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AudioCodes Reports Third Quarter 2018 Results
[October 23, 2018]

AudioCodes Reports Third Quarter 2018 Results


LOD, Israel, Oct. 23, 2018 /PRNewswire/ --

Third Quarter Highlights

  • Quarterly revenues increased by 13.5% year-over-year to $44.5 million;
  • Quarterly service revenues increased by 10.8% 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

AudioCodes (NASDAQ: AUDC), 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

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









September 30,


December 31,


2018


2017


(Unaudited)


(Audited)

ASSETS








CURRENT ASSETS:




Cash and cash equivalents

$ 21,320


$ 24,235

Short-term and restricted bank deposits

6,245


2,739

Short-term marketable securities and accrued interest

25,710


7,087

Trade receivables, net

26,454


22,059

Other receivables and prepaid expenses

8,244


4,693

Inventories

21,900


16,563

Total current assets

109,873


77,376





LONG-TERM ASSETS:




Long-term and restricted bank deposits

3,394


4,207

Long-term marketable securities

-


20,475

Deferred tax assets

4,933


6,685

Severance pay funds

18,654


20,138

Total long-term assets

26,981


51,505





PROPERTY AND EQUIPMENT, NET

3,892


3,835





GOODWILL, INTANGIBLE ASSETS AND OTHER, NET

37,640


38,222





Total assets

$ 178,386


$ 170,938





LIABILITIES AND EQUITY








CURRENT LIABILITIES:




Current maturities of long-term bank loans

$ 2,497


$ 2,519

Trade payables

6,627


5,639

Other payables and accrued expenses

23,621


20,786

Deferred revenues

22,995


16,417

Total current liabilities

55,740


45,361





LONG-TERM LIABILITIES:




Accrued severance pay

19,787


21,228

Long-term bank loans

4,322


6,237

Deferred revenues and other liabilities

7,257


5,731

Total long-term liabilities

31,366


33,196





Total shareholders' equity

91,280


92,381

Total liabilities and shareholders' equity

$ 178,386


$ 170,938


 

 

 


AUDIOCODES LTD. AND ITS SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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













 Nine months ended


Three months ended


 September 30,


September 30,


2018


2017


2018


2017


(Unaudited)


(Unaudited)

Revenues:








Products

$ 89,237


$ 79,450


$ 30,462


$ 26,522

Services

41,209


35,871


14,057


12,686

Total Revenues

130,446


115,321


44,519


39,208

Cost of revenues:








Products

38,428


35,241


13,414


11,909

Services

10,071


8,359


3,413


2,692

Total Cost of revenues

48,499


43,600


16,827


14,601

Gross profit

81,947


71,721


27,692


24,607

Operating expenses:








Research and development, net

25,626


22,222


8,283


7,686

Selling and marketing

37,377


36,549


12,020


12,151

General and administrative

7,713


6,537


2,402


2,176

Total operating expenses

70,716


65,308


22,705


22,013

Operating income

11,231


6,413


4,987


2,594

Financial income (expenses), net

186


(6)


(37)


97

Income before taxes on income

11,417


6,407


4,950


2,691

Taxes on income, net

(2,454)


(3,049)


(815)


(1,642)

Net income

$ 8,963


$ 3,358


$ 4,135


$ 1,049

Basic earnings per share

$ 0.31


$ 0.11


$ 0.14


$ 0.03

Diluted earnings per share

$ 0.30


$ 0.10


$ 0.14


$ 0.03

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

28,855


31,500


28,797


30,918

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

30,118


32,534


30,272


31,959

 

AUDIOCODES LTD. AND ITS SUBSIDIARIES




RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

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









Nine months ended


Three months ended


September 30,


September 30,


2018


2017


2018


2017


(Unaudited)


(Unaudited)

GAAP net income

$ 8,963


$ 3,358


$ 4,135


$ 1,049

GAAP earnings per share

$ 0.30


$ 0.10


$ 0.14


$ 0.03

Cost of revenues:








Share-based compensation (1)

138


59


51


17

Amortization expenses (2)

522


522


174


174


660


581


225


191

Research and development, net:








