disclose the name of the customer. In ULE today, we have a number of service providers, leading service providers that have started to utilize ULE.
One leading security company that will launch product in beginning of 2015, for security, they have chosen ULE because of its ability to do 2-way voice in addition to doing visual and also signaling. We have now announced during this conference call another European type of service provider, which is the largest, basically incumbent in its territory.
They are launching a full home automation service including safety and also automation, so from thermostat to smart AC plug to many other additional services. And what they are doing, they are basically trialing the service itself right now.
But for the technology selection, they're very, very happy with what ULE has to offer. And actually, this is kind of the first time that they were able to make the service really work and tick in all corners of any house that they have tried to use the solution without any repeaters, basically just plug and play.
And they are going to start it by year-end, this comprehensive field trial. And hopefully, in middle of next year, this turns out to be a service that is fully launched with many households in the pipe.
In addition, we're working today very closely with Tier 1 service providers from the North America market, for the European market that are very, very excited with what ULE has to offer, and we hope we'll have some very good developments by the next quarter to share.
Charles L. Anderson - Dougherty & Company LLC, Research Division
Perfect. And then just last one for me in that -- in terms of the uptick in R&D.
Should we read into that, that you maybe have some new products on the way? Or is that to support a customer who you've recently won?
Just a little bit more color on that would be helpful.
Ofer Elyakim
Yes, sure. Yes, thank you.
So on the uptick in R&D investments, the investments are focused on our existing road map and product focus. So that means Mobile, that means VoIP, and that means ULE.
What these investments are supposed to do is to enable us to address a much larger opportunity in both Voice over IP and also in Mobile as well as in ULE. So we have been trying to penetrate, I would say, during the last 18 months, and now we see that we have penetrated.
And the market is there, and now we want to make sure that we seize the opportunity. And for that, we need to make sure that we are well equipped with all of the support, software and chipset that we need in order to get the maximum out of the opportunities that are out there, and we feel now comfortable to step up these investments.
Operator
[Operator Instructions] We will now take our next question from Rajvindra Gill from Needham & Company.
Joshua Buchalter
This is Josh Buchalter in for Raji. Could you please speak to what you're seeing competitively with your Internet of Things space?
I mean, it's obviously burgeoning, but it will be helpful for us to hear how you guys think about that.
Ofer Elyakim
Yes, so thank you for your question. So on ULE, when we compare the technology that we're providing today to what's out there, we find 2 key differences.
The first one is about the fact that we're talking about a technology that is a standard and also operates in a licensed spectrum. This is very different from all of the other RFs out there that are operating on the crowded ISM band of the 900 and the 2.4.
We're talking here about a technology that is fully licensed, so basically no interference. And for this type of IoT, security, safety, what have you, the fidelity and the reliability of the network is one of the key factors to be considered by any provider as well as an OEM.
The other part of the difference has to do with the functionality. We believe that DECT in its setup because it's a -- it operates in a licensed frequency, it's a standard that basically has the type approval in all of the continents that we operate in, basically today guarantees the best range in the market, better than WiFi, better than any other RF technology that we are aware of that is now competing in the space.
In addition, this is the only technology which is a real synchronous 2-way -- real-time 2-way communication protocol that can support, in addition to you just carrying packets from one site to another for -- from a node to a gateway. We can carry real voice calls 2-way.
We can carry visual. There's so much that you can do with ULE that you cannot do with other technologies.
Just another example, we have added recently voice activation and basically voice control and voice announcements to ULE. And we've demonstrated in 2 shows that 2 -- 1 took place 2 weeks ago, the Broadband World Forum and 1 is taking place this week, the European Utility Week where we're basically focusing -- showing and demonstrating a complete home safety automation system that is fully voice-activated.
Everything is done from the same ULE chip. So it just kind of shows you how broad the offering is with ULE and with the capabilities of this -- our [ph] technology to carry any type of media over.
Joshua Buchalter
All right, that's helpful. And I guess switching gears, can you -- gross margins came down a little bit this quarter but were pretty high in Q2.
Was it more Q2 was abnormally high? And maybe could you go into some puts and takes within the quarter and also the guide?
Ofer Elyakim
Sure. So in terms of our gross margins, I think the way you should look at it is more from the kind of longer history perspective.
What we have been demonstrating is that we were able to gradually improve our gross margin, and this is what we are working on. We -- gross margin, in many cases, have to do a lot with mix, with the mix of product.
And 1 quarter, the mix is better -- more favorable in terms of margin. Another quarter, it's less favorable.
But I think that we are focused on gross margins, and we believe that the new products are coming in at higher gross margins. This -- the margin profile should continue to be at this, I would say, 40% level, then maybe gradually improve from there.
Right now, we're seeing from both Q3 and Q4 roughly the 40% range, but I wouldn't like read too much into it to say that margins are -- there was anything that has to do with margins. We believe that margins will continue to stay at this level or maybe be slightly higher.
From a long-term perspective, we're shooting for the mid-40s type of margin profile.
Operator
We will now take our next question from Bob Sales from LMK.
Bob Sales
A couple of questions. When you look out past Q4 into fiscal 2016 in the home business, can you give us some sense of broadly what your expectations would be within the home category between DECT and the gateway business?
Ofer Elyakim
Sure. So as we have indicated before, so we see our DECT sales are split mainly into cordless phone SoC sales, which probably capture about 90%.
And then the remaining is really around the gateway, the CAT-iq gateway product. We believe that the DECT cordless phone SoC is a mature market.
