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AudioCodes Reports Fourth Quarter and Full Year 2020 Results
[January 26, 2021]

AudioCodes Reports Fourth Quarter and Full Year 2020 Results


LOD, Israel, Jan. 26, 2021 /PRNewswire/ --

Fourth Quarter and Full Year 2020 Highlights

  • Quarterly revenues increased by 11.1% year-over-year to $58.7 million; full 2020 year revenues increased by 10.2% to $220.8 million;
  • Quarterly service revenues increased by 19.9% year-over-year to $21 million; full 2020 year service revenues increased by 16.7% to $75.4 million; and
  • Quarterly and full 2020 year UC-SIP revenues increased more than 20% year-over-year.
  • GAAP results:
          o Quarterly GAAP gross margin was 71.4%; 
          o Quarterly GAAP operating margin was 20.7%;
          o Quarterly GAAP net income was $8.4 million, or $0.24 per diluted share; and 
          o Full 2020 year GAAP net income was $27.2 million, or $0.83 per diluted share.
  • Non-GAAP results:
          o Quarterly Non-GAAP gross margin was 71.5%;
          o Quarterly Non-GAAP operating margin was 26.2%; 
          o Quarterly Non-GAAP net income was $15.2 million, or $0.44 per diluted share; and
          o Full 2020 year Non-GAAP net income was $46.7 million, or $1.41 per diluted share.
  • Net cash provided by operating activities was $10.1 million for the quarter and $38.5 million for the full year.

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 fourth quarter and full year periods ended December 31, 2020.

Revenues for the fourth quarter of 2020 were $58.7 million compared to $56.6 million for the third quarter of 2020 and $52.8 million for the fourth quarter of 2019. Revenues were $220.8 million in 2020 compared to $200.3 million in 2019.

Net income was $8.4 million, or $0.24 per diluted share, for the fourth quarter of 2020, compared to a net loss of $8.2 million, or $(0.28) per diluted share, for the fourth quarter of 2019. Net income was $27.2 million, or $0.83 per diluted share, in 2020 compared to $4.0 million, or $0.13 per diluted share, in 2019.

On a Non-GAAP basis, net income was $15.2 million, or $0.44 per diluted share, for the fourth quarter of 2020 compared to $8.1 million, or $0.26 per diluted share, in the fourth quarter of 2019. Non-GAAP net income was $46.7 million, or $1.41 per diluted share, in 2020 compared to $27.8 million, or $0.89 per diluted share, in 2019.

Non-GAAP net income excludes: (i) share-based compensation expenses; (ii) amortization expenses related to intangible assets; (iii) expenses related to the payment required to be made pursuant to the royalty buyout agreement with the Israel National Authority for Technology and Innovation ("IIA")entered into in November 2019; (iv) expenses or income related to revaluation of an earn-out liability in connection with the acquisition of Active Communications Europe; (v) financial income or expenses related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies and (vi) non-cash deferred tax expenses (benefit). 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 $10.1 million for the fourth quarter of 2020 and $38.5 million for 2020. Net cash provided by operating activities in both periods was impacted by the $11.6 million payment made in December 2020 which was the second installment payment pursuant to the royalty buyout agreement.

Cash and cash equivalents, long and short-term bank deposits and long and short-term marketable securities were $186.3 million as of December 31, 2020 compared to $71.9 million as of December 31, 2019. The increase in cash and cash equivalents, long and short-term bank deposits and long and short-term marketable securities was the result of the receipt of the net proceeds of the Company's public offering in June 2020, as well as due to cash provided by operating activities, offset, in part, by the payments of cash dividends during 2020.

"We are pleased to report record financial results for the fourth quarter and full year 2020," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes.

"The year 2020 ended on a strong note, underscoring our excellent performance for the full year, and providing continued momentum heading into 2021. With collaboration and work from home trends becoming key for business continuity and workplace productivity in the Covid-19 pandemic era, we have seen increased demand for our comprehensive portfolio of solutions and services for the UCaas and Contact Center markets. Most notable was the more than 17% growth in our Enterprise business during 2020, which now comprises about 78% of revenue, driven mainly by continued success in voice solutions for Microsoft Teams where annual revenue grew by over 300% year-over-year, and more than 30%  compared to the third quarter of 2020. Additionally, we witnessed higher than anticipated revenue in the Contact Center business, which grew over 15% in 2020. With continued focus on collaboration tools and on work from home in the coming years, we anticipate similar growth in 2021 and beyond."

Mr. Adlersberg continued, "Given the ramp up in conversational AI opportunities we experienced in the second half of 2020, and looking to the future, we expect voice.ai to be a new growth engine for us over the next several years. In 2020, we experienced over 50% growth in the revenues of our conversational IVR, recording and voice.ai connect solutions. Driven by the current environment and trends, the need for quick and efficient access to contact centers has become a top priority for many. We see rising demand and requirements for automation of customer calls and self-service solutions. Meeting recap is another growth area for us where we integrate an intelligent assistant into our Meeting Insight solution, targeting to automate various enterprise business processes across the organization. As such, we see much potential and growth in voice.ai related applications."  

