AudioCodes Reports Second Quarter 2018 Results
LOD, Israel, July 24, 2018 /PRNewswire/ --
Second Quarter Highlights
-- Quarterly revenues increased by 12.3% year-over-year to $43.5 million;
-- Quarterly service revenues increased by 14.2% year-over-year to $13.5
million;
-- Revenues related to UC-SIP business increased more than 30% compared to
the second quarter of 2017;
-- Quarterly GAAP gross margin was 62.3%; quarterly Non-GAAP gross margin
was 62.8%;
-- Quarterly GAAP operating margin was 7.6%; quarterly Non-GAAP operating
margin was 10.2%;
-- Quarterly cash flow from operating activities was $2.2 million;
-- Quarterly GAAP net income was $2.4 million, or $0.08 per diluted share;
quarterly Non-GAAP net income was $4.1 million, or $0.14 per diluted
share;
-- AudioCodes repurchased 452,000 of its ordinary shares during the quarter
at an aggregate cost of $3.3 million.
Details
AudioCodes (NASDAQ, TASE: AUDC), a leading vendor of advanced voice networking and media processing solutions for the digital workplace, today announced financial results for the second quarter ended June 30, 2018.
Revenues for the second quarter of 2018 were $43.5 million compared to $42.4 million for the first quarter of 2018 and $38.7 million for the second quarter of 2017.
Net income was $2.4 million, or $0.08 per diluted share, for the second quarter of 2018 compared to $1.0 million, or $0.03 per diluted share, for the comparable period last year.
On a Non-GAAP basis, net income was $4.1 million, or $0.14 per diluted share, for the second quarter of 2018 compared to $2.5 million, or $0.08 per diluted share, for the comparable period last year.
Non-GAAP net income excludes: (i) share-based compensation expenses; (ii) amortization expenses related to intangible assets; (iii) expenses related to deferred payments and expenses 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 $2.2 million for the second quarter of 2018. Cash and cash equivalents, long- and short-term bank deposits and long- and short-term marketable securities were $58.1 million as of June 30, 2018 compared to $58.7 million as of December 31, 2017. 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 offset, in part, by cash from operating activities.
"We are pleased to report strong financial results for the second quarter of 2018," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes.
"Continuing the strong trend of previous quarters, our Enterprise Voice business continued to evolve as we enhanced our leadership position in the UC and the contact center market segments. Revenues in the first half of 2018 grew 12.9% compared to the first half of 2017. We now project revenue growth of about 10% for the full 2018 year, compared to growth of 7.7% in 2017 and 4.2% in 2016. At the core of this growth is the UC-SIP business which performed well across all business lines and achieved growth of over 30% from the year ago quarter. On the financial front, we achieved substantial improvement in our operating margins which reached 10% in the second quarter of 2018. Taking into account our investment in the new initiative of Voice.AI, which we expect to amount to more than $3 million this year, we now project operating margins of approximately 12% in 2018 for the mainstream networking business, now comprising about 99% of the Company revenues. Cash flow from operations in the first half 2018 continued to be strong, following similar performance in the past three years. We remain confident for the second half of 2018 and beyond as we continue to enjoy good business momentum in winning enterprise voice deployments and service provider network transformation projects. We also experienced continued evolution of new opportunities in our Voice.AI business," concluded Mr. Adlersberg.
Appointment of Lior Aldema as director
The Board of Directors has appointed Lior Aldema as a director of the Company. Mr Aldema is the Company's Chief Business Officer and has been with the Company since 1998. Mr Aldema will fill a vacancy as a Class I director and will therefore stand for re-election at the Annual General Meeting in 2019.
"I am delighted that Lior will be joining our Board of Directors," said Shabtai Adlersberg, President and CEO, founder and director of AudioCodes. "Lior and I have been working closely for many years, and his contributions to the Company are significant. Lior's unique and deep understanding of AudioCodes' products and markets will benefit the Board and the Company. I wish him success in his new role."
Dividend
The Company's Board of Directors has decided to declare an annual cash dividend of 20 cents per share payable on August 20, 2018 to shareholders of record on August 6, 2018. The Company is issuing a separate press release that contains additional information with respect to the dividend.
