AudioCodes Reports Third Quarter 2015 Results

Nov 03, 2015, 02:30 ET from AudioCodes

LOD, Israel, Nov. 3, 2015 /PRNewswire/ --

Third Quarter Highlights:

  • Quarterly revenues increased 5.6% over the previous quarter and decreased 12.1% year-over-year to $34.2 million;
  • Quarterly service revenues increased 15.6% year-over-year to $9.6 million;
  • Quarterly Non-GAAP gross margin was 60.0%;
  • Quarterly Non-GAAP operating expenses decreased by 9.9% year-over-year to $18.7 million;
  • Quarterly cash flow from operating activities was $1.8 million;
  • Quarterly Non-GAAP net income was $1.7 million, or $0.04 per diluted share, compared to Non-GAAP net income of $1.6 million, or $0.04 per diluted share, in the prior year period;
  • AudioCodes repurchased 1.1 million shares of its ordinary shares at an aggregate cost of $3.7 million during the quarter.

Details:

AudioCodes (Nasdaq: AUDC), a leading provider of converged voice solutions that enable enterprises and service providers to transition to all-IP voice networks, today announced financial results for the third quarter ended September 30, 2015.

Revenues for the third quarter of 2015 were $34.2 million, compared to $32.4 million for the second quarter of 2015 and $38.9 million for the third quarter of 2014.

Net loss was $130,000, or ($0.00) per diluted share, for the third quarter of 2015, compared to a net loss of $708,000, or ($0.02) per diluted share, for the third quarter of 2014.

On a Non-GAAP basis, the Company reported a quarterly net income of $1.7 million, or $0.04 per diluted share, compared to net income of $1.6 million, or $0.04 per diluted share, in the third quarter of 2014.

Non-GAAP net income excludes: (i) stock-based compensation expenses; (ii) amortization expenses related to intangible assets; and (iii) non-cash deferred tax benefit or expenses. A reconciliation of net income (loss) 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 for the third quarter of 2015 totaled $1.8 million. Cash and cash equivalents, bank deposits and marketable securities were $75.3 million as of September 30, 2015 compared to $89.3 million as of September 30, 2014. The decrease in cash and cash equivalents, bank deposits and marketable securities was the result of the use of cash for the continued repurchasing of the Company's ordinary shares pursuant to its share repurchase program.

"We are pleased to report a return to growth in revenues and improved sequential financial performance for the third quarter of 2015," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "Third quarter revenues demonstrate strong performance across our networking business which grew 10.3% over the previous quarter. Driven by healthy demand in the unified communications market and the business communications services market, we saw increased traction in our sales and continued to solidify our position as a leading Voice Networking solutions and services vendor. Backed by the strong trend of network transformation into all-IP networks, our continued investment in the Microsoft Skype for Business ecosystem and our session border controller (SBC) activities provided more than 15% sequential growth in each of these market segments. As in previous quarters, we experienced growing collaboration with our industry partners, which we believe will support further growth in coming years."

"As we remain focused on improving bottom line results, we made solid progress with our cost reduction plan announced in July 2015. Third quarter financial results reflect this reduction in operating expenses, an area we intend to continue to focus on in 2016 and beyond," concluded Mr. Adlersberg.

Share Buy Back Program

During the quarter ended September 30, 2015, AudioCodes acquired 1.1 million shares under the existing share repurchase program for a total consideration of approximately $3.7 million. As of September 30, 2015 and since beginning the repurchase of its shares in August 2014, AudioCodes had acquired an aggregate of 4.7 million shares for an aggregate consideration of approximately $20.3 million.

In August 2014, the Board of Directors of AudioCodes approved a program to repurchase up to $3 million of its ordinary shares. In addition, AudioCodes received court approvals in Israel in November 2014 and May 2015 to purchase up to an aggregate of $30 million of additional ordinary shares pursuant to this program. The current court approval for share repurchases will expire at the end of December 2015. At that time the authority to repurchase any unutilized portions of the prior approval will expire. On November 2, 2015 the Board of Directors has approved filing a new application with the court requesting approval for a new repurchase program for a total consideration of up to $10 million in share repurchases for a period of 6 months from the date of receipt of court approval.

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 8:00 A.M., Eastern Time today to discuss the Company's third quarter 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.

About AudioCodes

AudioCodes Ltd. (Nasdaq, TASE: AUDC) designs, develops and sells advanced Voice-over-IP (VoIP) and converged VoIP and Data networking products and applications to Service Providers and Enterprises. AudioCodes is a VoIP technology market leader, focused on converged VoIP and data communications, and its products are deployed globally in Broadband, Mobile, Enterprise networks and Cable. The Company provides a range of innovative, cost-effective products including Media Gateways, Multi-Service Business Routers, Session Border Controllers (SBC), Residential Gateways, IP Phones, Media Servers, Value Added Applications and Professional Services. AudioCodes' underlying technology, VoIPerfectHD™, relies on AudioCodes' leadership in DSP, voice coding and voice processing technologies. AudioCodes' High Definition (HD) VoIP technologies and products provide enhanced intelligibility and a better end user communication experience in Voice communications. For more information on AudioCodes, visit http://www.audiocodes.com.

