AudioCodes Reports Second Quarter 2018 Results

AudioCodes Reports Second Quarter 2018 Results

Jul 24, 2018

Second Quarter Highlights

  • Quarterly revenues increased by 12.3% year-over-year to $43.5 million;
  • Quarterly service revenues increased by 2% year-over-year to $13.5 million;
  • Revenues related to UC-SIP business increased more than 30% compared to the second quarter of 2017;
  • Quarterly GAAP gross margin was 62.3%; quarterly Non-GAAP gross margin was 62.8%;
  • Quarterly GAAP operating margin was 7.6%; quarterly Non-GAAP operating margin was 10.2%;
  • Quarterly cash flow from operating activities was $2.2 million;
  • Quarterly GAAP net income was $2.4 million, or $0.08 per diluted share; quarterly Non-GAAP net income was $4.1 million, or $0.14 per diluted share;
  • AudioCodes repurchased 452,000 of its ordinary shares during the quarter at an aggregate cost of $3.3 million.

Details

Lod, Israel – July 24, 2018 - AudioCodes (NASDAQ: AUDC) Press Release

AudioCodes, a leading vendor of advanced voice networking and media processing solutions for the digital workplace, today announced financial results for the second quarter ended June 30, 2018.

Revenues for the second quarter of 2018 were $43.5 million compared to $42.4 million for the first quarter of 2018 and $38.7 million for the second quarter of 2017.

Net income was $2.4 million, or $0.08 per diluted share, for the second quarter of 2018 compared to $1.0 million, or $0.03 per diluted share, for the comparable period last year.

On a Non-GAAP basis, net income was $4.1 million, or $0.14 per diluted share, for the second quarter of 2018 compared to $2.5 million, or $0.08 per diluted share, for the comparable period last year.

Non-GAAP net income excludes: (i) share-based compensation expenses; (ii) amortization expenses related to intangible assets; (iii) expenses related to deferred payments and expenses 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.

Net cash provided by operating activities was $2.2 million for the second quarter of 2018. Cash and cash equivalents, long- and short-term bank deposits and long- and short-term marketable securities were $58.1 million as of June 30, 2018 compared to $58.7 million as of December 31, 2017. 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 offset, in part, by cash from operating activities.

"We are pleased to report strong financial results for the second quarter of 2018,” said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes.

"Continuing the strong trend of previous quarters, our Enterprise Voice business continued to evolve as we enhanced our leadership position in the UC and the contact center market segments. Revenues in the first half of 2018 grew 12.9% compared to the first half of 2017. We now project revenue growth of about 10% for the full 2018 year, compared to growth of 7.7% in 2017 and 4.2% in 2016. At the core of this growth is the UC-SIP business which performed well across all business lines and achieved growth of over 30% from the year ago quarter. On the financial front, we achieved substantial improvement in our operating margins which reached 10% in the second quarter of 2018. Taking into account our investment in the new initiative of Voice.AI, which we expect to amount to more than $3 million this year, we now project operating margins of approximately 12% in 2018 for the mainstream networking business, now comprising about 99% of the Company revenues. Cash flow from operations in the first half 2018 continued to be strong, following similar performance in the past three years. We remain confident for the second half of 2018 and beyond as we continue to enjoy good business momentum in winning enterprise voice deployments and service provider network transformation projects. We also experienced continued evolution of new opportunities in our Voice.AI business,” concluded Mr. Adlersberg.

Appointment of Lior Aldema as director

The Board of Directors has appointed Lior Aldema as a director of the Company. Mr Aldema is the Company’s Chief Business Officer and has been with the Company since 1998. Mr Aldema will fill a vacancy as a Class I director and will therefore stand for re-election at the Annual General Meeting in 2019.

“I am delighted that Lior will be joining our Board of Directors,” said Shabtai Adlersberg, President and CEO, founder and director of AudioCodes. “Lior and I have been working closely for many years, and his contributions to the Company are significant. Lior’s unique and deep understanding of AudioCodes’ products and markets will benefit the Board and the Company. I wish him success in his new role.”

Dividend

The Company’s Board of Directors has decided to declare an annual cash dividend of 20 cents per share payable on August 20, 2018 to shareholders of record on August 6, 2018. The Company is issuing a separate press release that contains additional information with respect to the dividend.

Share Buy Back Program

As of June 30, 2018, AudioCodes had acquired an aggregate of 17.2 million of its ordinary shares since August 2014 for an aggregate consideration of $90.3 million. During the quarter ended June 30, 2018, AudioCodes acquired 452,000 of its ordinary shares under its share repurchase program for a total consideration of approximately $3.3 million.

In June 2018, AudioCodes received court approval in Israel to purchase up to an additional $20 million (“Permitted Amount”) of its ordinary shares. The court approval also permits AudioCodes to declare a dividend of any part of the Permitted Amount during the approved validity period. As of June 30, 2018, $19.5 million remained available to the Company under this court approval. The current court approval will expire on December 14, 2018.

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 https://www.audiocodes.com/investors-lobby

 

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