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AudioCodes Reports Second Quarter 2020 Results
[July 28, 2020]

AudioCodes Reports Second Quarter 2020 Results


LOD, Israel, July 28, 2020 /PRNewswire/ --

Second Quarter Highlights

  • Quarterly revenues increased by 8.1% year-over-year to $53.5 million;
  • Quarterly service revenues increased by 3% year-over-year to $17.1 million;
  • Quarterly UC-SIP revenues increased more than 20% year-over-year;
  • GAAP results:
    - Quarterly GAAP gross margin percentage was 66.7%;
    - Quarterly GAAP operating margin percentage was 16.5%; 
    - Quarterly GAAP net income was $6.6 million, or $0.21 per diluted share;
  • Non-GAAP results:
    - Quarterly Non-GAAP gross margin percentage was 66.9%;
    - Quarterly Non-GAAP operating margin percentage was 20.1%;
    - Quarterly Non-GAAP net income was $10.5 million, or $0.32 per diluted share;
  • Net cash provided by operating activities was $10.7 million for the quarter;
  • $85.4 million in new capital, net of expenses of the offering, raised through public offering of ordinary shares.

Details

AudioCodes (NASDAQ: AUDC), a leading vendor of advanced communications software, products and productivity solutions for the digital workplace, today announced financial results for the second quarter ended June 30, 2020.

Revenues for the second quarter of 2020 were $53.5 million compared to $52.0 million for the first quarter of 2020 and $49.5 million for the second quarter of 2019.

Net income was $6.6 million, or $0.21 per diluted share, for the second quarter of 2020, compared to $4.8 million, or $0.16 per diluted share, for the second quarter of 2019.

On a Non-GAAP basis, net income was $10.5 million, or $0.32 per diluted share, for the second quarter of 2020 compared to $6.8 million, or $0.22 per diluted share, for the second quarter of 2019.

Non-GAAP net income excludes: (i) share-based compensation expenses; (ii) amortization expenses related to intangible assets; (iii) expenses or income related to revaluation of an earn-out liability in connection with the acquisition of Active Communications Europe; (iv) financial income or expenses related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies and (v) non-cash deferred tax 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 second quarter of 2020 the Company raised approximately $85.4 million in net proceeds from the public offering of 2,600,000 ordinary shares at a purchase price of $35 per share. 

Net cash provided by operating activities was $10.7 million for the second quarter of 2020. Cash and cash equivalents and long- and short-term bank deposits were $170.4 million as of June 30, 2020 compared to $71.9 million as of December 31, 2019. The increase in cash and cash equivalents and long- and short-term bank deposits was primarily a result of the receipt of the net proceeds of the public offering in June 2020, as well as due to cash provided by operating activities.

"We are pleased to report strong financial results for the second quarter of 2020," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "Work-from-home (WFH) has become the new normal in recent months and UCaaS and Collaboration have taken center stage in the transition of many enterprises to a digital workplace. As a result, we experienced good business momentum across most of the market segments we participate in, most notably in the UCaaS and the Contact Center market segments. Coupling this favorable sales momentum with lower than anticipated operating expenses resulting from the COVID-19 pandemic, we continued to improve our financial performance year-over-year. Underscoring our financial success were improved gross margin, which increased to 66.9% in the second quarter from 63.5% in the year-ago quarter, and the substantial increase in operating income to 20.1% from 14.1% in the second quarter of 2019. As a result, net income increased above 50% year-over–year and we have generated strong cash flow from operations. Continuing the sales trend of the first quarter of 2020, we experienced increased market activity and demand for Microsoft Teams. Revenue related to the MS Teams ecosystem grew more than 300% from the year-ago quarter, reaching a level of above $10 million. In addition, newly created opportunities related to MS Teams have doubled year over year in the second quarter."