Share-based compensation (1)

445


278


181


97

Deferred payments expenses (3)

-


136


-


63


445


414


181


160

Selling and marketing:








Share-based compensation (1)

861


779


307


239

Amortization expenses (2)

45


90


15


30


906


869


322


269

General and administrative:








Share-based compensation (1)

854


565


314


219

Revaluation of earn-out liability (4)

200


-


-


-


1,054


565


314


219

 

Income taxes:








Deferred tax (5)

1,752


2,560


584


1,496

Non-GAAP net income

$ 13,780


$ 8,347


$ 5,761


$ 3,384

Non-GAAP diluted earnings per share

$ 0.45


$ 0.25


$ 0.19


$ 0.10










 

(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












Nine months ended


Three months ended



September 30,


September 30,



2018


2017


2018


2017



(Unaudited)


(Unaudited)

Cash flows from operating activities:









Net income


$ 8,963


$ 3,358


$ 4,135


$ 1,049

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









Depreciation and amortization


1,666


1,859


561


599

Amortization of marketable securities premiums and accretion of discounts, net


271


475


83


146

Increase in accrued severance pay, net


43


232


182


284

Share-based compensation expenses


2,298


1,681


853


572

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


(79)


251


(64)


36

Decrease in long- term deferred tax assets


1,689


2,497


563


1,475

Decrease (increase) in trade receivables, net


(4,395)


851


(1,500)


960

Decrease (increase) in other receivables and prepaid expenses


(3,133)


(1,789)


(2,063)


2,398

Increase in inventories


(5,500)


(98)


(3,414)


(488)

Increase (decrease) in trade payables


988


(2,315)


530


386

Increase (decrease) in other payables and accrued expenses


2,761


1,594


1,880


(63)

Increase (decrease) in deferred revenues


8,392


809


1,736


(1,160)

Net cash provided by operating activities


13,964


9,405


3,482


6,194

Cash flows from investing activities:









Proceeds from short-term deposits, net


-


496


400


161

Investment in short-term deposits, net


(3,500)


-


-


-

Proceeds from long-term bank deposits


807


900


300


300

Proceeds from redemption of marketable securities


1,577


5,350


-


4,500

Purchase of property and equipment


(978)


(1,041)


(362)


(395)

Net cash provided by (used in) investing activities


(2,094)


5,705


338


4,566










 

AUDIOCODES LTD. AND ITS SUBSIDIARIES





CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS





U.S. dollars in thousands












Nine months ended


Three months ended



September 30,


September 30,



2018


2017


2018


2017



(Unaudited)


(Unaudited)

Cash flows from financing activities:









Purchase of treasury shares


(11,569)


(16,548)


(1,058)


(6,366)

Repayment of bank loans


(1,887)


(2,878)


(625)


(953)

Cash dividends paid to shareholders


(5,761)


-


(5,761)


-

Payment related to the acquisition of ACS


(151)


-


-


-

Proceeds from issuance of shares upon exercise of options and warrants


4,583


2,012


2,906


479

Net cash used in financing activities


(14,785)


(17,414)


(4,538)


(6,840)










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


(2,915)


(2,304)


(718)


3,920

Cash, cash equivalents and restricted cash at beginning of period


24,235


24,344


22,038


18,120

Cash, cash equivalents and restricted cash at end of period


$ 21,320


$ 22,040


$ 21,320


$ 22,040

 

 

Company Contacts


   IR Agency Contact

Niran Baruch,            

  Shirley Nakar,          

   Philip Carlson

VP Finance & Chief Financial Officer  

  Director, Investor Relations  

  KCSA Strategic

AudioCodes  

  AudioCodes 

   Communications

Tel: +972-3-976-4000  

  Tel: +972-3-976-4000  

   Tel: +1-212-896-1233

Niran.baruch@audiocodes.com  

   shirley@audiocodes.com    

  audc@kcsa.com

 

 

 

 

 

Cision View original content:http://www.prnewswire.com/news-releases/audiocodes-reports-third-quarter-2018-results-300735818.html

SOURCE AudioCodes Ltd.


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