To download AudioCodes investor relations app, which offers access to its SEC filings, press releases, videos, audiocasts and more, please visit Apple's App Store for the iPhone and iPad or Google Play for Android mobile devices.

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.

©2015 AudioCodes Ltd. All rights reserved. AudioCodes, AC, HD VoIP, HD VoIP Sounds Better, IPmedia, Mediant, MediaPack, What's Inside Matters, OSN, SmartTAP, VMAS, VoIPerfect, VoIPerfectHD, Your Gateway To VoIP, 3GX, VocaNom, AudioCodes One Voice and AudioCodes One Box 365 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,


2015


2014


(Unaudited)


(Audited)

ASSETS








CURRENT ASSETS:




Cash and cash equivalents

$ 15,137


$ 14,797

Short-term and restricted bank deposits

5,556


7,630

Short-term marketable securities and accrued interest

1,540


543

Trade receivables, net

26,079


31,056

Other receivables and prepaid expenses

7,179


9,564

Inventories

16,268


14,736

Total current assets

71,759


78,326





LONG-TERM ASSETS:




Long-term and restricted bank deposits

$ 1,075


4,066

Long-term marketable securities

51,973


58,684

Deferred tax assets

-


872

Severance pay funds

16,239


17,835

Total long-term assets

69,287


81,457





PROPERTY AND EQUIPMENT, NET

4,116


3,856





GOODWILL, INTANGIBLE ASSETS AND OTHER, NET

35,812


36,745





Total assets

$ 180,974


$ 200,384





LIABILITIES AND EQUITY








CURRENT LIABILITIES:




Current maturities of long-term bank loans

$ 4,686


$ 4,686

Trade payables

7,307


10,111

Other payables and accrued expenses

15,571


15,758

Deferred revenues

12,124


10,233

Total current liabilities

39,688


40,788





LONG-TERM LIABILITIES:




Accrued severance pay

$ 16,589


17,908

Long-term bank loans

1,786


5,105

Deferred revenues and other liabilities

3,786


2,862

Total  long-term liabilities

22,161


25,875





Total equity

119,125


133,721

Total liabilities and equity

$ 180,974


$ 200,384

 

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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






 Nine months ended


Three months ended


 September 30,


September 30,


2015


2014


2015


2014


(Unaudited)


(Unaudited)

Revenues:








Products

$ 76,286


$ 88,549


$ 24,613


$ 30,632

Services

27,824


23,913


9,612


8,313

Total Revenues

104,110


112,462


34,225


38,945

Cost of revenues:








Products

35,348


40,767


11,527


14,574

Services

7,274


5,873


2,451


1,912

Total Cost of revenues

42,622


46,640


13,978


16,486

Gross profit

61,488


65,822


20,247


22,459

Operating expenses:








Research and development, net

21,332


24,337


6,656


8,109

Selling and marketing

33,100


34,256


10,463


11,361

General and administrative

6,813


5,691


2,158


1,975

Total operating expenses

61,245


64,284


19,277


21,445

Operating income

243


1,538


970


1,014

Financial income (expenses), net

600


(168)


(6)


(270)

Income before taxes on income

843


1,370


964


744

Taxes on income, net

(3,273)


(2,402)


(1,094)


(1,452)

Net loss

$ (2,430)


$ (1,032)


$ (130)


$ (708)

Basic net loss per share

$ (0.06)


$ (0.02)


$ (0.00)


$ (0.02)

Diluted net loss per share

$ (0.06)


$ (0.02)


$ (0.00)


$ (0.02)

Weighted average number of shares used in computing basic and diluted net loss per share (in thousands)

40,757


42,135


39,489


43,206

 


AUDIOCODES LTD. AND ITS SUBSIDIARIES

NON-GAAP PROFORMA STATEMENTS OF OPERATIONS

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






 Nine months ended


Three months ended


 September 30,


September 30,


2015


2014


2015


2014


(Unaudited)


(Unaudited)

Revenues:








Products

$ 76,286


$ 88,549


$ 24,613


$ 30,632

Services

27,824


23,913


9,612


8,313

Total Revenues

104,110


112,462


34,225


38,945

Cost of revenues:








Products

34,747


40,124


11,325


14,362

Services

7,057


5,699


2,380


1,854

Total Cost of revenues (1) (2)

41,804


45,823


13,705


16,216

Gross profit

62,306


66,639


20,520


22,729

Operating expenses:








Research and development, net (1)

20,979


23,874


6,541


7,952

Selling and marketing (1) (2)

32,103


33,154


10,197


10,987

General and administrative (1)

6,134


5,092


1,931


1,789

Total operating expenses

59,216


62,120


18,669


20,728

Operating income

3,090


4,519


1,851


2,001

Financial income (expenses), net

600


(168)


(6)


(270)

Income before taxes on income

3,690


4,351


1,845


1,731

Taxes on income, net (3)

(627)


(139)


(195)


(150)

Net income

$ 3,063


$ 4,212


$ 1,650


$ 1,581

Diluted net earnings per share

$ 0.07


$ 0.10


$ 0.04


$ 0.04

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

41,400


43,583


39,855


44,400

 

(1) Excluding stock-based compensation expenses related to options and restricted stock units granted to employees and others.

