AudioCodes Reports Second Quarter 2023 Results and Declares Semi-Annual Dividend of 18 cents per share

LOD, Israel, Aug. 1, 2023 /PRNewswire/ --

Second Quarter Highlights

• Quarterly revenues increased by 1.4% sequentially to $60.0 million.
• Quarterly Service revenues of $28.5 million accounted for 47.4% of revenues.
• GAAP results:
  
  - Quarterly GAAP gross margin was 64.1% compared to 61.7% in the prior quarter;
  
  - Quarterly GAAP operating margin was 3.8% compared to operating margin loss of 1.4% in the prior quarter; and
  
  - Quarterly GAAP net income was $1.1 million, or $0.03 per diluted share compared to net loss of $0.2 million, or $0.01 per diluted share in the prior quarter.
• Non-GAAP results:
  
  - Quarterly Non-GAAP gross margin was 64.5% compared to 62.1% in the prior quarter;
  
  - Quarterly Non-GAAP operating margin was 9.5% compared to 4.9% in the prior quarter; and
  
  - Quarterly Non-GAAP net income was $5.1 million, or $0.16 per diluted share compared to net income of $2.7 million, or $0.08 per diluted share in the prior quarter.
• Net cash provided by operating activities was $2.2 million for the quarter.
• AudioCodes repurchased 318,891 of its ordinary shares during the quarter at an aggregate cost of $2.9 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 second quarter ended June 30, 2023.

Revenues for the second quarter of 2023 were $60.0 million compared to $59.2 million for the first quarter of 2023 and $68.4 million for the second quarter of 2022.

Net income was $1.1 million, or $0.03 per diluted share, for the second quarter of 2023 compared to net loss of $0.2 million, or $0.01 per diluted share for the first quarter of 2023 and net income of $6.9 million, or $0.21 per diluted share, for the second quarter of 2022.

On a Non-GAAP basis, net income was $5.1 million, or $0.16 per diluted share, for the second quarter of 2023 compared to $2.7 million, or $0.08 per diluted share, for the first quarter of 2023 and $11.3 million, or $0.34 per diluted share, for the second quarter of 2022.

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) other income related to a payment made by the landlord to AudioCodes Inc., a subsidiary of the Company, in connection with the termination of a lease agreement for its offices in New Jersey; (v) financial income 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 (income). 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 $2.2 million for the second quarter of 2023.  Cash and cash equivalents, long and short-term bank deposits, long and short-term marketable securities and long and short-term financial investments were $118.5 million as of June 30, 2023 compared to $124.3 million as of December 31, 2022.  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 2023.

"I am pleased to report solid second quarter 2023 results with meaningful business activity improvement relative to prior quarter in key strategic areas," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes.

We made good progress in our enterprise business, now reaching 88% of our company revenue.  Microsoft-related business in the quarter grew 12% year-over-year and 16% sequentially, with Microsoft Teams business up 18% year over year.  Strong ongoing momentum of our AudioCodes Live managed services continued, with ARR exiting the quarter at $40 million, growing over 60% year-over-year, and Live Total Contract Value (TCV) generated in the second quarter expanding 75% over the previous quarter.  Strong Live performance to date puts on track to achieve our target of $46-$50 million in 2023, representing approximately 50% year-over-year growth.  Zoom related business grew over 20% year over year.

We also executed well in our customer experience (CX) and conversational AI businesses, delivering 7% year over year and over 25% sequentially.  Voca Conversational Interactive Center (CIC), our entry-level Microsoft Teams-native AI-first contact center is garnering significant customer interest in 2023, as enterprises are increasingly looking to leverage Teams for both UC/CX environments.  As announced yesterday, Voca CIC is now officially certified by Microsoft as a Microsoft Teams Contact Center solution.  Enterprises that adopt Voca CIC can achieve true consolidation of Unified Communications and Contact Center, provided as a fully managed service by AudioCodes.

We also made significant progress in other conversational AI (CAI) lines.  Voice ai Connect made good progress in the quarter, and Meeting Insights for Teams solution has recently integrated with GPT-4 generative AI, making available advanced AI summarization and smart recap features to our customers.  Importantly, we are increasingly confident in our growth prospects for both CX and conversational AI, as the strong pipeline built over the past several quarters is starting to materialize into meaningful bookings and contract wins.  

Overall, we executed well this quarter and our burgeoning success particularly in Live puts us on an accelerated path in our long-term transformation to software and services.  This factor coupled with incremental opex relief from previously announced cost savings actions should position us to deliver on our commitment to drive meaningful profitability improvements in second half of 2023 and beyond," concluded Mr. Adlersberg. 

Share Buy Back Program

During the quarter ended June 30, 2023, the Company acquired 318,891 of its ordinary shares under its share repurchase program for a total consideration of $2.9 million.

In June 2023, the Company received court approval in Israel to purchase up to an aggregate amount of $25 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 December 27, 2023.

As of June 30, 2023, the Company had $24.7 million available under this approval for the repurchase of shares and/or declaration of cash dividends.

Cash Dividend

AudioCodes also announced today that the Company's Board of Directors has declared a cash dividend in the amount of 18 cents per share. The aggregate amount of the dividend is approximately $5.7 million.  The dividend is payable on August 31, 2023, to all of the Company's shareholders of record at the close of trading on the NASDAQ Global Select Market on August 17, 2023. 

In accordance with Israeli tax law, the dividend is subject to withholding tax at the source at the rate of 25% of the dividend amount payable to each shareholder of record, subject to applicable exemptions.  If the recipient of the dividend is at the time of distribution or was at any time during the preceding 12-month period the holder of 10% or more of the Company's share capital, the withholding rate is 30%.

The dividend will be paid in U.S. dollars on the ordinary shares of AudioCodes Ltd. that are traded on the Nasdaq Global Select Market or the Tel-Aviv Stock Exchange.  The amount and timing of any other dividends will be determined by the Board.

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 8:30 A.M., Eastern Time today to discuss the Company's second quarter of 2023 operating performance, financial results and outlook.  Interested parties may participate in the conference call by dialing one of 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

Second quarter of 2023 earnings call supplementary slides are available at AudioCodes investor website at http://www.audiocodes.com/investors-lobby

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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.

©2023 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.

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