Share Buy Back Program
As of June 30, 2018, AudioCodes had acquired an aggregate of 17.2 million of its ordinary shares since August 2014 for an aggregate consideration of $90.3 million. During the quarter ended June 30, 2018, AudioCodes acquired 452,000 of its ordinary shares under its share repurchase program for a total consideration of approximately $3.3 million.
In June 2018, AudioCodes received court approval in Israel to purchase up to an additional $20 million ("Permitted Amount") of its ordinary shares. The court approval also permits AudioCodes to declare a dividend of any part of the Permitted Amount during the approved validity period. As of June 30, 2018, $19.5 million remained available to the Company under this court approval. The current court approval will expire on December 14, 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 second 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
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.
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
June 30, 2018 December 31, 2017
(Unaudited) (Audited)
---------- --------
ASSETS
CURRENT ASSETS:
Cash
and
cash
equivalents $22,038 $24,235
Short-
term
and
restricted
bank
deposits 6,639 2,739
Short-
term
marketable
securities
and
accrued
interest 25,709 7,087
Trade
receivables,
net 24,954 22,059
Other
receivables
and
prepaid
expenses 5,943 4,693
Inventories 18,649 16,563
------ ------
Total
current
assets 103,932 77,376
------- ------
LONG-TERM ASSETS:
Long-
term
and
restricted
bank
deposits 3,700 4,207
Long-
term
marketable
securities - 20,475
Deferred
tax
assets 5,517 6,685
Severance
pay
funds 18,867 20,138
------ ------
Total
long-
term
assets 28,084 51,505
------ ------
PROPERTY
AND
EQUIPMENT,
NET 3,734 3,835
----- -----
GOODWILL,
INTANGIBLE
ASSETS
AND
OTHER,
NET 37,834 38,222
Total
assets $173,584 $170,938
======== ========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current
maturities
of
long-
term
bank
loans $2,500 $2,519
Trade
payables 6,097 5,639
Other
payables
and
accrued
expenses 21,821 20,786
Deferred
revenues 21,780 16,417
------ ------
Total
current
liabilities 52,198 45,361
------ ------
LONG-TERM LIABILITIES:
Accrued
severance
pay 19,818 21,228
Long-
term
bank
loans 4,949 6,237
Deferred
revenues
and
other
liabilities 6,757 5,731
----- -----
Total
long-
term
liabilities 31,524 33,196
------ ------
Total
shareholders'
equity 89,862 92,381
------ ------
Total
liabilities
and
shareholders'
equity $173,584 $170,938
======== ========
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except share and per share data
Six months ended Three months ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
Revenues:
Products $58,775 $52,928 $30,012 $26,920
Services 27,152 23,185 13,490 11,816
------ ------ ------ ------
Total Revenues $85,927 $76,113 $43,502 $38,736
-------------- ------- ------- ------- -------
Cost of revenues:
Products 25,014 23,332 13,119 12,173
Services 6,658 5,667 3,287 2,765
----- ----- ----- -----
Total Cost of revenues 31,672 28,999 16,406 14,938
---------------------- ------ ------ ------ ------
Gross profit 54,255 47,114 27,096 23,798
------ ------ ------ ------
Operating expenses:
Research and development, net 17,343 14,536 8,710 7,382
Selling and marketing 25,357 24,398 12,369 12,363
General and administrative 5,311 4,361 2,730 2,200
----- ----- ----- -----
Total operating expenses 48,011 43,295 23,809 21,945
------ ------ ------ ------
Operating income 6,244 3,819 3,287 1,853
Financial income (expenses), net 223 (103) (20) (34)
--- ---- --- ---
Income before taxes on income 6,467 3,716 3,267 1,819
Income tax expense, net (1,639) (1,407) (873) (805)
------ ------ ---- ----
Net income $4,828 $2,309 $2,394 $1,014
====== ====== ====== ======
Basic earnings per share $0.17 $0.07 $0.08 $0.03
===== ===== ===== =====
Diluted earnings per share $0.16 $0.07 $0.08 $0.03
===== ===== ===== =====
Weighted average number of shares used in 28,884 31,791 28,609 31,596
computing basic earnings per share (in thousands)
===
