AudioCodes Reports Third Quarter 2018 Results

AudioCodes Reports Third Quarter 2018 Results

Oct 23, 2018

Third Quarter Highlights

  • Quarterly revenues increased by 13.5% year-over-year to $44.5 million;
  • Quarterly service revenues increased by 8% year-over-year to $14.1 million;
  • Revenues related to UC-SIP business increased more than 30% compared to the third quarter of 2017;
  • Quarterly GAAP gross margin was 62.2%; quarterly Non-GAAP gross margin was 62.7%;
  • Quarterly GAAP operating margin was 11.2%; quarterly Non-GAAP operating margin was 13.5%;
  • Quarterly cash flow from operating activities was $3.5 million;
  • Quarterly GAAP net income was $4.1 million, or $0.14 per diluted share; quarterly Non-GAAP net income was $5.8 million, or $0.19 per diluted share;
  • AudioCodes repurchased approximately 133,000 of its ordinary shares during the quarter at an aggregate cost of $1.1 million.
  • AudioCodes declared an annual cash dividend of 20 cents per share. The dividend, in the aggregate amount of $5.8 million, was paid on August 20, 2018.

Details

Lod, Israel – October 23, 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 third quarter ended September 30, 2018.

Revenues for the third quarter of 2018 were $44.5 million compared to $43.5 million for the second quarter of 2018 and $39.2 million for the third quarter of 2017.

Net income was $4.1 million, or $0.14 per diluted share, for the third 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 $5.8 million, or $0.19 per diluted share, for the third quarter of 2018 compared to $3.4 million, or $0.10 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 $3.5 million for the third quarter of 2018. Cash and cash equivalents, long- and short-term bank deposits and long- and short-term marketable securities were $56.7 million as of September 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 to pay a dividend to shareholders in the aggregate amount of $5.8 million and for the continued repurchasing of the Company’s ordinary shares offset, in part, by cash provided by operating activities.

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

"In the third quarter we continued to execute on our strategic plan to grow our leadership in the Enterprise and Service Providers telephony and Voice business. Supporting our strategy for secular multi-year growth are the strong trends of moving to a digital workplace in the enterprise and the transitioning to all-IP networks in the service providers market. This has resulted in 13.5% growth in revenue and strong net income compared to the year ago quarter. Key to this strong performance was our UC-SIP business which grew over 30% compared to the third quarter of 2017. This is now the third quarter in a row in 2018 with above 30% growth in our UC-SIP business over the respective quarters in 2017. We now predict annual revenue growth of above 11.5% for the full year 2018 compared to 7.7% growth in revenue in 2017. We also forecast that non-GAAP net income in 2018 will grow more than 50% compared to 2017, on the heels of close to 30% growth in net income in 2017. Steady evolution in the underlying market segments we serve coupled with our strong execution and leadership should support continued business momentum in coming quarters”.

“On the financial front, we have demonstrated good control of operating expenses resulting in record financial performance. Non-GAAP operating margin for the third quarter of 2018 was 13.5% compared to 8.8% in the third quarter of 2017. EBITDA was $6.4 million compared to $3.8 million in the third quarter of 2017. Non-GAAP net income reached $5.8 million compared to non-GAAP net income of $3.8 million in the third quarter of 2017. Net cash provided by operations was $3.5 million and has reached $14.0 million for the nine months ended September 30, 2018. As such, we remain confident in improved performance in the coming quarters as we enjoy continued good business momentum,” concluded Mr. Adlersberg.

Dividend

On July 24, 2018, the Company declared an annual cash dividend of 20 cents per share. The dividend, in the aggregate amount of $5.8 million, was paid on August 20, 2018 to all of the Company’s shareholders of record on August 6, 2018.

Share Buy Back Program

During the quarter ended September 30, 2018, AudioCodes acquired approximately 133,000 of its ordinary shares under its share repurchase program for a total consideration of $1.1 million. As of September 30, 2018, AudioCodes had acquired an aggregate of 17.3 million of its ordinary shares since August 2014 for an aggregate consideration of $91.3 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 out of any part of the Permitted Amount during the approved validity period. As of September 30, 2018, $12.7 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 third 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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