AudioCodes Reports Fourth Quarter and Full Year 2017 Results
LOD, Israel, Jan. 24, 2018 /PRNewswire/ --
Fourth Quarter and Full Year 2017 Highlights
-- Quarterly revenues increased by 9.7% year-over-year to $41.4 million;
full 2017 year revenues were $156.7 million compared to $145.6 million
in 2016;
-- Quarterly service revenues increased by 17.4% year-over-year to $13.4
million; full 2017 year service revenues were $49.3 million compared to
$43.3 million in 2016;
-- Quarterly UC-SIP revenues increased more than 15% year-over-year;
-- Quarterly GAAP gross margin was 63.1%; quarterly Non-GAAP gross margin
was 63.6%;
-- Quarterly GAAP operating margin was 7.8%; quarterly Non-GAAP operating
margin was 9.7%;
-- Cash flow from operating activities was $8.4 million for the quarter and
$17.8 million for the full year;
-- Quarterly GAAP net income was $672,000, or $0.02 per diluted share,
Quarterly Non-GAAP net income was $3.8 million, or $0.12 per diluted
share;
-- Full 2017 year GAAP net income was $4.0 million, or $0.13 per diluted
share; full 2017 year Non-GAAP net income was $12.2 million, or $0.37
per diluted share;
-- AudioCodes repurchased 1.3 million of its ordinary shares during the
quarter at an aggregate cost of $9.0 million.
Details
AudioCodes,(NASDAQ: AUDC) a leading vendor of advanced voice networking and media processing solutions for the digital workplace, today announced financial results for the fourth quarter and full year periods ended December 31, 2017.
Revenues for the fourth quarter of 2017 were $41.4 million, compared to $39.2 million for the third quarter of 2017 and $37.8 million for the fourth quarter of 2016. Revenues were $156.7 million in 2017 compared to $145.6 million in 2016.
Net income was $672,000, or $0.02 per diluted share, for the fourth quarter of 2017, compared to $14.8 million or $0.44 per diluted share, for the fourth quarter of 2016. Net income in 2017 was $4.0 million or $0.13 per diluted share, compared to $16.2, or $0.45 per diluted share, in 2016.
In the fourth quarter and full year of 2016, net income per diluted share included $0.34 per share and $0.32 per share, respectively, as a result of the creation of a deferred tax asset. Non-GAAP net income excludes the effect of this non-cash deferred tax benefit.
On a Non-GAAP basis, net income was $3.8 million, or $0.12 per diluted share, for the fourth quarter of 2017 compared to $2.6 million, or $0.08 per diluted share, in the fourth quarter last year. Non-GAAP net income in 2017 was $12.2 million, or $0.37 per diluted share, compared to $9.4 million, or $0.26 per diluted share, in 2016.
Non-GAAP net income excludes: (i) share-based compensation expenses; (ii) amortization expenses related to intangible assets; (iii) expenses related to deferred payments and income due to revaluation of an earn-out liability, each in connection with the acquisition of Active Communications Europe; and (iv) non-cash deferred tax benefit or 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 $8.4 million for the fourth quarter of 2017 and $17.8 million for 2017. Cash and cash equivalents, long- and short-term bank deposits and long- and short-term marketable securities were $58.7 million as of December 31, 2017 compared to $69.5 million as of December 31, 2016. The decrease in cash and cash equivalents, long- and short-term bank deposits and long- and short-term 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 strong financial results for the fourth quarter and full year 2017," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes.
"In 2017 we executed well on our strategic goal to lead the Enterprise Voice space with voice connectivity solutions and enhanced our leadership position for coming years. We achieved record financial results and new highs in our gross margin and operating income, an attestation to our efficient operations. Looking forward, we expect to continue our evolution and growth in 2018, continuing our strong cash flow for the fourth year in a row. We also expect to continue investment in future offerings as well as focus on the return on investment to our shareholders."
"We have decided to formulate a new Business Unit called Voice.AI to follow on the steps of success of our Networking Business Unit and UC-SIP operations. Leveraging our existing operations in voice recognition and call logging/recording, Voice.AI is intended to capitalize on the endless amount of business voice interactions and resources and the growing effectiveness of AI technologies such as NLP and NLU. The newly developed Voice.AI solutions will be used to process and distribute meaningful actionable business insights. Capitalizing on our leadership position in enterprise voice and large customer base, expertise in telephony and VoIP communications, as well as our extensive product portfolio of gateways, session border controllers and end point devices and appliances, we envision significant potential for future products and solutions."
"Additionally, the ongoing trend of all-IP network transformation provides us with much to look forward to, while we work on new growth engines and new technological developments," concluded Mr. Adlersberg.