"As we enter 2021 with growth engines such as solutions for Microsoft Teams, contact centers and conversational AI, we are confident in our decision to continue to invest in future solutions and service offerings in the UCaaS and Contact Center enterprise market and to focus on the return on investment to our shareholders," concluded Mr. Adlersberg.

Court Approval of Share Purchases and/or Cash Dividends

In January 2021, the Company received court approval in Israel to purchase up to an aggregate amount of $30 million of additional ordinary shares. The court approval also permits AudioCodes to declare a dividend of any part of this amount. The approval is valid through July 19, 2021.

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 8:30 A.M., Eastern Time today to discuss the Company's fourth quarter and full year 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.

©2021 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.

Summary financial data follows

 

                                                                                                                                     





AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands 



December 31,


December 31,


2020


2019


(Unaudited)


(Audited)

ASSETS








CURRENT ASSETS:




Cash and cash equivalents

$ 40,934


$ 64,773

Restricted cash

5,100


5,000

Short-term and restricted bank deposits

84,817


1,416

Short-term marketable securities and accrued interest

449


-

Trade receivables, net

34,518


27,501

Other receivables and prepaid expenses

8,631


5,626

Inventories

29,193


28,275

Total current assets

203,642


132,591





LONG-TERM ASSETS:




Long-term and restricted bank deposits

$ 94


$ 694

Long-term marketable securities and accrued interest

54,895


-

Deferred tax assets

12,081


20,466

Operating lease right-of-use assets

25,430


29,688

Severance pay funds

20,597


19,370

Total long-term assets

113,097


70,218





PROPERTY AND EQUIPMENT, NET

4,593


4,392





GOODWILL, INTANGIBLE ASSETS AND OTHER, NET

36,791


37,123





Total assets

$ 358,123


$ 244,324





LIABILITIES AND SHAREHOLDERS' EQUITY








CURRENT LIABILITIES:




Current maturities of long-term bank loans

$ 1,200


$ 2,473

Trade payables

6,984


6,628

Other payables and accrued expenses

28,531


24,692

IIA settlement liability

11,684


10,750

Deferred revenues

37,182


33,538

Short-term operating lease liabilities

9,178


8,579

Total current liabilities

94,759


86,660





LONG-TERM LIABILITIES:




Accrued severance pay

$ 21,830


$ 20,313

Long-term bank loans

-


1,200

IIA settlement liability

-


10,749

Deferred revenues and other liabilities

12,243


9,831

Long-term operating lease liabilities

19,436


23,097

Total long-term liabilities

53,509


65,190





Total shareholders' equity

209,855


92,474

Total liabilities and shareholders' equity

$ 358,123


$ 244,324


 

 

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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



Year ended


Three months ended


December 31,


December 31,


2020


2019


2020


2019


(Unaudited)

(Audited)


(Unaudited)

Revenues:








Products

$ 145,332


$ 135,646


$ 37,644


$ 35,271

Services

75,442


64,641


21,022


17,526

Total Revenues

220,774


200,287


58,666


52,797

Cost of revenues:








Products

54,384


59,022


12,071


15,340

Services

16,574


14,129


4,735


3,215

Expense related to royalty buyout agreement with 
the IIA

-


32,178


-


32,178

Total Cost of revenues

70,958


105,329


16,806


50,733

Gross profit

149,816


94,958


41,860


2,064

Operating expenses:








Research and development, net

46,072


41,199


12,528


10,941

Selling and marketing

51,217


51,535


13,110


13,650

General and administrative

14,177


11,778


4,104


3,424

Total operating expenses

111,466


104,512


29,742


28,015

Operating income (loss)

38,350


(9,554)


12,118


(25,951)

Financial income (expenses), net

(1,703)


(1,761)


(2,661)


231

Income (loss) before taxes on income

36,647


(11,315)


9,457


(25,720)

Tax benefit (taxes on income), net

(9,399)


15,292


(1,076)


17,487

Net income (loss)

$ 27,248


$ 3,977


$ 8,381


$ (8,233)

Basic net earnings (loss) per share

$ 0.87


$ 0.14


$ 0.25


$ (0.28)

Diluted net earnings (loss) per share

$ 0.83


$ 0.13


$ 0.24


$ (0.28)

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

31,440


29,252


32,907


29,423

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

32,916


30,800


34,210


29,423










 

 


AUDIOCODES LTD. AND ITS SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

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



Year ended


Three months ended


December 31,


December 31,


2020


2019


2020


2019


(Unaudited)

(Audited)


(Unaudited)

GAAP net income (loss)

$ 27,248


$ 3,977


$ 8,381


$ (8,233)

