LOD, Israel, May 7, 2024 /PRNewswire/ --
First Quarter Highlights
- Quarterly revenues increased by 1.5% year-over-year to $60.1 million;
- Quarterly service revenues increased by 3.3% year-over-year to $31.5 million;
- GAAP results:
- Quarterly GAAP gross margin was 64.4%;
- Quarterly GAAP operating margin was 5.5%;
- Quarterly GAAP net income was $2.1 million, or $0.07 per diluted share. - Non-GAAP results:
- Quarterly Non-GAAP gross margin was 65.2%;
- Quarterly Non-GAAP operating margin was 10.5%;
- Quarterly Non-GAAP net income was $5.2 million, or $0.17 per diluted share. - Net cash provided by operating activities was $15.0 million for the quarter.
- AudioCodes declared a cash dividend of 18 cents per share. The dividend, in the aggregate amount of $5.5 million, was paid on March 6, 2024 to shareholders of record on February 20, 2024.
- AudioCodes repurchased 301,937 of its ordinary shares during the quarter at an aggregate cost of $3.6 million.
Details
AudioCodes (NASDAQ:AUDC), a leading vendor of advanced communications software, products and productivity solutions for the digital workplace, today announced its financial results for the first quarter ended March 31, 2024.
Revenues for the first quarter of 2024 were $60.1 million compared to $59.2 million for the first quarter of 2023.
Net income was $2.1 million, or $0.07 per diluted share, for the first quarter of 2024 compared to net loss of $0.2 million, or $0.01 per diluted share, for the first quarter of 2023.
On a Non-GAAP basis, net income was $5.2 million, or $0.17 per diluted share, for the first quarter of 2024 compared to $2.7 million, or $0.08 per diluted share, for the first quarter of 2023.
Non-GAAP net income excludes: (i) share-based compensation expenses; (ii) amortization expenses related to intangible assets; (iii) expenses related to deferred payments in connection with the acquisition of Callverso Ltd; (iv) financial income related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies; (v) non-cash deferred tax expenses (income); and (vi) non-cash lease expense which is required to be recorded during the quarter even though this is a free rent period under the lease for the Company's new headquarters. 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 $15.0 million for the first quarter of 2024. Cash and cash equivalents, long and short-term bank deposits, long and short-term marketable securities and long and short-term financial investments were $106.0 million as of March 31, 2024 compared to $106.7 million as of December 31, 2023. The decrease in cash and cash equivalents, long and short-term bank deposits, long and short-term marketable securities and long and short-term financial investments was the result of 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 during the first quarter of 2024, , offset, in part, by cash from operating activities.
"Our first quarter 2024 results were highlighted by healthy revenue growth of 1.5% year-over-year and progress made in strategic areas for our business", said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "In parallel with the nice growth in key business lines such as Microsoft Teams, voice services for CX, and conversational AI applications, we saw continued decline in our legacy gateway networking business, similar to trends seen in 2023. The continued transition from capex to recurring revenue model also posed revenue headwinds in the quarter.
Growth in key business lines for our future continued as planned. Microsoft business grew 8% year-over-year, with steady increase in the Live managed services, which grew 45% year-over-year, and have reached ARR of $53M exiting 1Q24. We are thus confident that we are on track to achieve our Live ARR plan of $64-$70 million for 2024. Live managed services represent now nearly 45% of our Microsoft business compared to 25% in the year ago quarter, and thus we believe the impact of our shift to recurring revenue model should ease in coming quarters. We also enjoyed growth in total contract value of Live services which grew above 45% year-over-year. Additionally, we have seen strong performance in customer experience (CX) and conversational AI (CAI), up 15% and 50% year over year, respectively. The strength has been driven by sales of our voice connectivity solutions in the CX market, and cross-selling of our Voca CIC AI first, Azure-native contact center for Teams. We are heartened by the market's growing recognition of Voca CIC, which has recently been awarded by CX Today as the best Microsoft Teams Contact Center solution. We expect Voca CIC to be a major growth pillar of our CX and of the Company over the long-term. We believe we are the de facto leader for complete calling and contact center solutions for Microsoft Teams.
On the financial front, we enjoyed strong positive cash flow from operations in the quarter. To support further margin expansion, we have recently initiated the second phase of cost rationalization plans discussed previously.
Overall, while we had a slower than expected start of revenue growth to the year due to the decline in gateways and muted business spending as a result of the elevated interest rate environment in 2024, we remain confident in our ability to sustain healthy top-line growth long-term while driving significant margin expansion in 2024 and beyond," concluded Mr. Adlersberg.
Share Buy Back Program and Cash Dividend
In December 2023, the Company received court approval in Israel to purchase up to an aggregate amount of $20 million of additional ordinary shares. The court approval also permits AudioCodes to declare a dividend out of any part of this amount. The approval is valid through June 18, 2024.