Share Buy Back Program
As of December 31, 2017, AudioCodes had acquired an aggregate of 15.8 million of its ordinary shares since August 2014 for an aggregate consideration of $79.7 million. During the quarter ended December 31, 2017, AudioCodes acquired 1.3 million of its ordinary shares under its share repurchase program for a total consideration of $9.0 million. During 2017, AudioCodes acquired 3.7 million of its ordinary shares for a total consideration of $25.6 million.
In November 2017, AudioCodes received court approval in Israel to purchase up to an aggregate of $20 million of additional ordinary shares pursuant to its share repurchase program. As of December 31, 2017, $16.8 million remained available to the Company for repurchasing shares under this court approval. The current court approval for share repurchases will expire on May 27, 2018.
Conference Call & Web Cast Information
AudioCodes will conduct a conference call at 8:00 A.M., Eastern Time today to discuss the Company's fourth quarter and full year of 2017 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
Follow AudioCodes' social media channels:
AudioCodes invites you to join our online community and follow us on: AudioCodes Voice Blog, LinkedIn, Twitter, Facebook, and YouTube.
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.
About AudioCodes
AudioCodes Ltd. (NASDAQ, TASE: AUDC) is a leading vendor of advanced voice networking and media processing 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; 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.
©2018 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 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
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
U.S. dollars in thousands
December 31, December 31,
2017 2016
---- ----
(Unaudited) (Audited)
---------- --------
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents $24,235 $24,344
Short-term and
restricted bank
deposits 2,739 3,401
Short-term marketable
securities and accrued
interest 7,087 6,778
Trade receivables, net 22,059 25,448
Other receivables and
prepaid expenses 4,693 3,377
Inventories 16,563 16,333
------ ------
Total current assets 77,376 79,681
------ ------
LONG-TERM ASSETS:
Long-term and
restricted bank
deposits $4,207 $5,407
Long-term marketable
securities 20,475 29,540
Deferred tax assets 6,685 11,607
Severance pay funds 20,138 17,820
------ ------
Total long-term assets 51,505 64,374
------ ------
PROPERTY AND EQUIPMENT,
NET 3,835 3,867
----- -----
GOODWILL, INTANGIBLE
ASSETS AND OTHER, NET 38,222 39,054
Total assets $170,938 $186,976
======== ========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of
long-term bank loans $2,519 $3,451
Trade payables 5,639 7,710
Other payables and
accrued expenses 20,786 18,618
Deferred revenues 16,417 14,951
------ ------
Total current
liabilities 45,361 44,730
------ ------
LONG-TERM LIABILITIES:
Accrued severance pay $21,228 $18,941
Long-term bank loans 6,237 8,493
Deferred revenues and
other liabilities 5,731 6,153
----- -----
Total long-term
liabilities 33,196 33,587
------ ------
Total equity 92,381 108,659
------ -------
Total liabilities and
equity $170,938 $186,976
======== ========
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
U.S. dollars in thousands, except shares and per share data
Year ended Three months ended
December 31, December 31,
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
(Unaudited) (Audited) (Unaudited)
---------- -------- ----------
Revenues:
Products $107,482 $102,279 $28,032 $26,359
Services 49,257 43,292 13,386 11,401
------ ------ ------ ------
Total Revenues 156,739 145,571 41,418 37,760
-------------- ------- ------- ------ ------
Cost of revenues:
Products 47,445 46,935 12,204 12,039
Services 11,449 10,295 3,090 2,717
------ ------ ----- -----
Total Cost of revenues 58,894 57,230 15,294 14,756
---------------------- ------ ------ ------ ------
Gross profit 97,845 88,341 26,124 23,004
------ ------ ------ ------
Operating expenses:
Research and development, net 30,348 29,139 8,126 7,682
Selling and marketing 48,954 45,084 12,405 11,369
General and administrative 8,893 6,364 2,356 366
----- ----- ----- ---
Total operating expenses 88,195 80,587 22,887 19,417
------ ------ ------ ------
Operating income 9,650 7,754 3,237 3,587
Financial expenses, net (10) (160) (4) (127)
--- ---- --- ----
Income before taxes on income 9,640 7,594 3,233 3,460
Taxes on income, net (5,610) 8,644 (2,561) 11,308
------ ----- ------ ------
Net income $4,030 $16,238 $672 $14,768
====== ======= ==== =======
Basic net earnings per share $0.13 $0.46 $0.02 $0.45
===== ===== ===== =====
Diluted net earnings per share $0.13 $0.45 $0.02 $0.44
===== ===== ===== =====
Weighted average number of shares used in computing basic net
earnings per share (in thousands) 31,104 35,174 29,915 32,956
====== ====== ====== ======
Weighted average number of shares used in computing diluted
net earnings per share (in thousands) 32,168 40,565 31,071 33,859
====== ====== ====== ======
AUDIOCODES LTD. AND ITS SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
--------------------------------------------------------
U.S. dollars in thousands, except per share data
Year ended Three months ended
December 31, December 31,
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
(Unaudited) (Audited) (Unaudited)
---------- -------- ----------
GAAP net income $4,030 $16,238 $672 $14,768
====== ======= ==== =======
GAAP net earnings per share $0.13 $0.45 $0.02 $0.44
===== ===== ===== =====
Cost of revenues:
Share-based compensation (1) 84 118 25 31
Amortization expenses (2) 696 1,052 174 174
780 1,170 199 205
Research and development, net:
Share-based compensation (1) 383 459 105 113
Deferred payments expenses (3) 198 752 62 188
--- --- --- ---
581 1,211 167 301
Selling and marketing:
Share-based compensation (1) 1,024 1,101 245 264
Amortization expenses (2) 116 120 26 30
--- --- --- ---
1,140 1,221 271 294
General and administrative:
Share-based compensation (1) 816 736 251 182
Revaluation of earn-out liability (4) (118) (1,674) (118) (1,674)
---- ------ ---- ------
698 (938) 133 (1,492)
Income taxes:
Deferred tax (5) 4,922 (9,475) 2,362 (11,468)
----- ------ ----- -------
Non-GAAP net income $12,151 $9,427 $3,804 $2,608
======= ====== ====== ======
Non-GAAP diluted net earnings per share $0.37 $0.26 $0.12 $0.08
===== ===== ===== =====
(1) Share-based compensation expenses related to options and restricted share units granted to employees and others.
