AudioCodes Reports Second Quarter 2015 Results

AudioCodes Reports Second Quarter 2015 Results

Jul 28, 2015

Second Quarter Highlights:

  • Quarterly revenues decreased 13.7% year-over-year to $32.4 million;
  • Service revenues increased 13.7% year-over-year to $9.3 million from $8.2 million;
  • Quarterly Non-GAAP gross margin was 59.9%, compared to 60.0% in the prior year period;
  • Quarterly Non-GAAP operating expenses decreased 4.2% year-over-year to $20.2 million;
  • Quarterly cash flow from operating activities remained positive at $3.4 million;
  • Quarterly Non-GAAP net loss was $537,000, or ($0.01) per diluted share, compared to net income of $1.6 million, or $0.04 per diluted share, in the prior year period;
  • AudioCodes repurchased 1,449,000 of its ordinary shares at an aggregate cost of $6.1 million during the quarter.

Details:

Lod, Israel – July 28, 2015 - AudioCodes (NasdaqGS: AUDC), a leading provider of converged voice solutions, which enables enterprises and service providers to transition to all-IP voice networks, today announced financial results for the second quarter ended June 30, 2015.

Revenues for the second quarter of 2015 were $32.4 million, compared to $37.6 million for the second quarter of 2014.

Net loss was $1.9 million, or ($0.05) per diluted share, for the second quarter of 2015, compared to a net loss of $46,000, or ($0.00) per diluted share, for the second quarter of 2014.

On a Non-GAAP basis, the Company reported a quarterly net loss of $537,000, or ($0.01) per diluted share, compared to net income of $1.6 million, or $0.04 per diluted share, in the second quarter last year.

Non-GAAP net income (loss) excludes: (i) stock-based compensation expenses; (ii) amortization expenses related to intangible assets; and (iii) non-cash deferred tax benefit or expenses. A reconciliation of net income (loss) 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.

Net cash provided by operating activities for the second quarter of 2015 totaled $3.4 million. Cash and cash equivalents, bank deposits and marketable securities were $78.6 million as of June 30, 2015 compared to $91.8 million as of June 30, 2014. The decrease in cash and cash equivalents, bank deposits and marketable securities was the result of the use of cash to repurchase the Company’s ordinary shares pursuant to its share repurchase program.

"We are disappointed with the financial results for the second quarter of 2015, more so in view of our growing business activity and the progress made in the second quarter in the unified communications and the business services market segments. As pre-announced on June 9th, AudioCodes’ second quarter results reflect weakness in our business in Central and Latin America and certain markets in Europe. In addition, we experienced larger than expected weakness in the contact center market, and lower gateway revenues in the areas of low and mid capacity and legacy residential gateways," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. “On a more positive note, we saw encouraging developments in our Microsoft Lync business and in our service provider activity, reflected in increased success in sales of CPE products into the hosted PBX market and projects related to the All-IP transformation trend. In order to compensate for the decline in revenues, we have initiated a cost reduction plan. The plan is expected to generate an estimated annualized savings of 5% to 10% of the Company’s operating expenses and be implemented over the next six to twelve months. We expect the initial steps already taken to reduce our operating expenses by approximately 5% below the level of expenses in the first quarter as early as the fourth quarter of this year. In addition, we have started a full review of our business line activities in order to support our plan to return to profitability and growth in the second half of 2015 and beyond,” Mr. Adlersberg added.

“Our Skype for Business One Voice Solution, and the One Box 365 solution continue to gain market traction. We see great potential, and saw good progress with our service provider activity, mainly as a result of targeting our efforts towards the global trend of migrating public telephony and voice services into All-IP networks. In this space, we made progress towards winning two large multi-year projects with leading tier-1 service providers. Additionally, we continued to focus our efforts on developing and selling more complete end-to-end solutions and software products to end customers, which we believe will support further growth in coming years. As we continue to adapt and align our offering towards industry trends such as NFV and SDN, as well as the migration to hybrid and pure Cloud environments, we are confident in our ability to weather challenging market conditions and drive growth and success in the future,” concluded Mr. Adlersberg.

Share Buy Back Program

In August 2014, AudioCodes announced that its Board of Directors had approved a program to repurchase up to $3.0 million of its Ordinary Shares. In November 2014, AudioCodes received court approval to repurchase up to an additional $15.0 million of its Ordinary Shares and in May 2015 the court approved an additional $15.0 million in share repurchases. During the quarter ended June 30, 2015, AudioCodes acquired 1,449,000 shares under this program for a total consideration of approximately $6.1 million. As of June 30, 2015, AudioCodes had acquired an aggregate of 3,537,000 shares under this program for an aggregate consideration of approximately $16.6 million.

2015 Full Year Outlook update

AudioCodes is updating its full year guidance. The Company’s outlook is based on current indications for its business, which are subject to change.

We now expect revenues for 2015 to be in the range of $137 million to $143 million compared with the prior forecast of a range of $158 million to $162 million. We are now forecasting non-GAAP net income per diluted share to be in the range of $0.09 to $0.12 compared with the prior forecast of $0.24 to $0.28.

AudioCodes management believes that Non-GAAP financial guidance provides the best comparative basis for investors to understand the Company’s on-going operations and prospects for the future. Non-GAAP net income per diluted share should be evaluated in light of the Company’s financial results prepared in accordance with U.S. GAAP.

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 8:00 A.M., Eastern Time today to discuss the Company’s second quarter 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.

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