"The progress made in our Voice.ai business was also noteworthy. We saw continued progress in the introduction of Meeting Insights, a productivity enhancement software tool for group collaboration. In the voice.ai gateway (VAIG) business we saw an increase in opportunities relating to adding voice and telephony channels to virtual agents and enterprise intelligent assistants, a rapidly growing use these days. Looking forward, we expect that Collaboration and WFH will continue to take hold as mainstream market trends for coming years. While the full impact of COVID-19 is still uncertain and may remain a global challenge for the next few years, we believe in our ability to respond to new developments and challenges in our markets. We plan to continue our investment in future product offerings and focus on the return on investment to our shareholders," concluded Mr. Adlersberg.

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 8:30 A.M., Eastern Time today to discuss the Company's second quarter of 2020 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

Follow AudioCodes' social media channels:

AudioCodes invites you to join our online community and follow us on: AudioCodes Voice Blog, LinkedIn, Twitter, Facebook, and YouTube.

About AudioCodes

AudioCodes Ltd. (NASDAQ: AUDC) (TASE: AUDC) is a leading vendor of advanced communications software, products and productivity solutions for the digital workplace. AudioCodes enables enterprises and service providers to build and operate all-IP voice networks for unified communications, contact centers, and hosted business services. AudioCodes offers a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world.

For more information on AudioCodes, visit http://www.audiocodes.com.

Statements concerning AudioCodes' business outlook or future economic performance; product introductions and plans and objectives related thereto; and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters, are "forward-looking statements'' as that term is defined under U.S. Federal securities laws. Forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. These risks, uncertainties and factors include, but are not limited to: the effect of global economic conditions in general and conditions in AudioCodes' industry and target markets in particular; shifts in supply and demand; market acceptance of new products and the demand for existing products; the impact of competitive products and pricing on AudioCodes' and its customers' products and markets; timely product and technology development, upgrades and the ability to manage changes in market conditions as needed; possible need for additional financing; the ability to satisfy covenants in the Company's loan agreements; possible disruptions from acquisitions; the ability of AudioCodes to successfully integrate the products and operations of acquired companies into AudioCodes' business; possible adverse impact of the COVID-19 pandemic on our business and results of operations; and other factors detailed in AudioCodes' filings with the U.S. Securities and Exchange Commission. AudioCodes assumes no obligation to update the information in this release.

©2020 AudioCodes Ltd. All rights reserved. AudioCodes, AC, HD VoIP, HD VoIP Sounds Better, IPmedia, Mediant, MediaPack, What's Inside Matters, OSN, SmartTAP, User Management Pack, VMAS, VoIPerfect, VoIPerfectHD, Your Gateway To VoIP, 3GX, VocaNom, AudioCodes One Voice, AudioCodes Meeting Insights, AudioCodes Room Experience and CloudBond are trademarks or registered trademarks of AudioCodes Limited. All other products or trademarks are property of their respective owners. Product specifications are subject to change without notice.

Company Contacts
Niran Baruch,
VP Finance & Chief Financial Officer
AudioCodes
Tel: +972-3-976-4000
Niran.baruch@audiocodes.com

Shirley Nakar,
Director, Investor Relations
AudioCodes
Tel: +972-3-976-4000
shirley@audiocodes.com

IR Agency Contact
Brett Maas,
Managing Director
Hayden IR
Tel: +1-646-536-7331
brett@haydenir.com

Summary financial data follows

                                                                             






AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands



June 30,


December 31,


2020


2019


(Unaudited)


(Audited)

ASSETS








CURRENT ASSETS:




Cash and cash equivalents

$ 163,849


$ 64,773

Short-term and restricted bank deposits

5,965


6,416

Trade receivables, net

30,144


27,501

Other receivables and prepaid expenses

7,419


5,626

Inventories

29,469


28,275

Total current assets

236,846


132,591





LONG-TERM ASSETS:




Long-term and restricted bank deposits

$ 544


$ 694

Deferred tax assets

17,311


20,466

Operating lease right-of-use assets

26,489


29,688

Severance pay funds

18,783


19,370

Total long-term assets

63,127


70,218





PROPERTY AND EQUIPMENT, NET

4,294


4,392





GOODWILL, INTANGIBLE ASSETS AND OTHER, NET

36,957


37,123





Total assets

$ 341,224


$ 244,324





LIABILITIES AND SHAREHOLDERS' EQUITY








CURRENT LIABILITIES:




Current maturities of long-term bank loans

$ 1,836


$ 2,473

Trade payables

4,611


6,628

Other payables and accrued expenses

25,335


24,692

IIA settlement liability

10,780


10,750

Deferred revenues

35,770


33,538

Short-term operating lease liabilities

8,332


8,579

Total current liabilities

86,664


86,660





LONG-TERM LIABILITIES:




Accrued severance pay

$ 20,350


$ 20,313

Long-term bank loans

600


1,200

IIA settlement liability

10,780


10,749

Deferred revenues and other liabilities

10,777


9,831

Long-term operating lease liabilities

19,859


23,097

Total long-term liabilities

62,366


65,190





Total shareholders' equity

192,194


92,474

Total liabilities and shareholders' equity

$ 341,224


$ 244,324


 

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands, except per share data



 Six months ended


Three months ended


 June 30,


June 30,


2020


2019


2020


2019


(Unaudited)


(Unaudited)

Revenues:








Products

$ 70,701


$ 65,296


$ 36,367


$ 32,843

Services

34,843


30,782


17,155


16,656

Total Revenues

105,544


96,078


53,522


49,499

Cost of revenues:








Products

27,793


28,150


14,031


14,372

Services

7,774


7,385


3,793


3,813

Total Cost of revenues

35,567


35,535


17,824


18,185

Gross profit

69,977


60,543


35,698


31,314

Operating expenses:








Research and development, net

22,806


19,659


11,224


10,179

Selling and marketing

25,586


25,220


12,317


12,659

General and administrative

6,578


5,263


3,313


2,592

Total operating expenses

54,970


50,142


26,854


25,430

Operating income

15,007


10,401


8,844


5,884

Financial income (expenses), net

454


(1,079)


(852)


(280)

Income before taxes on income

15,461


9,322


7,992


5,604

Taxes on income, net

(3,558)


(1,479)


(1,353)


(810)

Net income

$ 11,903


$ 7,843


$ 6,639


$ 4,794

Basic net earnings per share

$ 0.40


$ 0.27


$ 0.22


$ 0.16

Diluted net earnings per share

$ 0.38


$ 0.26


$ 0.21


$ 0.16

Weighted average number of shares used in computing basic net earnings per share
(in thousands)

30,017


29,214


30,493


29,214

Weighted average number of shares used in
computing diluted net earnings per share
(in thousands)

31,554


30,737


32,062


30,744

 


AUDIOCODES LTD. AND ITS SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

U.S. dollars in thousands, except per share data



Six months ended


Three months ended


June 30,


June 30,


2020


2019


2020


2019


(Unaudited)


(Unaudited)

GAAP net income

$ 11,903


$ 7,843


$ 6,639


$ 4,794

GAAP net earnings per share

$ 0.38


$ 0.26


$ 0.21


$ 0.16

Cost of revenues:








Share-based compensation (1)

99


66


49


30

Amortization expenses (2)

136


136


68


68


235


202


117


98

Research and development, net:








Share-based compensation (1)

490


422


247


210

Selling and marketing:








Share-based compensation (1)

1,623


754


864


421

Amortization expenses (2)

30


30


15


15


1,653


784


879


436

General and administrative:








Share-based compensation (1)

1,264


739


657


373

Revaluation of earn-out liability (3)

-


(23)


-


-


1,264


716


657


373

Financial expenses:








Exchange rate differences (4)

(453)


1,258


829


358









Income taxes:








Deferred tax (5)

3,154


1,088


1,124


544

Non-GAAP net income

$ 18,246


$ 12,313


$ 10,492


$ 6,813

Non-GAAP diluted net earnings per share

$ 0.57


$ 0.40


$ 0.32


$ 0.22










(1)  Share-based compensation expenses related to options and restricted share units granted to employees and others.