(2) Excluding amortization of intangible assets related to the acquisitions of Mailvision and Active Communications Europe assets.
(3) Excluding expenses related to deferred payments in connection with the acquisition of Active Communications Europe.
(4) Revaluation of earn-out liability in connection with the acquisition of Active Communications Europe.
(5) 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.
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
U.S. dollars in thousands
Year ended Three months ended
December 31, December 31,
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
(Unaudited) (Audited) (Unaudited)
---------- -------- ----------
Cash flows from operating activities:
-------------------------------------
Net income $4,030 $16,238 $672 $14,768
Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 2,438 2,892 579 630
Amortization of marketable securities premiums and accretion of discounts, net 570 973 95 296
Increase (decrease) in accrued severance pay, net (31) 830 (263) 247
Share-based compensation expenses 2,307 2,414 626 590
Decrease (increase) in long-term deferred tax assets, net 4,838 (9,391) 2,341 (11,446)
Decrease (increase) in accrued interest and exchange rate effect of loans, marketable securities and
bank deposits 403 114 152 (73)
Decrease in trade receivables, net 3,389 174 2,538 385
Decrease (increase) in other receivables and prepaid expenses (1,316) 732 473 1,390
Decrease (increase) in inventories (230) 445 (132) (666)
Increase (decrease) in trade payables (2,071) 406 244 93
Increase (decrease) in other payables and accrued expenses 1,798 (680) 204 (2,318)
Increase in deferred revenues 1,640 3,195 831 2,795
Net cash provided by operating activities 17,765 18,342 8,360 6,691
------ ------ ----- -----
Cash flows from investing activities:
-------------------------------------
Proceeds from sale of marketable securities - 12,429 - -
Decrease in short-term deposits, net 662 2,260 166 531
Decrease (increase) in long-term bank deposits 1,200 (2,367) 300 (2,844)
Proceeds from redemption of marketable securities 8,116 3,215 2,766 2,315
Purchase of property and equipment (1,574) (1,477) (533) (288)
Net cash provided by (used in) investing activities 8,404 14,060 2,699 (286)
----- ------ ----- ----
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
U.S. dollars in thousands
Year ended Three months ended
December 31, December 31,
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
(Unaudited) (Audited) (Unaudited)
----------
Cash flows from financing activities:
-------------------------------------
Purchase of treasury share (25,563) (29,392) (9,015) (7,666)
Repayment of long-term bank loans (3,504) (5,353) (626) (1,078)
Proceeds from bank loans - 6,000 - 6,000
Consideration related to payment of acquisition of Mailvision - (233) - -
Proceeds from issuance of shares upon exercise of options and warrants 2,789 2,012 777 1,451
----- ----- --- -----
Net cash used in financing activities (26,278) (26,966) (8,864) (1,293)
------- ------- ------ ------
Increase (decrease) in cash and cash equivalents (109) 5,436 2,195 5,112
Cash and cash equivalents at the beginning of the period $24,344 $18,908 $22,040 $19,232
------- ------- ------- -------
Cash and cash equivalents at the end of the period $24,235 $24,344 $24,235 $24,344
======= ======= ======= =======
Company Contacts IR Agency Contact
Niran Baruch, Shirley Nakar, Philip Carlson
VP Finance & Chief Financial Officer Director, Investor Relations CSA Strategic
AudioCodes AudioCodes Communications
Tel: +972-3-976-4000 Tel: +972-3-976-4000 Tel: +1-212-896-1233
Niran.baruch@audiocodes.com shirley@audiocodes.com audc@kcsa.com
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