On February 6, 2024, the Company declared a cash dividend of 18 cents per share. The dividend, in the aggregate amount of approximately $5.5 million, was paid on March 6, 2024 to all of the Company's shareholders of record on February 20, 2024.
During the quarter ended March 31, 2024, the Company acquired 301,937 of its ordinary shares under its share repurchase program for a total consideration of $3.6 million.
As of March 31, 2024, the Company had $10.2 million available under this approval for the repurchase of shares and/or declaration of cash dividends.
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 2024 operating performance, financial results and outlook. Interested parties may participate in the conference call by dialing one the following numbers:
United States Participants: 888-506-0062
International Participants: +1 (973) 528-0011
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 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; the effects of the current terrorist attacks by Hamas in Israel, and the war and hostilities between Israel and Hamas, and Israel and Hezbollah as well as the possibility that this could develop into a broader regional conflict involving Israel with other parties, may affect our operations and may limit our ability to produce and sell our solutions; any disruption in our operations by the obligations of our personnel to perform military service as a result of current or future military actions involving Israel; 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.
©2024 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 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 | |||
March 31, | December 31, | ||
2024 | 2023 | ||
(Unaudited) | (Audited) | ||
ASSETS | |||
CURRENT ASSETS: | |||
Cash and cash equivalents | $ 30,410 | $ 30,546 | |
Short-term and restricted bank deposits | 208 | 212 | |
Short-term marketable securities | 15,322 | 7,438 | |
Trade receivables, net | 48,977 | 51,125 | |
Other receivables and prepaid expenses | 8,841 | 9,381 | |
Inventories | 40,658 | 43,959 | |
Total current assets | 144,416 | 142,661 | |
LONG-TERM ASSETS: | |||
Long-term Trade receivables | $16,630 | $ 16,798 | |
Long-term marketable securities | 57,532 | 65,732 | |
Long-term financial investments | 2,543 | 2,730 | |
Deferred tax assets | 6,890 | 6,208 | |
Operating lease right-of-use assets | 35,061 | 36,712 | |
Severance pay funds | 17,219 | 17,202 | |
Total long-term assets | 135,875 | 145,382 | |
PROPERTY AND EQUIPMENT, NET | 17,394 | 10,893 | |
GOODWILL, INTANGIBLE ASSETS AND OTHER, NET | 38,448 | 38,581 | |
Total assets | $ 336,133 | $ 337,517 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
CURRENT LIABILITIES: | |||
Trade payables | 7,322 | 7,556 | |
Other payables and accrued expenses | 28,460 | 29,943 | |
Deferred revenues | 44,312 | 38,820 | |
Short-term operating lease liabilities | 6,474 | 7,878 | |
Total current liabilities | 86,568 | 84,197 | |
LONG-TERM LIABILITIES: | |||
Accrued severance pay | $ 16,569 | $ 16,662 | |
Deferred revenues and other liabilities | 17,929 | 17,142 | |
Long-term operating lease liabilities | 31,435 | 31,404 | |
Total long-term liabilities | 65,933 | 65,208 | |
Total shareholders' equity | 183,632 | 188,112 | |
Total liabilities and shareholders' equity | $ 336,133 |
$ 337,517 | |
AUDIOCODES LTD. AND ITS SUBSIDIARIES | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
U.S. dollars in thousands, except per share data | ||||
Three months ended | ||||
March 31, | ||||
2024 | 2023 | |||
(Unaudited) | ||||
Revenues: | ||||
Products | $ 28,550 | $ 28,693 | ||
Services | 31,526 | 30,520 | ||
Total Revenues |
60,076 |
59,213 | ||
Cost of revenues: | ||||
Products | 11,825 | 13,044 | ||
Services | 9,584 | 9,626 | ||
Total Cost of revenues | 21,409 | 22,670 | ||
Gross profit | 38,667 | 36,543 | ||
Operating expenses: | ||||
Research and development, net | 13,933 | 15,009 | ||
Selling and marketing | 17,367 | 17,847 | ||
General and administrative | 4,086 | 4,531 | ||
Total operating expenses | 35,386 | 37,387 | ||
Operating income (loss) | 3,281 | (844) | ||
Financial income, net | 23 | 949 | ||
Income before taxes on income | 3,304 | 105 | ||
Taxes on income, net | (1,221) | (287) | ||
Net income (loss) | $ 2,083 | $ (182) | ||
Basic net earnings (loss) per share | $ 0.07 | $ (0.01) | ||
Diluted net earnings (loss) per share | $ 0.07 | $ (0.01) | ||
Weighted average number of shares used in computing basic net | 30,333 | 31,750 | ||
Weighted average number of shares used in computing diluted net | 30,793 | 32,148 | ||
