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AudioCodes Reports First Quarter 2023 Results
Press Releases

AudioCodes Reports First Quarter 2023 Results

LOD, Israel, May 9, 2023 /PRNewswire/ —

First Quarter Highlights

  • Quarterly revenues decreased by 10.8% year-over-year to $59.2 million;
  • Quarterly service revenues increased by 10.8% year-over-year to $30.5 million;
  • GAAP results:

    – Quarterly GAAP gross margin was 61.7%;

    – Quarterly GAAP operating loss percentage was 1.4%;

    – Quarterly GAAP net loss was $0.2 million, or $0.01 per diluted share.
  • Non-GAAP results:

    – Quarterly Non-GAAP gross margin was 62.1%;

    – Quarterly Non-GAAP operating margin was 4.9%;

    – Quarterly Non-GAAP net income was $2.7 million, or $0.08 per diluted share.
  • Net cash provided by operating activities was $3.2 million for the quarter.
  • AudioCodes declared a cash dividend of 18 cents per share. The dividend, in the aggregate amount of $5.7 million, was paid on March 7, 2023 to shareholders of record on February 21, 2023.

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, 2023.

Revenues for the first quarter of 2023 were $59.2 million compared to $66.4 million for the first quarter of 2022.

Net loss was $0.2 million, or $0.01 per diluted share, for the first quarter of 2023 compared to net income of $8.6 million, or $0.26 per diluted share, for the first quarter of 2022.

On a Non-GAAP basis, net income was $2.7 million, or $0.08 per diluted share, for the first quarter of 2023 compared to $11.2 million, or $0.33 per diluted share, for the first 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 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.  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 $3.2 million for the first 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 $121.5 million as of March 31, 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 payment of a cash dividend during the first quarter of 2023.

“Our first quarter financial results were impacted by the slowing global economy and rising uncertainties worldwide, which manifested in enterprise customers and partners slowing decision cycle on product purchases primarily in EMEA, coupled with North America service providers managing their inventory more tightly,” said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes.  “On a brighter side, we saw continued business momentum in the UCaaS and CCaaS markets.  Leading growth in these areas were services, which have demonstrated growth of 10.8% year-over-year, with professional and managed services growing 11.8% year-over-year.  Services business now represents 51.5% of our quarterly sales.  With increased focus on moving to recurring business sales, our managed services business, Live and LiveCloud, ended the quarter at $35 million ARR, up over 60% year-over-year, with total contract value now over $110 million. We now expect Live to continue at above 50% growth rate throughout 2023, and we target ARR to reach between $46M to $50 by the end of the year.

Given customer spending remains pressured by macro-economic uncertainty near term, we are taking decisive actions to adjust our cost structure and reduce our headcount by approximately 8% to 10% over the next 6-12 months, with approximately 6% effective immediately.  We thus plan to provide opex relief starting in the beginning of the third quarter.

In the customer experience (CX) market, we saw healthy customer activity during the quarter.  Our entry-level Microsoft Teams-native AI-first contact center application for the CX market has generated growing interest over the 2022 activity and we plan to step up our efforts in this area.  Additionally, we have seen growing acceptance and use of our new AI-based products in 1Q23.  Leading the Voice.AI growth was our VoiceAI Connect connectivity solution, Meeting Insights and our intelligent virtual agent solutions.  On the GPT front, we have already taken steps to adopt ChatGPT and LLM models in our solutions to enable advanced AI summarization and speech interaction analytics.  We expect Voice.AI to accelerate growth in 2023 and beyond and to further expand our success in the UCaaS and the CX markets,” concluded Mr. Adlersberg. 

Share Buy Back Program and Cash Dividend

In January 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 out of any part of this amount.  The approval is valid through July 4, 2023.

On February 7, 2023, the Company declared a cash dividend of 18 cents per share.  The dividend, in the aggregate amount of approximately $5.7 million, was paid on March 7, 2023 to all of the Company’s shareholders of record on February 21, 2023.

As of March 31, 2023, the Company had $19.3 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 2023 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; 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.

Summary financial data follows

 

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands      



March 31,


December 31,


2023


2022


(Unaudited)


(Audited)

ASSETS








CURRENT ASSETS:




Cash and cash equivalents

$ 29,578


$ 24,535

Short-term and restricted bank deposits

206


5,210

Short-term marketable securities

3,450


2,120

Short-term financial investments

12,792


15,258

Trade receivables, net

48,244


56,424

Other receivables and prepaid expenses

9,822


10,006

Inventories

42,082


36,377

Total current assets

146,174


149,930





LONG-TERM ASSETS:




Long-term Trade receivables

$14,768


$13,099

Long-term marketable securities

74,231


75,946

Long-term financial investments

1,252


1,242

Deferred tax assets

9,379


9,073

Operating lease right-of-use assets

11,755


13,517

Severance pay funds

17,557


17,933

Total long-term assets

128,942


130,810





PROPERTY AND EQUIPMENT, NET

4,837


3,965





GOODWILL, INTANGIBLE ASSETS AND OTHER, NET

38,980


39,126





Total assets

$ 318,933


$ 323,831





LIABILITIES AND SHAREHOLDERS’ EQUITY








CURRENT LIABILITIES:




Trade payables

10,582


11,338

Other payables and accrued expenses

35,793


38,316

Deferred revenues

40,660


36,634

Short-term operating lease liabilities

6,289


8,169

Total current liabilities

93,324


94,457





LONG-TERM LIABILITIES:




Accrued severance pay

$ 17,395


$ 17,755

Deferred revenues and other liabilities

17,311


16,308

Long-term operating lease liabilities

4,282


5,551

Total long-term liabilities

38,988


39,614





Total shareholders’ equity

186,621


189,760

Total liabilities and shareholders’ equity

$ 318,933


$ 323,831

 

 

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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




Three months ended



March 31,



2023


2022



(Unaudited)

Revenues:





Products


$ 28,693


$ 38,820

Services


30,520


27,537

Total Revenues


 

59,213


66,357

Cost of revenues:





Products


13,044


14,275

Services


9,626


7,722

Total Cost of revenues


22,670


21,997

Gross profit


36,543


44,360

Operating expenses:





Research and development, net


15,009


14,982

Selling and marketing


17,847


17,288

General and administrative


4,531


4,038

Total operating expenses


37,387


36,308

Operating income (loss)


(844)


8,052

Financial income, net


949


1,010

Income (loss) before taxes on income


105


9,062

 

Taxes on income, net


(287)


(454)

Net income (loss)


$ (182)


$ 8,608

Basic net earnings (loss) per share


$ (0.01)


$ 0.27

Diluted net earnings (loss) per share


$ (0.01)


$ 0.26

Weighted average number of shares used in computing basic net

 earnings per share (in thousands)


31,750


32,230

Weighted average number of shares used in computing diluted net

 earnings per share (in thousands)


32,148


33,082

 

 

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,



2023


2022



(Unaudited)

GAAP net income (loss)


$ (182)


$ 8,608

GAAP net earnings (loss) per share


$ (0.01)


$ 0.26

Cost of revenues:





Share-based compensation (1)


107


49

Amortization expenses (2)


135


190



242


239

Research and development, net:





Share-based compensation (1)


743


1,159

Deferred payments expenses (3)


125


125



868


1,284

Selling and marketing:





Share-based compensation (1)


1,237


1,439

Amortization expenses (2)


11


11

Deferred payments expenses (3)


125


125



1,373


1,575

General and administrative:





Share-based compensation (1)


1,259


1,168

Other Income (4)



(405)



1,259


763

Financial expenses:





Exchange rate differences (5)


(541)


(720)






Income taxes:





Deferred tax (6)


(338)


(587)

Non-GAAP net income


$ 2,681


$ 11,162

Non-GAAP diluted net earnings per share


$ 0.08


$ 0.33

Weighted average number of shares used in computing Non-GAAP

 diluted net earnings per share (in thousands)


33,056


33,783







(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)  Other income related to a payment made to AudioCodes Inc. in connection with the termination of a lease agreement for its offices in New Jersey. 

(5)  Financial 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.


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,



2023


2022



(Unaudited)

Cash flows from operating activities:





Net income (loss)


$ (182)


$ 8,608

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





Depreciation and amortization


651


742

Amortization of marketable securities premiums and accretion of discounts, net


372


360

Increase (decrease) in accrued severance pay, net


16


(688)

Share-based compensation expenses


3,346


3,815

Increase in deferred tax assets, net


(366)


(650)

Cash financial income, net


(390)


(150)

Decrease in operating lease right-of-use assets


2,150


1,350

Decrease in operating lease liabilities


(3,537)


(4,206)

Decrease (increase) in trade receivables, net


6,511


(1,174)

Decrease (increase) in other receivables and prepaid expenses


184


(1,133)

Increase in inventories


(5,766)


(1,413)

Decrease in trade payables


(756)


(1,846)

Decrease in other payables and accrued expenses


(4,065)


(5,202)

Increase in deferred revenues


5,060


2,525

Net cash provided by operating activities


3,228


938

Cash flows from investing activities:





Investment in short-term deposits



(5,000)

Proceeds from short-term deposits


5,004


3

Proceeds from long-term deposits



Purchase of financial investments



(15,400)

Proceeds from redemption of marketable securities


1,000


Proceeds from redemption of financial investments


2,749


Net cash paid in acquisition of subsidiary



(100)

Purchase of property and equipment


(1,316)


(290)

Net cash provided by (used in) investing activities


7,437


(20,787)

 

 

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

U.S. dollars in thousands




Three months ended



March 31,



2023


2022



(Unaudited)

Cash flows from financing activities:





Purchase of treasury shares



(20,869)

Cash dividends paid to shareholders


(5,718)


(5,832)

Proceeds from issuance of shares upon exercise of options


96


5

Net cash used in financing activities


(5,622)


(26,696)






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


5,043


(46,545)

Cash, cash equivalents and restricted cash at beginning of period


24,535


84,523

Cash, cash equivalents and restricted cash at end of period


$ 29,578


$ 37,978







Company Contacts



Niran Baruch,

Chief Financial Officer

AudioCodes

Tel: +972-3-976-4000

niran.baruch@audiocodes.com


Roger L. Chuchen

VP, Investor Relations

AudioCodes

Tel:  732-764-2552

Mobile: 347-752-0780

roger.chuchen@audiocodes.com

Cision View original content:https://www.prnewswire.com/news-releases/audiocodes-reports-first-quarter-2023-results-301819106.html

SOURCE AudioCodes

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