It's pretty stable, but still, it is declining unit-wise from year-to-year, I would say, like in the area of like around 10%, which is very consistent with the way it's been tracking for the last couple of years. And right now, our view, when we look into future planning and when we look into how kind of the market is shaping up, we believe that this is roughly the rate of decline in this market.
For sure, we do hope that a level of decline will stabilize into kind of the flat territory at some point, given the installed base. But on home gateways, so far, what we have been able to do and what the market has been doing is gradually operators are understanding the fact that high-definition voice is a must at home in order to make sure that the voice quality at home will be as good as anywhere else and that voice -- high-definition voice is actually something that users or anyone who is engaged with an HD voice realizes that the level of intelligibility that you can get at a high-definition voice call is very, very different from what you get today on the narrow bands, and we're talking now on a narrowband channel.
And so I think there is much more openness in the market to adopt more high-definition voice codecs and also to make sure that the infrastructure, including the CPEs and the devices, do support that from point to point. And as I said in my prepared comments, you see the amount of operators today who support high-definition voice.
And I think high-definition voice is going to turn into the lowest common denominator in the next few years.
Bob Sales
Okay. And then you had dramatic growth in this quarter year-over-year for the gateway product.
I guess how would you manage our expectations as we look at your business a year going forward? Should we believe that you're going to continue the same sort of very aggressive growth in the gateway business given the design wins you've announced?
Ofer Elyakim
Sure. So the way to think about the gateway business -- gateway business is really service provider-dependent.
All of these products are basically sold through a new -- a gateway product launches by the service providers, and what -- in order to track us, you need to take into account the new design wins that we are announcing on home gateways. And in the last 2 years, we were able to very consistently add each year 1 or 2 new large service providers.
And if we continue in that path and if we continue to see more deployments of handsets and more usage, I think this could accelerate the level of growth. But we believe that the way we're tracking today is also sustainable in the next couple of quarters.
Bob Sales
Okay, very good. And then the VoIP business, it sounds to me like you're confident of more tier wins given the changing competitive landscape in that business, which I think favors your positioning.
Can you just talk a little bit about -- a little bit of a downtick for Q4. Can you just talk about the dynamics of the revenue changes in that business and how you see the new design wins folding into fiscal year '16?
Ofer Elyakim
Yes, and thank you. That's a very good question that maybe we -- I did not explain enough in my prepared comments.
So first of all, yes, we are very comfortable in our growth prospects in the Voice over IP space. I do not read too much into these tad low sequentially, so $4.4 million going into the midpoint, which is $3.8 million.
Our visibility in terms of kind of future orders, et cetera, tends to be limited. We do get a lot of like ad hoc requests for more shipments, et cetera.
So I would not look into that too much. I think the big picture is important.
DSPG is very well positioned for continued and accelerated growth in this market. We have a very strong pipeline of designs ahead, some we secured and we announced 2 quarters ago.
And we have a number of additional ones in the pipeline that we are on track to secure, and they will fuel additional revenue growth from '15 to '16 and also into the next year. So here, we are very comfortable with our ability to continue and grow and become the market leader in the Voice over IP space.
Bob Sales
Okay. Can I ask one more question?
Ofer Elyakim
Sure.
Bob Sales
In the HDClear business, given the question previously about the fact that, that -- the market dynamics have changed a bit, and I think there's probably more integration into the application processor for that -- for the voice processing, can you take a look -- can you talk a little bit about how you view the business that you're going to end up with a couple initial design wins, which I think will be a clear jump-up in your ability to generate revenue? But then how you look at the business going past that, given these changing dynamics and some moves by -- cost pressures and moves by the phone manufacturers to integrate more into the SoC capability?
Ofer Elyakim
Yes. So in the mobile market, as I said, our key goal this year is to make sure that we penetrate and we secure designs that would translate into revenues as early as late this year into next year.
We believe that we have the right solutions to offer the customer base both from voice enhancement to always-on to very low power consumption. We believe that low power consumption is starting to play a more instrumental role for these OEMs than it was before.
And so we see plenty of space and -- for opportunities. In low-power processing, and what I discussed in my prepared comments about the fact that the phone wants to be always on and process all kinds of interrupts together in order to get and to draw the picture of kind of the user setup and what the user would like to do and what kind of environment he or she is in, I think, kind of bodes well for the type of algorithms and processing that we're doing.
And so I think kind of the combination of our ability to process voice and noise, our ability to do always-on, our ability to do everything at very, very low power, I think, kind of bodes very well for our penetration and also for our road map going forward. And it's always going to be the case that more integration is going to be there.
But really the question is about kind of the segmentation and what new requirements are coming in, what kind of new user experience or applications these OEMs are looking for, and I think kind of by that, there should be room to serve and to build appropriate solutions that are really focused on the very low power, which is very different from what's kind of going into the main processors [ph].
Operator
[Operator Instructions] At this time, we have no more questions. So at this point, I'd like to pass back over to Mr.
Dror Levy. There are no more questions at this time, so I'd like to pass back to Mr.
Levy and Mr. Elyakim.
There are currently no more questions. [Technical Difficulty]
Operator
Ladies and gentlemen, please stand by as we are experiencing a momentary interruption in today's conference. Thank you for your patience.
Please continue to hold. Please go ahead.
Dror Levy
Yes. Sorry, guys.
We had a technical issue, and we were disconnected. So were there any further questions after Bob had done his question?
Operator
There were no more questions, Mr. Levy.
Dror Levy
Okay. So I think that at this point, we can conclude the call.
So thanks, everyone, for participating, and we look back to reporting to you again in 90 days.
Operator
Ladies and gentlemen, that will conclude today's conference call. Thank you for your participation.
You may now disconnect.