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AudioCodes Reports Second Quarter 2019 Results

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LOD, Israel, July 23, 2019 /PRNewswire/ --

Second Quarter Highlights

  • Quarterly revenues increased by 13.8% year-over-year to $49.5 million;
  • Quarterly service revenues increased by 23.5% year-over-year to $16.7 million;
  • Quarterly UC-SIP revenues increased more than 20% year-over-year;
  • Quarterly GAAP gross margin percentage was 63.3%; quarterly Non-GAAP gross margin percentage was 63.5%;
  • Quarterly GAAP operating margin percentage was 11.9%; quarterly Non-GAAP operating margin percentage was 14.1%;
  • Quarterly cash flow from operating activities was $8.4 million;
  • Quarterly GAAP net income was $4.8 million, or $0.16 per diluted share;
  • Quarterly Non-GAAP net income was $6.8 million, or $0.22 per diluted share; 
  • AudioCodes repurchased 473,235 of its ordinary shares during the quarter at an aggregate cost of $7.05 million.

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 second quarter ended June 30, 2019.

Revenues for the second quarter of 2019 were $49.5 million compared to $46.6 million for the first quarter of 2019 and $43.5 million for the second quarter of 2018.

Net income was $4.8 million, or $0.16 per diluted share, for the second quarter of 2019 compared to $2.4 million, or $0.08 per diluted share, for the second quarter of 2018.

On a Non-GAAP basis, net income was $6.8 million, or $0.22 per diluted share, for the second quarter of 2019 compared to $4.1 million, or $0.14 per diluted share, for the second quarter of 2018.

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.

Net cash provided by operating activities was $8.4 million for the second quarter of 2019. Cash and cash equivalents, long- and short-term bank deposits and short-term marketable securities were $69.1 million as of June 30, 2019 compared to $65.4 million as of December 31, 2018. The increase in cash and cash equivalents, long- and short-term bank deposits and short-term marketable securities was the result of cash from operating activities offset, in part, by the use of cash for the continued repurchasing of the Company's ordinary shares pursuant to its share repurchase program and the payment of a cash dividend in the first quarter of 2019.

"We are pleased to report record financial results for the second quarter of 2019," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "We continue to enjoy strong growth in the UC and UCaaS markets and a faster pace of migration of service providers to All-IP. Coupling these growth trends with strong execution across our business lines we continue to expand our business while demonstrating improved financial and operational efficiency. By surpassing our financial plan for the first half of 2019, we are confident in our ability to outperform our initial plan for the year and deliver higher revenues and profitability than previously announced."

"We continue to increase our investments in the Microsoft Teams space as this collaboration solution continues to gain traction in the market. We are confident in our ability to grow our business in this area in 2019 and beyond. At the same time, we continue to foster new partnerships with more leading players in the UCaaS and Contact Center markets, and make progress in our efforts and investments in the voice.ai area. We continue to prudently invest in our future offerings and remain focused on maximizing the return on investments for our shareholders," concluded Mr. Adlersberg.

Share Buy Back Program

As of June 30, 2019, AudioCodes had acquired an aggregate of 18.1 million of its ordinary shares since August 2014 for an aggregate consideration of $102.1 million. During the quarter ended June 30, 2019, AudioCodes acquired 473,235 of its ordinary shares under its share repurchase program for a total consideration of $7.05 million.

In January 2019, AudioCodes received court approval in Israel to purchase up to an aggregate of $12 million ("Permitted Amount") of additional ordinary shares pursuant to its share repurchase program. The court approval also permitted AudioCodes to declare a dividend of any part of the Permitted Amount during the approved validity period. This court approval expired on July 1, 2019.

On May 28, 2019, the Board of Directors of AudioCodes approved the submission of a new application to the Israeli court, requesting approval of an additional repurchase program for $12 million of ordinary shares following the expiration of the existing program. The application also requests the court to permit AudioCodes to declare a dividend of any part of this amount. The new application was submitted to the court and a decision is expected during August 2019.

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 8:30 A.M., Eastern Time today to discuss the Company's first quarter of 2019 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 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.

©2019 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,


December 31,


2019


2018


(Unaudited)


(Audited)

ASSETS








CURRENT ASSETS:




Cash and cash equivalents

$ 39,400


$ 31,503

Short-term and restricted bank deposits

7,385


12,381

Short-term marketable securities and accrued interest

21,035


19,602

Trade receivables, net

24,716


22,279

Other receivables and prepaid expenses

5,687


5,885

Inventories

29,832


22,620

Total current assets

128,055


114,270





LONG-TERM ASSETS:




Long-term and restricted bank deposits

$ 1,294


$ 1,894

Deferred tax assets

3,263


4,350

Operating lease right-of-use assets

32,253


-

Severance pay funds

18,393


17,518

Total long-term assets

55,203


23,762





PROPERTY AND EQUIPMENT, NET

4,522


3,865





GOODWILL, INTANGIBLE ASSETS AND OTHER, NET

37,299


37,475





Total assets

$ 225,079


$ 179,372





LIABILITIES AND SHAREHOLDERS' EQUITY








CURRENT LIABILITIES:




Current maturities of long-term bank loans

$ 2,483


$ 2,487

Trade payables

9,855


6,188

Other payables and accrued expenses

23,766


22,541

Deferred revenues

29,542


23,727

Short-term operating lease liabilities

8,513


-

Total current liabilities

74,159


54,943





LONG-TERM LIABILITIES:




Accrued severance pay

$ 19,488


$ 18,728

Long-term bank loans

2,442


3,687

Deferred revenues and other liabilities

8,948


7,466

Long-term operating lease liabilities

25,090


-

Total long-term liabilities

55,968


29,881





Total shareholders' equity

94,952


94,548

Total liabilities and shareholders' equity

$ 225,079


$ 179,372

 

