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AudioCodes Reports Third Quarter 2019 Results

LOD, Israel, Oct. 29, 2019 /PRNewswire/ --  

Third Quarter Highlights

  • Quarterly revenues increased by 15.5% year-over-year to $51.4 million;
  • Quarterly service revenues increased by 16.2% year-over-year to $16.3 million;
  • Quarterly UC-SIP revenues increased more than 15% year-over-year;
  • Quarterly GAAP gross margin percentage was 62.9%; quarterly Non-GAAP gross margin percentage was 63.2%;
  • Quarterly GAAP operating margin percentage was 11.7%; quarterly Non-GAAP operating margin percentage was 14.5%;
  • Quarterly cash flow from operating activities was $4.0 million;
  • Quarterly GAAP net income was $4.4 million, or $0.14 per diluted share;
  • Quarterly Non-GAAP net income was $7.4 million, or $0.24 per diluted share;
  • AudioCodes declared a semi-annual cash dividend of 12 cents per share. The dividend, in the aggregate amount of $3.5 million, was paid on September 3, 2019.

Details

AudioCodes (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, 2019.

Revenues for the third quarter of 2019 were $51.4 million compared to $49.5 million for the second quarter of 2019 and $44.5 million for the third quarter of 2018.

Net income was $4.4 million, or $0.14 per diluted share, for the third quarter of 2019 compared to $4.1 million, or $0.14 per diluted share, for the third quarter of 2018.

On a Non-GAAP basis, net income was $7.4 million, or $0.24 per diluted share, for the third quarter of 2019 compared to $5.8 million, or $0.19 per diluted share, for the third 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 $4.0 million for the third quarter of 2019. Cash and cash equivalents, long- and short-term bank deposits and short-term marketable securities were $69.5 million as of September 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 cash dividends during 2019.

"We are pleased to report record financial results for the third quarter of 2019," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "We continue to enjoy growth trends in the UC and UCaaS markets and an increased pace of migration of service providers to All-IP. Our strong execution across our business lines, aided by these growth trends, enabled us to expand our business. We improved our financial performance on both revenues and profits.  Our improved operational efficiency and the growth in our operating margin percentage to 14.5% underscored our financial success."

"With greater industry focus on the meeting space, we have increased our investments in this area since the beginning of 2019. Earlier in October we announced our entry into the market in collaboration with Dolby. Our Room Experience (RX) solution suite is designed to address a wide range of customer room environments from huddle rooms to large rooms and the boardroom. Our solutions include a comprehensive portfolio of devices built around Dolby hardware and audio technology in order to deliver an exceptional audio experience in rooms of all sizes.  The initiative also includes Meeting Insights, an enterprise software solution designed to easily capture, organize, share and distribute the content of enterprise meetings using AudioCodes' state-of-the-art Voice.ai technology."

"A continued theme in our investments is the emerging voice.ai area where we are making progress with encouraging results. We continue to prudently invest in our future offerings and remain focused on maximizing the return on these investments for our shareholders," concluded Mr. Adlersberg.

Cash Dividend 

On August 6, 2019, the Company declared a cash dividend of $0.12 per share. The dividend, in the aggregate amount of $3.5 million, was paid on September 3, 2019 to all of the Company's shareholders of record on August 19, 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 third 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. (AUDC) (AUDC.TA) 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, 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



September 30,


December 31,


2019


2018


(Unaudited)


(Audited)

ASSETS








CURRENT ASSETS:




Cash and cash equivalents

$ 51,097


$ 31,503

Short-term and restricted bank deposits

7,394


12,381

Short-term marketable securities and accrued interest

10,006


19,602

Trade receivables, net

24,072


22,279

Other receivables and prepaid expenses

5,303


5,885

Inventories

30,172


22,620





Total current assets

128,044


114,270





LONG-TERM ASSETS:




Long-term and restricted bank deposits

$ 994


$ 1,894

Deferred tax assets

2,719


4,350

Operating lease right-of-use assets

30,750


-

Severance pay funds

18,738


17,518





Total long-term assets

53,201


23,762





PROPERTY AND EQUIPMENT, NET

4,472


3,865





GOODWILL, INTANGIBLE ASSETS AND OTHER, NET

37,211


37,475





Total assets

$ 222,928


$ 179,372





LIABILITIES AND SHAREHOLDERS' EQUITY








CURRENT LIABILITIES:




Current maturities of long-term bank loans

$ 2,456


$ 2,487

Trade payables

7,819


6,188

Other payables and accrued expenses

23,098


22,541

Deferred revenues

29,746


23,727

Short-term operating lease liabilities

8,605


-





Total current liabilities

71,724


54,943





LONG-TERM LIABILITIES:




Accrued severance pay

$ 20,072


$ 18,728

Long-term bank loans

1,814


3,687

Deferred revenues and other liabilities

8,945


7,466

Long-term operating lease liabilities

22,530


-





Total long-term liabilities

53,361


29,881





Total shareholders' equity

97,843


94,548





Total liabilities and shareholders' equity

$ 222,928


$ 179,372

 

 

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,


2019


2018


2019


2018


(Unaudited)


(Unaudited)

Revenues:








Products

$ 100,375


$ 89,237


$ 35,079


$ 30,462

Services

47,115


41,209


16,333


14,057









Total Revenues

147,490


130,446


51,412


44,519









Cost of revenues:








Products

43,682


38,428


15,532


13,414

Services

10,914


10,071


3,529


3,413









Total Cost of revenues

54,596


48,499


19,061


16,827









Gross profit

92,894


81,947


32,351


27,692









Operating expenses:








Research and development, net

30,258


25,626


10,599


8,283

Selling and marketing

37,885


37,377


12,665


12,020

General and administrative

8,354


7,713


3,091


2,402









Total operating expenses

76,497


70,716


26,355


22,705









Operating income

16,397


11,231


5,996


4,987

Financial income (expenses), net

(1,992)


186


(913)


(37)









Income before taxes on income

14,405


11,417


5,083


4,950

Taxes on income, net

(2,195)


(2,454)


(716)


(815)









Net income

$ 12,210


$ 8,963


$ 4,367


$ 4,135









Basic net earnings per share

$ 0.42


$ 0.31


$ 0.15


$ 0.14









Diluted net earnings per share

$ 0.40


$ 0.30


$ 0.14


$ 0.14









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

29,195


28,855


29,157


28,797









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

30,705


30,118


30,642


30,272

 

 

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,


2019


2018


2019


2018


(Unaudited)


(Unaudited)





GAAP net income

$ 12,210


$ 8,963


$ 4,367


$ 4,135









GAAP net earnings per share

$ 0.40


$ 0.30


$ 0.14


$ 0.14









Cost of revenues:








Share-based compensation (1)

121


138


55


51

Amortization expenses (2)

204


522


68


174


325


660


123


225

Research and development, net:








Share-based compensation (1)

648


445


226


181









Selling and marketing:








Share-based compensation (1)

1,360


861


606


307

Amortization expenses (2)

45


45


15


15


1,405


906


621


322

General and administrative:








Share-based compensation (1)

1,204


854


465


314

Revaluation of earn-out liability (3)

(23)


200


-


-


1,181


1,054


465


314

Financial expenses:








Exchange rate differences (4)

2,330


-


1,072


-









Income taxes:








Deferred tax (5)

1,632


1,752


544


584









Non-GAAP net income

$ 19,731


$ 13,780


$ 7,418


$ 5,761

Non-GAAP diluted net earnings per share

$ 0.63


$ 0.45


$ 0.24


$ 0.19










(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




Nine months ended


Three months ended



September 30,


September 30,



2019


2018


2019


2018



(Unaudited)


(Unaudited)

Cash flows from operating activities:









Net income


$ 12,210


$ 8,963


$ 4,367


$ 4,135

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









Depreciation and amortization


1,522


1,666


542


561

Amortization of marketable securities premiums and 
     accretion of discounts, net


79


271


-


83

Increase in accrued severance pay, net


124


43


239


182

Share-based compensation expenses


3,333


2,298


1,352


853

Decrease in deferred tax assets, net


1,481


1,689


528


563

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


120


(79)


(39)


(64)

Changes in operating leases, net


385


-


(965)


-

Decrease (increase) in trade receivables, net


(2,006)


(4,395)


617


(1,500)

Decrease (increase) in other receivables and prepaid 
     expenses


482


(3,133)


279


(2,063)

Increase in inventories


(7,677)


(5,500)


(421)


(3,414)

Increase (decrease) in trade payables


1,631


988


(2,036)


530

Increase (decrease) in other payables and accrued 
     expenses


1,424


2,761


(641)


1,880

Increase in deferred revenues


7,648


8,392


217


1,736










Net cash provided by operating activities


20,756


13,964


4,039


3,482










Cash flows from investing activities:









Investment in short-term deposits


-


(3,500)


-


-

Proceeds from short-term deposits


10,962


-


4,991


400

Proceeds from long-term deposits


900


807


300


300

Proceeds from redemption of marketable securities


19,385


1,577


-


-

Purchase of marketable securities


(10,006)


-


(10,006)


-

Purchase of property and equipment


(1,676)


(978)


(315)


(362)










Net cash provided by (used in) investing activities


19,565


(2,094)


(5,030)


338










 

 

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,



2019


2018


2019


2018



(Unaudited)


(Unaudited)

Cash flows from financing activities:









Purchase of treasury shares


(8,002)


(11,569)


-


(1,058)

Repayment of bank loans


(1,853)


(1,887)


(616)


(625)

Cash dividends paid to shareholders


(6,720)


(5,761)


(3,502)


(5,761)

Payment related to the acquisition of ACS


(410)


(151)


-


-

Proceeds from issuance of shares upon exercise of 
     options and warrants


2,233


4,583


771


2,906










Net cash used in financing activities


(14,752)


(14,785)


(3,347)


(4,538)










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


25,569


(2,915)


(4,338)


(718)










Cash, cash equivalents and restricted cash at beginning 
     of period


31,503


24,235


61,410


22,038










Cash, cash equivalents and restricted cash at end of 
     period


$ 57,072


$ 21,320


$ 57,072


$ 21,320

 

 

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 Partner Hayden IR
Tel: +1-646-536-7331
Brett@haydenir.com   

 

 

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