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

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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

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