 

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,


2019


2018


2019


2018


(Unaudited)


(Unaudited)

Revenues:








Products

$ 65,296


$ 58,775


$ 32,843


$ 30,012

Services

30,782


27,152


16,656


13,490

Total Revenues

96,078


85,927


49,499


43,502

Cost of revenues:








Products

28,150


25,014


14,372


13,119

Services

7,385


6,658


3,813


3,287

Total Cost of revenues

35,535


31,672


18,185


16,406

Gross profit

60,543


54,255


31,314


27,096

Operating expenses:








Research and development, net

19,659


17,343


10,179


8,710

Selling and marketing

25,220


25,357


12,659


12,369

General and administrative

5,263


5,311


2,592


2,730

Total operating expenses

50,142


48,011


25,430


23,809

Operating income

10,401


6,244


5,884


3,287

Financial income (expenses), net

(1,079)


223


(280)


(20)

Income before taxes on income

9,322


6,467


5,604


3,267

Taxes on income, net

(1,479)


(1,639)


(810)


(873)

Net income

$ 7,843


$ 4,828


$ 4,794


$ 2,394

Basic net earnings per share

$ 0.27


$ 0.17


$ 0.16


$ 0.08

Diluted net earnings per share

$ 0.26


$ 0.16


$ 0.16


$ 0.08

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

29,214


28,884


29,214


28,609

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

30,737


30,041


30,744


29,733

 

 

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,


2019


2018


2019


2018


(Unaudited)


(Unaudited)

GAAP net income

$ 7,843


$ 4,828


$ 4,794


$ 2,394

GAAP net earnings per share

$ 0.26


$ 0.16


$ 0.16


$ 0.08

Cost of revenues:








Share-based compensation (1)

66


87


30


48

Amortization expenses (2)

136


348


68


174


202


435


98


222

Research and development, net:








Share-based compensation (1)

422


264


210


151

Selling and marketing:








Share-based compensation (1)

754


554


421


280

Amortization expenses (2)

30


30


15


15


784


584


436


295

General and administrative:








Share-based compensation (1)

739


540


373


271

Revaluation of earn-out liability (3)

(23)


200


-


200


716


740


373


471

Financial expenses:








Exchange rate differences (4)

1,258


-


358


-









Income taxes:








Deferred tax (5)

1,088


1,168


544


584

Non-GAAP net income

$ 12,313


$ 8,019


$ 6,813


$ 4,117

Non-GAAP diluted net earnings per share

$ 0.40


$ 0.26


$ 0.22


$ 0.14










(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 Mailvision and 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 STATEMENTS OF CASH FLOWS

U.S. dollars in thousands








Six months ended


Three months ended



June 30,


June 30,



2019


2018


2019


2018



(Unaudited)


(Unaudited)

Cash flows from operating activities:









Net income


$ 7,843


$ 4,828


$ 4,794


$ 2,394

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









Depreciation and amortization


980


1,105


506


565

Amortization of marketable securities premiums and accretion of discounts, net


79


188


23


85

Increase in accrued severance pay, net


(115)


(139)


(276)


(186)

Share-based compensation expenses


1,981


1,445


1,034


750

Decrease in deferred tax assets, net


953


1,126


528


563

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


159


(15)


170


(30)

Changes in operating leases, net


1,350


-


1,783


-

Decrease (increase) in trade receivables, net


(2,623)


(2,895)


2,237


(3,284)

Decrease (increase) in other receivables and prepaid expenses


203


(1,070)


457


664

Increase in inventories


(7,256)


(2,086)


(4,357)


(1,115)

Increase in trade payables


3,667


458


3,040


296

Increase (decrease) in other payables and accrued expenses


2,065


881


(2,401)


1,962

Increase (decrease) in deferred revenues


7,431


6,656


884


(468)

Net cash provided by operating activities


16,717


10,482


8,422


2,196

Cash flows from investing activities:









Investment in short-term deposits


-


(399)


-


(399)

Proceeds from short-term deposits


5,971


-


-


-

Proceeds from long-term deposits


600


-


300


-

Proceeds from redemption of marketable securities


19,385


1,577


12,094


850

Purchase of marketable securities


(21,035)


-


(21,035)


-

Purchase of property and equipment


(1,361)


(616)


(245)


(336)

Net cash provided by (used in) investing activities


3,560


562


(8,886)


115










 

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,



2019


2018


2019


2018



(Unaudited)


(Unaudited)

Cash flows from financing activities:









Purchase of treasury shares


(8,002)


(10,511)


(7,051)


(3,287)

Repayment of bank loans


(1,237)


(1,262)


(619)


(626)

Cash dividends paid to shareholders


(3,218)


-


-


-

Payment related to the acquisition of ACS


(410)


(151)


-


-

Proceeds from issuance of shares upon exercise of options and warrants


1,462


1,677


348


231

Net cash used in financing activities


(11,405)


(10,247)


(7,322)


(3,682)










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


8,872


797


(7,786)


(1,371)

Cash, cash equivalents and restricted cash at beginning of period


31,503


31,181


48,161


33,349

Cash, cash equivalents and restricted cash at end of period


$ 40,375


$ 31,978


$ 40,375


$ 31,978

                                                                                                                       

 

Company Contacts


IR Agency Contact

Niran Baruch,

Shirley Nakar,

Rob Fink,

VP Finance & Chief Financial Officer

Director, Investor Relations

Hayden IR

AudioCodes

AudioCodes

Tel: +1-646-415-8972

Tel: +972-3-976-4000

Tel: +972-3-976-4000

audc@haydenir.com

Niran.baruch@audiocodes.com

shirley@audiocodes.com


 

 

 

 

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SOURCE AudioCodes Ltd.

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