Weighted average number of shares used in 30,041 32,822 29,733 32,608
computing diluted earnings per share (in thousands)
===
AUDIOCODES LTD. AND ITS SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
U.S. dollars in thousands, except per share data
Six months ended Three months ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
GAAP net income $4,828 $2,309 $2,394 $1,014
====== ====== ====== ======
GAAP earnings per share $0.16 $0.07 $0.08 $0.03
===== ===== ===== =====
Cost of revenues:
Share-based compensation (1) 87 42 48 17
Amortization expenses (2) 348 348 174 174
435 390 222 191
Research and development, net:
Share-based compensation (1) 264 181 151 86
Deferred payments expenses (3) - 74 - 63
--- --- --- ---
264 255 151 149
Selling and marketing:
Share-based compensation (1) 554 540 280 277
Amortization expenses (2) 30 60 15 30
--- --- --- ---
584 600 295 307
General and administrative:
Share-based compensation (1) 540 346 271 191
Revaluation of earn-out liability (4) 200 - 200 -
--- --- --- ---
740 346 471 191
Income taxes:
Deferred tax (5) 1,168 1,064 584 634
----- ----- --- ---
Non-GAAP net income $8,019 $4,964 $4,117 $2,486
====== ====== ====== ======
Non-GAAP diluted earnings per share $0.26 $0.15 $0.14 $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.
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
Six months ended Three months ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
Cash flows from operating activities:
-------------------------------------
Net income $4,828 $2,309 $2,394 $1,014
Adjustments required to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,105 1,260 565 605
Amortization of marketable securities premiums and 188 329 85 168
accretion of discounts, net
Decrease in accrued severance pay, net (139) (52) (186) (248)
Share-based compensation expenses 1,445 1,109 750 571
Decrease (increase) in accrued interest and exchange (15) 215 (30) 218
rate effect of loans, marketable securities and bank deposits
Decrease in long- term deferred tax assets 1,126 1,022 563 613
Increase in trade receivables, net (2,895) (109) (3,284) (1,165)
Decrease (increase) in other receivables and prepaid expenses (1,070) (4,181) 664 (729)
Decrease (increase) in inventories (2,086) 390 (1,115) 497
Increase (decrease) in trade payables 458 (2,701) 296 (137)
Increase in other payables and accrued expenses 881 1,657 1,962 1,711
Increase (decrease) in deferred revenues 6,656 1,969 (468) (761)
Net cash provided by operating activities 10,482 3,217 2,196 2,357
------ ----- ----- -----
Cash flows from investing activities:
-------------------------------------
Investment in short-term deposits, net (399) - (399) -
Proceeds from redemption of marketable securities 1,577 850 850 850
Purchase of property and equipment (616) (646) (336) (183)
---- ---- ---- ----
Net cash provided by investing activities 562 204 115 667
--- --- --- ---
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Six months ended Three months ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
Cash flows from financing activities:
-------------------------------------
Purchase of treasury shares (10,511) (10,182) (3,287) (2,850)
Repayment of bank loans (1,262) (1,925) (626) (940)
Payment related to the acquisition of ACS (151) - - -
Proceeds from issuance of shares upon 1,677 1,533 231 247
exercise of options and warrants
---
Net cash used in financing activities (10,247) (10,574) (3,682) (3,543)
------- ------- ------ ------
Net increase (decrease) in cash, cash 797 (7,153) (1,371) (519)
equivalents, and restricted cash
Cash, cash equivalents and restricted 31,181 33,152 33,349 26,518
cash at beginning of period
---
Cash, cash equivalents and restricted $31,978 $25,999 $31,978 $25,999
cash at end of period
===
Company Contacts
Niran Baruch,
VP Finance & Chief Financial 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
IR Agency Contact
Philip Carlson
KCSA Strategic
Communications
Tel: 1-212-896-1233
audc@kcsa.com
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SOURCE AudioCodes Ltd.