(2) Excluding amortization of intangible assets related to the acquisitions of Nuera, Netrake, and Mailvision assets.

(3) Excluding 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

RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME

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






 Nine months ended


Three months ended


 September 30,


September 30,


2015


2014


2015


2014


(Unaudited)


(Unaudited)

GAAP net loss

$ (2,430)


$ (1,032)


$ (130)


$ (708)

GAAP net loss per share

$ (0.06)


$ (0.02)


$ (0.00)


$ (0.02)

Cost of revenues:








Stock-based compensation (1)

74


73


25


22

Amortization expenses (2)

744


744


248


248


818


817


273


270

Research and development, net:








Stock-based compensation (1)

353


463


115


157

Selling and marketing:








Stock-based compensation (1)

819


829


251


283

Amortization expenses (2)

178


273


15


91


997


1,102


266


374

General and administrative:








Stock-based compensation (1)

679


599


227


186









Income taxes:








Deferred tax (3)

2,646


2,263


899


1,302

Non-GAAP net income

$ 3,063


$ 4,212


$ 1,650


$ 1,581

Non-GAAP diluted net earnings per share

$ 0.07


$ 0.10


$ 0.04


$ 0.04









 

(1) Stock-based compensation expenses related to options and restricted stock units granted to employees and others.

(2) Amortization of intangible assets related to the acquisitions of Nuera, Netrake, and Mailvision assets.

(3) 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








 Nine months ended


Three months ended



 September 30,


September 30,



2015


2014


2015


2014



(Unaudited)


 (Unaudited)

Cash flows from operating activities:









Net loss


$ (2,430)


$ (1,032)


$ (130)


$ (708)

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









Depreciation and amortization


2,350


2,430


723


801

Amortization of marketable securities premiums and accretion of discounts, net


851


508


299


313

Increase (decrease) in accrued severance pay, net


277


(115)


198


71

Stock-based compensation expenses


1,925


1,964


618


648

Decrease in long- term deferred tax assets


872


1,450


-


483

Amortization of senior convertible notes discount and deferred charges


-


(15)


-


-

Decrease (increase) in accrued interest on marketable securities, bank deposits and structured notes


(58)


26


(87)


(148)

Decrease (increase) in trade receivables, net


4,977


(3,670)


1,980


693

Decrease (increase)  in other receivables and prepaid expenses


2,274


(3,361)


(536)


(991)

Increase in inventories


(1,532)


(1,244)


(1,136)


(1,010)

Increase (decrease) in trade payables


(2,804)


3,330


865


2,784

Increase (decrease) in deferred revenues


3,056


4,042


(156)


769

Increase (decrease) in other payables and accrued expenses


98


(723)


(852)


(1,676)

Net cash provided by operating activities


9,856


3,590


1,786


2,029

Cash flows from investing activities:









Purchase of marketable securities


-


(60,286)


-


(116)

Proceeds from sale of marketable securities


2,557


-


2,557


-

Decrease (increase) in short-term deposits, net


3,274


900


5


(100)

Proceeds from redemption of long-term bank deposits


1,826


1,834


461


453

Proceeds from redemption of marketable securities upon maturity


2,711


15,390


-


-

Purchase of property and equipment


(1,677)


(1,450)


(345)


(731)

Net cash provided by (used in) investing activities


8,691


(43,612)


2,678


(494)



















 

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

U.S. dollars in thousands








 Nine months ended


Three months ended



 September 30,


September 30,



2015


2014


2015


2014



 (Unaudited)


 (Unaudited)

Cash flows from financing activities:









Purchase of treasury stock


(14,991)


(2,733)


(3,662)


(2,733)

Repayment of senior convertible notes


-


(285)


-


-

Repayment of long-term bank loans


(3,319)


(3,319)


(977)


(976)

Consideration related to payment of acquisition of Mailvision


(233)


(233)


-


-

Proceeds from issuance of shares upon exercise of options and warrants


336


2,151


5


39

Proceeds from issuance of shares, net


-


29,744


-


-

Net cash provided by (used in) financing activities


(18,207)


25,325


(4,634)


(3,670)










Increase (decrease) in cash and cash equivalents


340


(14,697)


(170)


(2,135)

Cash and cash equivalents at the beginning of the period


14,797


30,763


15,307


18,201

Cash and cash equivalents at the end of the period


$ 15,137


$ 16,066


$ 15,137


$ 16,066

 

Company Contacts


 IR Agency Contact

Niran Baruch,
VP Finance & Chief Accounting 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

Philip Carlson/Collin Dennis

KCSA Strategic Communications

Tel: +1-212-896-1233

audc@kcsa.com

 

SOURCE AudioCodes



RELATED LINKS

http://www.audiocodes.com