AudioCodes Reports Fourth Quarter and Full Year 2016 Results
Lod, Israel – January 31, 2017
Fourth Quarter and Full Year 2016 Highlights:
- Quarterly revenues were $37.8 million, 5.9% over last year’s comparable quarter; full 2016 year revenues totaled $145.6 million compared to $139.8 million in 2015;
- Quarterly service revenues were $11.4 million, 14.6% over last year’s comparable quarter; full 2016 year service revenues totaled $43.3 million compared to $37.8 million in 2015;
- Revenues related to UC‐SIP business increased more than 20% compared to the fourth quarter of 2015;
- Quarterly GAAP gross margin was 60.9%, Quarterly Non‐GAAP gross margin was 61.5%;
- Quarterly GAAP operating margin was 9.5%, Quarterly Non‐GAAP operating margin was 7.7%;
- Quarterly GAAP net income was $14.8 million, or $0.44 per diluted share, Quarterly Non‐GAAP net income was $2.6 million, or $0.08 per diluted share;
- Full 2016 year GAAP net income was $16.2 million, or $0.45 per diluted share, full 2016 year Non‐GAAP net income was $9.4 million, or $0.26 per diluted share;
- Cash flow from operating activities was $6.7 million for the quarter and $18.3 million for the full 2016 year;
- AudioCodes repurchased 1,261,555 of its ordinary shares at an aggregate cost of $7.7 million during the fourth quarter of 2016.
AudioCodes (Nasdaq: AUDC), a leading provider of converged voice solutions that enable enterprises and service providers to transition to all-IP voice networks, today announced financial results for the fourth quarter and full year periods ended December 31, 2016.
Revenues for the fourth quarter of 2016 were $37.8 million, compared to $37.2 million for the third quarter of 2016 and $35.6 million for the fourth quarter of 2015. Revenues were $145.6 million in 2016 compared to $139.8 million in 2015.
During the fourth quarter of 2016, the Company made sales to Avaya of $645,000 which remained unpaid. On January 19, 2017, Avaya Inc. announced that it had filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. As a result, the revenues related to these sales were recorded by the Company as unpaid deferred revenues and were not included in revenues reported for the fourth quarter. These unpaid revenues were also not included in trade receivables in the Company's balance sheet as of December 31, 2016.
Net income was $14.8 million, or $0.44 per diluted share, for the fourth quarter of 2016 compared to $2.8 million, or $0.07 per diluted share, for the fourth quarter of 2015. Net income in 2016 was $16.2 million or $0.45 per diluted share, compared to $366,000, or $0.01 per diluted share, in 2015.
Net income per diluted share included $0.34 in the fourth quarter of 2016 and $0.32 in the full 2016 year as a result of the tax benefit described below.
On a Non-GAAP basis, quarterly net income was $2.6 million, or $0.08 per diluted share, compared to $2.8 million, or $0.07 per diluted share, in the fourth quarter last year. Non-GAAP net income in 2016 was $9.4 million, or $0.26 per diluted share, compared to $5.9 million, or $0.14 per diluted share, in 2015.
Non-GAAP net income (loss) excludes: (i) stock-based compensation expenses; (ii) amortization expenses related to intangible assets; (iii) expenses related to deferred payments and income due to revaluation of an Earn-Out liability, each in connection with the acquisition of Active Communications Europe and (iv) non-cash deferred tax benefit or expenses. A reconciliation of net income on a GAAP basis to a non-GAAP basis is provided in the tables that accompany the condensed consolidated financial statements contained in this press release.
During the fourth quarter of 2016, the Company fully utilized the remaining amount of the deferred tax asset recorded in 2013. Based on its earnings history and expected future operating results, the Company recorded another deferred tax asset in the amount of $11.6 million as of December 31, 2016. This deferred tax asset represents the approximate amount of the Company's net operating losses and temporary tax differences that the Company estimates it will utilize over the next few years. GAAP net income for the fourth quarter and full 2016 year reflect the effect of the tax benefit associated with the creation of this deferred tax asset. Non-GAAP net income excludes this non-cash deferred tax benefit.
Net cash provided by operating activities was $6.7 million for the fourth quarter of 2016 and $18.3 million for 2016. Cash and cash equivalents, long- and short-term bank deposits and long- and short-term marketable securities were $69.5 million as of December 31, 2016 compared to $80.4 million as of December 31, 2015. The decrease in cash and cash equivalents, long- and short-term bank deposits and long- and short-term marketable securities was the result of the use of cash for the continued repurchasing of the Company's ordinary shares pursuant to its share repurchase program.
"We are pleased to report strong financial results for the fourth quarter and the full 2016 year," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "In 2016, we continued to execute on our strategic goal of growing the UC-SIP business. We are pleased to report that we grew UC-SIP revenues to more than $55 million in 2016, an increase of more than 20% compared to 2015. We are confident in our ability to continue this growth and are planning to reach $100 million in annual revenues from this business within the next three years. Additionally, the global trend to move to All-IP between now and 2025 has increased demand for gateways. In line with this trend, our gateway revenues increased in the second half of 2016 compared to the first half of the year. We are encouraged by the momentum of these two business lines which now comprise above 90% of our quarterly revenues."
"We are focused on growing and positioning AudioCodes to become the leader in the Enterprise Voice market, applying our superior voice platform in the areas of unified communications (UC), contact centers (CC) and SIP trunking (SIPT). We achieved growth of our business with leading application partners such as Microsoft, Genesys and Broadsoft. We have emerged a most successful and valued vendor of CPE gear to our partners and customers, and were able to increase our penetration of the Service Providers market. In addition, we made important steps in evolving our business to the Cloud era with growing deployments of Cloud products and solutions in the areas of virtualized SBC and Skype for Business online. Finally, as we are confident in the long-term strength of our business, we continued to buy back shares in the fourth quarter of 2016 with the aim of increasing value to our shareholders," concluded Mr. Adlersberg.
Share Buy Back Program
During the quarter ended December 31, 2016, AudioCodes acquired 1,261,555 of its ordinary shares under its share repurchase program for a total consideration of approximately $7.7 million. As of December 31, 2016, AudioCodes had acquired an aggregate of 12.0 million of its ordinary shares since August 2014 for an aggregate consideration of approximately $54.2 million.
Conference Call & Web Cast Information
AudioCodes will conduct a conference call at 8:00 A.M., Eastern Time today to discuss the Company's fourth quarter and full year of 2016 operating performance, financial results and outlook. Interested parties may participate in the conference call by dialing one the following numbers:
United States Participants: +1 (877) 407-0778 | International Participants: +1 (201) 689-8565
The conference call will also be simultaneously webcast. Investors are invited to listen to the call live via webcast at the AudioCodes investor website at http://www.audiocodes.com/investors-lobby.