(2)  Amortization of intangible assets related to the acquisitions of Active Communications Europe assets.

(3)  Expenses or income related to revaluation of an earn-out liability in connection with the acquisition of Active Communications Europe.

(4)  Financial income or expenses related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies.

(5)  Non-cash deferred tax expenses.

 

Note: Non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP. The Company believes that non-GAAP information is useful because it can enhance the understanding of its ongoing economic performance and therefore uses internally this non-GAAP information to evaluate and manage its operations. The Company has chosen to provide this information to investors to enable them to perform comparisons of operating results in a manner similar to how the Company analyzes its operating results and because many comparable companies report this type of information.

 

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

U.S. dollars in thousands




Six months ended


Three months ended



June 30,


June 30,



2020


2019


2020


2019



(Unaudited)


(Unaudited)

Cash flows from operating activities:









Net income


$ 11,903


$ 7,843


$ 6,639


$ 4,794

Adjustments required to reconcile net income to net cash provided by operating activities:









Depreciation and amortization


1,119


980


551


506

Amortization of marketable securities premiums and accretion of discounts, net


-


79


-


23

Increase (decrease) in accrued severance pay, net


624


(115)


312


(276)

Share-based compensation expenses


3,476


1,981


1,817


1,034

Decrease in deferred tax assets, net


3,127


953


1,110


528

Increase in accrued interest and exchange rate effect of
loans, marketable securities and bank deposits


1


159


13


170

Decrease in operating lease right-of-use assets


3,898


4,063


2,022


2,159

Increase (decrease) in operating lease liabilities


(4,184)


(2,713)


60


(376)

Changes in IIA settlement liability, net


61


-


667


-

Decrease (increase) in trade receivables, net


(2,643)


(2,623)


(1,868)


2,237

Decrease (increase) in other receivables and prepaid expenses


(17)


203


58


457

Increase in inventories


(1,408)


(7,256)


(2,695)


(4,357)

Increase (decrease) in trade payables


(2,017)


3,667


(742)


3,040

Increase (decrease) in other payables and accrued expenses


369


2,065


2,278


(2,401)

Increase in deferred revenues


3,206


7,431


508


884

Net cash provided by operating activities


17,515


16,717


10,730


8,422

Cash flows from investing activities:









Proceeds from short-term deposits


451


5,971


301


-

Proceeds from long-term deposits


150


600


-


300

Proceeds from redemption of marketable securities


-


19,385


-


12,094

Purchase of marketable securities


-


(21,035)


-


(21,035)

Purchase of property and equipment


(641)


(1,361)


(293)


(245)

Net cash provided by (used in) investing activities


(40)


3,560


8


(8,886)










 

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

U.S. dollars in thousands




Six months ended


Three months ended



June 30,


June 30,



2020


2019


2020


2019



(Unaudited)


(Unaudited)

Cash flows from financing activities:









Purchase of treasury shares


-


(8,002)


-


(7,051)

Repayment of bank loans


(1,238)


(1,237)


(619)


(619)

Cash dividends paid to shareholders


(3,866)


(3,218)


-


-

Payment related to the acquisition of ACS


-


(410)


-


-

Proceeds from issuance of shares, net


85,654


-


85,654


-

Proceeds from issuance of shares upon exercise of options and warrants


1,051


1,462


703


348

Net cash provided by (used in) financing activities


81,601


(11,405)


85,738


(7,322)










Net increase (decrease) in cash, cash equivalents, and restricted cash


99,076


8,872


96,476


(7,786)

Cash, cash equivalents and restricted cash at beginning of period


69,773


31,503


72,373


48,161

Cash, cash equivalents and restricted cash at end of period


$ 168,849


$ 40,375


$ 168,849


$ 40,375

                                                                                                                       

Cision View original content:http://www.prnewswire.com/news-releases/audiocodes-reports-second-quarter-2020-results-301100796.html

SOURCE AudioCodes


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