AUDIOCODES LTD. AND ITS SUBSIDIARIES | |||||
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME | |||||
U.S. dollars in thousands, except per share data | |||||
Three months ended | |||||
March 31, | |||||
2024 | 2023 | ||||
(Unaudited) | |||||
GAAP net income (loss) | $ 2,083 | $ (182) | |||
GAAP net earnings (loss) per share | $ 0.07 | $ (0.01) | |||
Cost of revenues: | |||||
Share-based compensation (1) | 79 | 107 | |||
Amortization expenses (2) | 122 | 135 | |||
Lease expenses (6) | 304 | - | |||
505 | 242 | ||||
Research and development, net: | |||||
Share-based compensation (1) | 592 | 743 | |||
Deferred payments expenses (3) | - | 125 | |||
Lease expenses (6) | 342 | - | |||
934 | 868 | ||||
Selling and marketing: | |||||
Share-based compensation (1) | 723 | 1,237 | |||
Amortization expenses (2) | 11 | 11 | |||
Deferred payments expenses (3) | - | 125 | |||
Lease expenses (6) | 38 | - | |||
772 | 1,373 | ||||
General and administrative: | |||||
Share-based compensation (1) | 742 | 1,259 | |||
Lease expenses (6) | 76 | ||||
818 | 1,259 | ||||
Financial expenses: | |||||
Exchange rate differences (4) | (364) | (541) | |||
Income taxes: | |||||
Deferred tax (5) | 471 | (338) | |||
Non-GAAP net income | $ 5,219 | $ 2,681 | |||
Non-GAAP diluted net earnings per share | $ 0.17 | $ 0.08 | |||
Weighted average number of shares used in computing Non-GAAP | 31,570 | 33,056 | |||
(1) Share-based compensation expenses related to options and restricted share units granted to employees and others. (2) Amortization expenses related to intangible assets. (3) Expenses related to deferred payments in connection with the acquisition of Callverso Ltd. (4) Financial 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. (6) Non-cash lease expense which is required to be recorded during the quarter even though this is a free rent period under the lease for the Company's new headquarters.
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 | ||||
Three months ended | ||||
March 31, | ||||
2024 | 2023 | |||
(Unaudited) | ||||
Cash flows from operating activities: | ||||
Net income (loss) | $ 2,083 | $ (182) | ||
Adjustments required to reconcile net income to net cash provided | ||||
Depreciation and amortization | 523 | 651 | ||
Amortization of marketable securities premiums and accretion of | 314 | 372 | ||
Increase (decrease) in accrued severance pay, net | (110) | 16 | ||
Share-based compensation expenses | 2,136 | 3,346 | ||
Increase in deferred tax assets, net | (786) | (366) | ||
Cash financial loss (income), net | 85 | (390) | ||
Decrease in operating lease right-of-use assets | 2,389 | 2,150 | ||
Decrease in operating lease liabilities | (2,111) | (3,537) | ||
Decrease in trade receivables, net | 2,316 | 6,511 | ||
Decrease in other receivables and prepaid expenses | 540 | 184 | ||
Decrease (increase) in inventories | 3,258 | (5,766) | ||
Decrease in trade payables | (234) | (756) | ||
Decrease in other payables and accrued expenses | (1,732) | (4,065) | ||
Increase in deferred revenues | 6,310 | 5,060 | ||
Net cash provided by operating activities | 14,981 | 3,228 | ||
Cash flows from investing activities: | ||||
Proceeds from short-term deposits | 4 | 5,004 | ||
Proceeds from financial investment | 21 | - | ||
Proceeds from redemption of marketable securities | 500 | 1,000 | ||
Proceeds from redemption of financial investments | - | 2,749 | ||
Purchase of property and equipment | (6,785) | (1,316) | ||
Net cash provided by (used in) investing activities | (6,260) | 7,437 | ||
AUDIOCODES LTD. AND ITS SUBSIDIARIES | |||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | |||||
U.S. dollars in thousands | |||||
Three months ended | |||||
March 31, | |||||
2024 | 2023 | ||||
(Unaudited) | |||||
Cash flows from financing activities: | |||||
Purchase of treasury shares | (3,584) | - | |||
Cash dividends paid to shareholders | (5,453) | (5,718) | |||
Proceeds from issuance of shares upon exercise of options | 180 | 96 | |||
Net cash used in financing activities | (8,857) | (5,622) | |||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (136) | 5,043 | |||
Cash, cash equivalents and restricted cash at beginning of period | 30,546 | 24,535 | |||
Cash, cash equivalents and restricted cash at end of period | $ 30,410 | $ 29,578 | |||
Company Contacts | ||
Niran Baruch, Chief Financial Officer AudioCodes Tel: +972-3-976-4000 | Roger L. Chuchen, VP, Investor Relations AudioCodes Tel: 732-764-2552 |
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