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