GAAP net earnings (loss) per share

$ 0.83


$ 0.13


$ 0.24


$ (0.28)

Cost of revenues:








Share-based compensation (1)

181


183


24


62

Amortization expenses (2)

272


272


68


68

Expense related to royalty buyout agreement with the
IIA (3)

-


32,178


-


32,178


453


32,633


92


32,308

Research and development, net:








Share-based compensation (1)

1,535


937


771


289

Selling and marketing:








Share-based compensation (1)

3,635


2,171


967


811

Amortization expenses (2)

60


60


15


15


3,695


2,231


982


826

General and administrative:








Share-based compensation (1)

3,420


2,001


1,436


797

Revaluation of earn-out liability (4)

-


(23)


-


-


3,420


1,978


1,436


797

Financial expenses:








Exchange rate differences (5)

1,973


2,172


2,844


(158)









Income taxes:








Deferred tax (6)

8,398


(16,099)


720


(17,731)

Non-GAAP net income

$ 46,722


$ 27,829


$ 15,226


$ 8,098

Non-GAAP diluted net earnings per share

$ 1.41


$ 0.89


$ 0.44


$ 0.26

(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)  Expense related to royalty buyout agreement with the IIA.
(4)  Income related to revaluation of an earn-out liability in connection with the acquisition of Active Communications Europe.
(5)  Financial income or expenses related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies.
(6)  Non-cash deferred tax expenses (benefit).

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




Year ended


Three months ended



December 31,


December 31,



2020


2019


2020


2019



(Unaudited)

(Audited)


(Unaudited)

Cash flows from operating activities:









Net income (loss)


$ 27,248


$ 3,977


$ 8,381


$ (8,233)

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









Depreciation and amortization


2,268


2,044


587


522

Amortization of marketable securities premiums and 
     accretion of discounts, net


172


79


134


-

Increase (decrease) in accrued severance pay, net


290


(267)


(133)


(391)

Share-based compensation expenses


8,771


5,292


3,198


1,959

Decrease (increase) in deferred tax assets, net


8,329


(16,282)


692


(17,763)

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


(26)


140


(7)


20

Decrease in operating lease right-of-use assets


7,913


7,444


2,193


1,543

Increase (decrease) in operating lease liabilities


(6,717)


(5,456)


789


60

Changes in IIA settlement liability, net


(9,815)


21,499


(10,086)


21,499

Increase in trade receivables, net


(7,017)


(5,222)


(3,364)


(3,216)

Decrease (increase) in other receivables and prepaid 
     expenses


(1,516)


259


233


(223)

Decrease (increase) in inventories


(1,525)


(5,925)


929


1,752

Increase (decrease) in trade payables


356


440


390


(1,191)

Increase in other payables and accrued expenses


3,839


2,805


4,143


1,381

Increase in deferred revenues


5,906


12,342


2,008


4,694

Net cash provided by operating activities


38,476


23,169


10,087


2,413










Cash flows from investing activities:









Investment in short-term deposits


(84,000)


-


-


-

Proceeds from (investment in) short-term deposits


599


10,962


(75)


-

Proceeds from long-term deposits


600


1,200


375


300

Proceeds from redemption of marketable securities


-


29,412


-


10,027

Purchase of marketable securities


(54,977)


(10,025)


(27,313)


(19)

Purchase of property and equipment


(1,530)


(1,949)


(418)


(273)

Net cash provided by (used in) investing activities


(139,308)


29,600


(27,431)


10,035




















 

 

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

U.S. dollars in thousands




Year ended


Three months ended



December 31,


December 31,



2020


2019


2020


2019



(Unaudited)

(Audited)


(Unaudited)

Cash flows from financing activities:









Purchase of treasury shares


-


(8,002)


-


-

Repayment of bank loans


(2,497)


(2,470)


(632)


(617)

Cash dividends paid to shareholders


(8,442)


(6,720)


(855)


-

Payment related to the acquisition of ACS


-


(410)


-


-

Proceeds from issuance of shares, net


85,426


-


-


-

Proceeds from issuance of shares upon exercise of 
     options and warrants


2,606


3,103


1,230


870

Net cash provided by (used in) financing activities


77,093


(14,499)


(257)


253










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


(23,739)


38,270


(17,601)


12,701

Cash, cash equivalents and restricted cash at beginning 
     of period


69,773


31,503


63,635


57,072

Cash, cash equivalents and restricted cash at end of 
     period


$ 46,034


$ 69,773


$ 46,034


$ 69,773











 

 




Company Contacts


  IR Agency Contact

Niran Baruch,

VP Finance & Chief Financial Officer

AudioCodes

Tel: +972-3-976-4000

[email protected]

Shirley Nakar,

Director, Investor Relations

AudioCodes

Tel: +972-3-976-4000

[email protected]

Brett Maas,
Managing Director
Hayden IR
Tel: +1-646-536-7331
[email protected]

 

 

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SOURCE AudioCodes


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