AudioCodes Reports Third Quarter 2022 Results

LOD, Israel, Nov. 2, 2022 /PRNewswire/ -- Third Quarter Highlights

• Quarterly revenues increased by 10% year-over-year to $69.7 million; Quarterly service revenues increased by 8.2% year-over-year to $26.8 million.
• GAAP results:
           - Quarterly GAAP gross margin was 62.8%;
           - Quarterly GAAP operating margin was 10.1%; and
           - Quarterly GAAP net income was $5.4 million, or $0.17 per diluted share.

• Non-GAAP results:
           - Quarterly Non-GAAP gross margin was 63.2%;
           - Quarterly Non-GAAP operating margin was 15.5%; and
           - Quarterly Non-GAAP net income was $10.5 million, or $0.32 per diluted share.

• Net cash provided by operating activities was $2.1 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 August 31, 2022 to shareholders of record on August 17, 2022.
• AudioCodes repurchased 273,224 of its ordinary shares during the quarter at an aggregate cost of $6.1 million.

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 third quarter ended September 30, 2022.

Revenues for the third quarter of 2022 were $69.7 million compared to $63.4 million for the third quarter of 2021.

Net income was $5.4 million, or $0.17 per diluted share, for the third quarter of 2022, compared to $8.3 million, or $0.24 per diluted share, for the third quarter of 2021.

On a Non-GAAP basis, net income was $10.5 million, or $0.32 per diluted share, for the third quarter of 2022 compared to $12.9 million, or $0.38 per diluted share, for the third quarter of 2021.

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 income 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 (income). 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 $2.1 million for the third quarter of 2022.  Cash and cash equivalents, long and short-term bank deposits, long and short-term marketable securities and long and short-term financial investments were $126.7 million as of September 30, 2022 compared to $174.8 million as of December 31, 2021. 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 use of cash for the continued repurchasing of the Company's ordinary shares pursuant to its share repurchase program and the payment of a cash dividend during each of the first and third quarters of 2022.

"I am pleased to report solid financial results for the third quarter of 2022, growing revenues 10% year-over-year," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. 

"We see good continued momentum in both of the key markets that we serve: the UCaaS and the CX markets. Key driver of our growth came from UCaaS where Microsoft Teams related business grew nearly 20% year-over-year.  AudioCodes Live for Microsoft Teams managed services continued to grow and reached a level of $28 million ARR, nearly 100% growth over the year ago period, putting us well on track to achieve our 2022 target of over $30 million.

Our Customer Experience (CX) business was down 5% year-over-year after being up over 20% in the prior quarter. The decline was driven mainly by seasonal softness in Europe. We expect this business to return to growth in the fourth quarter, as we continue to see a strong pipeline of opportunities. 

This quarter, AudioCodes was named once again by Omdia as a leader in enterprise SBCs in terms of our market share. We also saw strong activity in the Service Provider (SP) business related to carrier all-IP transformation and PSTN shutdown projects which have re-emerged post-pandemic.

We have made important progress in our Conversational AI (CAI) applications business. We saw increased activity in enterprise voice recording, targeting both compliance recording and the meetings space within Microsoft Teams environments. Additionally, we had record conversational IVR, and VoiceAI Connect platform-as-a-service bookings, which grew by over 30% year-over-year in the quarter.

Lastly, on the operations front, we saw lower gross margin and operating margin than before. As we come to the end of our two-year cycle of increasing investments, announced in early 2021, we are determined to balance our R&D, sales and marketing expenses for the balance of the year and into 2023. We expect that over the next several quarters we will benefit from better FX hedging, easing of supply chain pressures, and the tightening of discretionary spending, while we allocate investments prudently to strategic areas of our business. These factors should put us on track to drive improved operating leverage in 2023 and beyond," concluded Mr. Adlersberg.

Share Buy Back Program and Cash Dividend

In June 2022, the Company received court approval in Israel to purchase up to an aggregate amount of $35 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 December 12, 2022.

On August 2, 2022, 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 August 31, 2022 to all of the Company's shareholders of record on August 17, 2022.

During the quarter ended September 30, 2022, the Company acquired 273,224 of its ordinary shares under its share repurchase program for a total consideration of $6.1 million.

As of September 30, 2022, the Company had $23.2 million available under the 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 third quarter of 2022 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.

Third quarter of 2022 earnings call supplementary slides are available at 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 is 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 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 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 expense.

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 Ltd