AudioCodes Reports Fourth Quarter and Full Year 2020 Results

LOD, Israel, Jan. 26, 2021 /PRNewswire/ --

Fourth Quarter and Full Year 2020 Highlights

• Quarterly revenues increased by 11.1% year-over-year to $58.7 million; full 2020 year revenues increased by 10.2% to $220.8 million;
• Quarterly service revenues increased by 19.9% year-over-year to $21 million; full 2020 year service revenues increased by 16.7% to $75.4 million; and
• Quarterly and full 2020 year UC-SIP revenues increased more than 20% year-over-year.
• GAAP results:
        o Quarterly GAAP gross margin was 71.4%; 
        o Quarterly GAAP operating margin was 20.7%;
        o Quarterly GAAP net income was $8.4 million, or $0.24 per diluted share; and 
        o Full 2020 year GAAP net income was $27.2 million, or $0.83 per diluted share.
• Non-GAAP results:
        o Quarterly Non-GAAP gross margin was 71.5%;
        o Quarterly Non-GAAP operating margin was 26.2%; 
        o Quarterly Non-GAAP net income was $15.2 million, or $0.44 per diluted share; and
        o Full 2020 year Non-GAAP net income was $46.7 million, or $1.41 per diluted share.
• Net cash provided by operating activities was $10.1 million for the quarter and $38.5 million for the full year.

Details

AudioCodes (NASDAQ: AUDC), a leading vendor of advanced communications software, products and productivity solutions for the digital workplace, today announced financial results for the fourth quarter and full year periods ended December 31, 2020.

Revenues for the fourth quarter of 2020 were $58.7 million compared to $56.6 million for the third quarter of 2020 and $52.8 million for the fourth quarter of 2019. Revenues were $220.8 million in 2020 compared to $200.3 million in 2019.

Net income was $8.4 million, or $0.24 per diluted share, for the fourth quarter of 2020, compared to a net loss of $8.2 million, or $(0.28) per diluted share, for the fourth quarter of 2019. Net income was $27.2 million, or $0.83 per diluted share, in 2020 compared to $4.0 million, or $0.13 per diluted share, in 2019.

On a Non-GAAP basis, net income was $15.2 million, or $0.44 per diluted share, for the fourth quarter of 2020 compared to $8.1 million, or $0.26 per diluted share, in the fourth quarter of 2019. Non-GAAP net income was $46.7 million, or $1.41 per diluted share, in 2020 compared to $27.8 million, or $0.89 per diluted share, in 2019.

Non-GAAP net income excludes: (i) share-based compensation expenses; (ii) amortization expenses related to intangible assets; (iii) expenses related to the payment required to be made pursuant to the royalty buyout agreement with the Israel National Authority for Technology and Innovation ("IIA")entered into in November 2019; (iv) expenses or income related to revaluation of an earn-out liability in connection with the acquisition of Active Communications Europe; (v) financial income or 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 (benefit). 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 $10.1 million for the fourth quarter of 2020 and $38.5 million for 2020. Net cash provided by operating activities in both periods was impacted by the $11.6 million payment made in December 2020 which was the second installment payment pursuant to the royalty buyout agreement.

Cash and cash equivalents, long and short-term bank deposits and long and short-term marketable securities were $186.3 million as of December 31, 2020 compared to $71.9 million as of December 31, 2019. The increase in cash and cash equivalents, long and short-term bank deposits and long and short-term marketable securities was the result of the receipt of the net proceeds of the Company's public offering in June 2020, as well as due to cash provided by operating activities, offset, in part, by the payments of cash dividends during 2020.

"We are pleased to report record financial results for the fourth quarter and full year 2020," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes.

"The year 2020 ended on a strong note, underscoring our excellent performance for the full year, and providing continued momentum heading into 2021. With collaboration and work from home trends becoming key for business continuity and workplace productivity in the Covid-19 pandemic era, we have seen increased demand for our comprehensive portfolio of solutions and services for the UCaas and Contact Center markets. Most notable was the more than 17% growth in our Enterprise business during 2020, which now comprises about 78% of revenue, driven mainly by continued success in voice solutions for Microsoft Teams where annual revenue grew by over 300% year-over-year, and more than 30%  compared to the third quarter of 2020. Additionally, we witnessed higher than anticipated revenue in the Contact Center business, which grew over 15% in 2020. With continued focus on collaboration tools and on work from home in the coming years, we anticipate similar growth in 2021 and beyond."

Mr. Adlersberg continued, "Given the ramp up in conversational AI opportunities we experienced in the second half of 2020, and looking to the future, we expect voice.ai to be a new growth engine for us over the next several years. In 2020, we experienced over 50% growth in the revenues of our conversational IVR, recording and voice.ai connect solutions. Driven by the current environment and trends, the need for quick and efficient access to contact centers has become a top priority for many. We see rising demand and requirements for automation of customer calls and self-service solutions. Meeting recap is another growth area for us where we integrate an intelligent assistant into our Meeting Insight solution, targeting to automate various enterprise business processes across the organization. As such, we see much potential and growth in voice.ai related applications."  

"As we enter 2021 with growth engines such as solutions for Microsoft Teams, contact centers and conversational AI, we are confident in our decision to continue to invest in future solutions and service offerings in the UCaaS and Contact Center enterprise market and to focus on the return on investment to our shareholders," concluded Mr. Adlersberg.

Court Approval of Share Purchases and/or Cash Dividends

In January 2021, the Company received court approval in Israel to purchase up to an aggregate amount of $30 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 July 19, 2021.

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 8:30 A.M., Eastern Time today to discuss the Company's fourth quarter and full year of 2020 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

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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.

©2021 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

                                                                                                                                     

(1)  Share-based compensation expenses related to options and restricted share units granted to employees and others.
(2)  Amortization of intangible assets related to the acquisitions of Active Communications Europe assets.
(3)  Expense related to royalty buyout agreement with the IIA.
(4)  Income related to revaluation of an earn-out liability in connection with the acquisition of Active Communications Europe.
(5)  Financial income or 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 (benefit).

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.

SOURCE AudioCodes