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AudioCodes Reports Second Quarter 2018 Results
[July 24, 2018]

AudioCodes Reports Second Quarter 2018 Results


LOD, Israel, July 24, 2018 /PRNewswire/ --

Second Quarter Highlights

  • Quarterly revenues increased by 12.3% year-over-year to $43.5 million;
  • Quarterly service revenues increased by 14.2% 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

AudioCodes (NASDAQ, TASE: AUDC), 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 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, TASE: AUDC) is a leading vendor of advanced voice networking and media processing 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; 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.

©2018 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 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.

Summary financial data follows:  





AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands


June 30, 2018


December 31, 2017


(Unaudited)


(Audited)

ASSETS








CURRENT ASSETS:




Cash and cash equivalents

$ 22,038


$ 24,235

Short-term and restricted bank deposits

6,639


2,739

Short-term marketable securities and accrued interest

25,709


7,087

Trade receivables, net

24,954


22,059

Other receivables and prepaid expenses

5,943


4,693

Inventories

18,649


16,563

Total current assets

103,932


77,376





LONG-TERM ASSETS:




Long-term and restricted bank deposits

3,700


4,207

Long-term marketable securities

-


20,475

Deferred tax assets

5,517


6,685

Severance pay funds

18,867


20,138

Total long-term assets

28,084


51,505





PROPERTY AND EQUIPMENT, NET

3,734


3,835





GOODWILL, INTANGIBLE ASSETS AND OTHER, NET

37,834


38,222





Total assets

$ 173,584


$ 170,938





LIABILITIES AND EQUITY








CURRENT LIABILITIES:




Current maturities of long-term bank loans

$ 2,500


$ 2,519

Trade payables

6,097


5,639

Other payables and accrued expenses

21,821


20,786

Deferred revenues

21,780


16,417

Total current liabilities

52,198


45,361





LONG-TERM LIABILITIES:




Accrued severance pay

19,818


21,228

Long-term bank loans

4,949


6,237

Deferred revenues and other liabilities

6,757


5,731

Total long-term liabilities

31,524


33,196





Total shareholders' equity

89,862


92,381

Total liabilities and shareholders' equity

$ 173,584


$ 170,938


AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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


 Six months ended


Three months ended


 June 30,


June 30,


2018


2017


2018


2017


(Unaudited)


(Unaudited)

Revenues:








Products

$ 58,775


$ 52,928


$ 30,012


$ 26,920

Services

27,152


23,185


13,490


11,816

Total Revenues

$ 85,927


$ 76,113


$ 43,502


$ 38,736

Cost of revenues:








Products

25,014


23,332


13,119


12,173

Services

6,658


5,667


3,287


2,765

Total Cost of revenues

31,672


28,999


16,406


14,938

Gross profit

54,255


47,114


27,096


23,798

Operating expenses:








Research and development, net

17,343


14,536


8,710


7,382

Selling and marketing

25,357


24,398


12,369


12,363

General and administrative

5,311


4,361


2,730


2,200

Total operating expenses

48,011


43,295


23,809


21,945

Operating income

6,244


3,819


3,287


1,853

Financial income (expenses), net

223


(103)


(20)


(34)

Income before taxes on income

6,467


3,716


3,267


1,819

Income tax expense, net

(1,639)


(1,407)


(873)


(805)

Net income

$ 4,828


$ 2,309


$ 2,394


$ 1,014

Basic earnings per share

$ 0.17


$ 0.07


$ 0.08


$ 0.03

Diluted earnings per share

$ 0.16


$ 0.07


$ 0.08


$ 0.03

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

28,884


31,791


28,609


31,596

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

30,041


32,822


29,733


32,608

 

 

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,


2018


2017


2018


2017


(Unaudited)


(Unaudited)

GAAP net income

$ 4,828


$ 2,309


$ 2,394


$ 1,014

GAAP earnings per share

$ 0.16


$ 0.07


$ 0.08


$ 0.03

Cost of revenues:








Share-based compensation (1)

87


42


48


17

Amortization expenses (2)

348


348


174


174


435


390


222


191

Research and development, net:








Share-based compensation (1)

264


181


151


86

Deferred payments expenses (3)

-


74


-


63


264


255


151


149

Selling and marketing:








Share-based compensation (1)

554


540


280


277

Amortization expenses (2)

30


60


15


30


584


600


295


307

General and administrative:








Share-based compensation (1)

540


346


271


191

Revaluation of earn-out liability (4)

200


-


200


-


740


346


471


191

Income taxes:








Deferred tax (5)

1,168


1,064


584


634

Non-GAAP net income

$ 8,019


$ 4,964


$ 4,117


$ 2,486

Non-GAAP diluted earnings per share

$ 0.26


$ 0.15


$ 0.14


$ 0.08

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

(2)      Excluding amortization of intangible assets related to the acquisitions of Mailvision and Active Communications Europe assets.

(3)      Excluding expenses related to deferred payments in connection with the acquisition of Active Communications Europe.

(4)      Revaluation of earn-out liability in connection with the acquisition of Active Communications Europe.

(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 STATEMENTS OF CASH FLOWS

U.S. dollars in thousands


Six months ended


Three months ended


June 30,


June 30,


2018


2017


2018


2017


(Unaudited)


(Unaudited)

Cash flows from operating activities:








Net income

$ 4,828


$ 2,309


$ 2,394


$ 1,014

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








Depreciation and amortization

1,105


1,260


565


605

Amortization of marketable securities premiums and
accretion of discounts, net

188


329


85


168

Decrease in accrued severance pay, net

(139)


(52)


(186)


(248)

Share-based compensation expenses

1,445


1,109


750


571

Decrease (increase) in accrued interest and exchange
rate effect of loans, marketable securities and bank deposits

(15)


215


(30)


218

Decrease in long- term deferred tax assets

1,126


1,022


563


613

Increase in trade receivables, net

(2,895)


(109)


(3,284)


(1,165)

Decrease (increase) in other receivables and prepaid expenses

(1,070)


(4,181)


664


(729)

Decrease (increase) in inventories

(2,086)


390


(1,115)


497

Increase (decrease) in trade payables

458


(2,701)


296


(137)

Increase in other payables and accrued expenses

881


1,657


1,962


1,711

Increase (decrease) in deferred revenues

6,656


1,969


(468)


(761)

Net cash provided by operating activities

10,482


3,217


2,196


2,357

Cash flows from investing activities:








Investment in short-term deposits, net

(399)


-


(399)


-

Proceeds from redemption of marketable securities

1,577


850


850


850

Purchase of property and equipment

(616)


(646)


(336)


(183)

Net cash provided by investing activities

562


204


115


667









 

                                   

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands


Six months ended


Three months ended


June 30,


June 30,


2018


2017


2018


2017


(Unaudited)


(Unaudited)

Cash flows from financing activities:








Purchase of treasury shares

(10,511)


(10,182)


(3,287)


(2,850)

Repayment of bank loans

(1,262)


(1,925)


(626)


(940)

Payment related to the acquisition of ACS

(151)


-


-


-

Proceeds from issuance of shares upon
exercise of options and warrants

1,677


1,533


231


247

Net cash used in financing activities

(10,247)


(10,574)


(3,682)


(3,543)









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

797


(7,153)


(1,371)


(519)

Cash, cash equivalents and restricted
cash at beginning of period

31,181


33,152


33,349


26,518

Cash, cash equivalents and restricted
cash at end of period

$ 31,978


$ 25,999


$ 31,978


$ 25,999

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
Philip Carlson
KCSA Strategic
Communications
Tel: 1-212-896-1233
audc@kcsa.com

Cision View original content:http://www.prnewswire.com/news-releases/audiocodes-reports-second-quarter-2018-results-300685357.html

SOURCE AudioCodes Ltd.


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