AudioCodes Reports Third Quarter 2018 Results
LOD, Israel, Oct. 23, 2018 /PRNewswire/ --
Third Quarter Highlights
-- Quarterly revenues increased by 13.5% year-over-year to $44.5 million;
-- Quarterly service revenues increased by 10.8% year-over-year to $14.1
million;
-- Revenues related to UC-SIP business increased more than 30% compared to
the third quarter of 2017;
-- Quarterly GAAP gross margin was 62.2%; quarterly Non-GAAP gross margin
was 62.7%;
-- Quarterly GAAP operating margin was 11.2%; quarterly Non-GAAP operating
margin was 13.5%;
-- Quarterly cash flow from operating activities was $3.5 million;
-- Quarterly GAAP net income was $4.1 million, or $0.14 per diluted share;
quarterly Non-GAAP net income was $5.8 million, or $0.19 per diluted
share;
-- AudioCodes repurchased approximately 133,000 of its ordinary shares
during the quarter at an aggregate cost of $1.1 million.
-- AudioCodes declared an annual cash dividend of 20 cents per share. The
dividend, in the aggregate amount of $5.8 million, was paid on August
20, 2018.
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 third quarter ended September 30, 2018.
Revenues for the third quarter of 2018 were $44.5 million compared to $43.5 million for the second quarter of 2018 and $39.2 million for the third quarter of 2017.
Net income was $4.1 million, or $0.14 per diluted share, for the third 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 $5.8 million, or $0.19 per diluted share, for the third quarter of 2018 compared to $3.4 million, or $0.10 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 $3.5 million for the third quarter of 2018. Cash and cash equivalents, long- and short-term bank deposits and long- and short-term marketable securities were $56.7 million as of September 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 to pay a dividend to shareholders in the aggregate amount of $5.8 million and for the continued repurchasing of the Company's ordinary shares offset, in part, by cash provided by operating activities.
"We are pleased to report record financial results for the third quarter of 2018," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes.
"In the third quarter we continued to execute on our strategic plan to grow our leadership in the Enterprise and Service Providers telephony and Voice business. Supporting our strategy for secular multi-year growth are the strong trends of moving to a digital workplace in the enterprise and the transitioning to all-IP networks in the service providers market. This has resulted in 13.5% growth in revenue and strong net income compared to the year ago quarter. Key to this strong performance was our UC-SIP business which grew over 30% compared to the third quarter of 2017. This is now the third quarter in a row in 2018 with above 30% growth in our UC-SIP business over the respective quarters in 2017. We now predict annual revenue growth of above 11.5% for the full year 2018 compared to 7.7% growth in revenue in 2017. We also forecast that non-GAAP net income in 2018 will grow more than 50% compared to 2017, on the heels of close to 30% growth in net income in 2017. Steady evolution in the underlying market segments we serve coupled with our strong execution and leadership should support continued business momentum in coming quarters".
"On the financial front, we have demonstrated good control of operating expenses resulting in record financial performance. Non-GAAP operating margin for the third quarter of 2018 was 13.5% compared to 8.8% in the third quarter of 2017. EBITDA was $6.4 million compared to $3.8 million in the third quarter of 2017. Non-GAAP net income reached $5.8 million compared to non-GAAP net income of $3.8 million in the third quarter of 2017. Net cash provided by operations was $3.5 million and has reached $14.0 million for the nine months ended September 30, 2018. As such, we remain confident in improved performance in the coming quarters as we enjoy continued good business momentum," concluded Mr. Adlersberg.
Dividend
On July 24, 2018, the Company declared an annual cash dividend of 20 cents per share. The dividend, in the aggregate amount of $5.8 million, was paid on August 20, 2018 to all of the Company's shareholders of record on August 6, 2018.
Share Buy Back Program
During the quarter ended September 30, 2018, AudioCodes acquired approximately 133,000 of its ordinary shares under its share repurchase program for a total consideration of $1.1 million. As of September 30, 2018, AudioCodes had acquired an aggregate of 17.3 million of its ordinary shares since August 2014 for an aggregate consideration of $91.3 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 out of any part of the Permitted Amount during the approved validity period. As of September 30, 2018, $12.7 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 third 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
September 30, December 31,
2018 2017
(Unaudited) (Audited)
---
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $21,320 $24,235
Short-term and
restricted bank deposits 6,245 2,739
Short-term marketable
securities and accrued
interest 25,710 7,087
Trade receivables, net 26,454 22,059
Other receivables and
prepaid expenses 8,244 4,693
Inventories 21,900 16,563
Total current assets 109,873 77,376
LONG-TERM ASSETS:
Long-term and restricted
bank deposits 3,394 4,207
Long-term marketable
securities - 20,475
Deferred tax assets 4,933 6,685
Severance pay funds 18,654 20,138
Total long-term assets 26,981 51,505
PROPERTY AND EQUIPMENT,
NET 3,892 3,835
GOODWILL, INTANGIBLE
ASSETS AND OTHER, NET 37,640 38,222
Total assets $178,386 $170,938
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of
long-term bank loans $2,497 $2,519
Trade payables 6,627 5,639
Other payables and
accrued expenses 23,621 20,786
Deferred revenues 22,995 16,417
Total current liabilities 55,740 45,361
LONG-TERM LIABILITIES:
Accrued severance pay 19,787 21,228
Long-term bank loans 4,322 6,237
Deferred revenues and
other liabilities 7,257 5,731
Total long-term
liabilities 31,366 33,196
Total shareholders'
equity 91,280 92,381
Total liabilities and
shareholders' equity $178,386 $170,938
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
---
U.S. dollars in thousands, except share and per share data
Nine months ended Three months ended
September 30, September 30,
---
2018 2017 2018 2017
---
(Unaudited) (Unaudited)
---
Revenues:
Products $89,237 $79,450 $30,462 $26,522
Services 41,209 35,871 14,057 12,686
---
Total Revenues 130,446 115,321 44,519 39,208
--- ---
Cost of revenues:
Products 38,428 35,241 13,414 11,909
Services 10,071 8,359 3,413 2,692
---
Total Cost of revenues 48,499 43,600 16,827 14,601
--- ---
Gross profit 81,947 71,721 27,692 24,607
---
Operating expenses:
Research and development, net 25,626 22,222 8,283 7,686
Selling and marketing 37,377 36,549 12,020 12,151
General and administrative 7,713 6,537 2,402 2,176
---
Total operating expenses 70,716 65,308 22,705 22,013
---
Operating income 11,231 6,413 4,987 2,594
Financial income (expenses), net 186 (6) (37) 97
---
Income before taxes on income 11,417 6,407 4,950 2,691
Taxes on income, net (2,454) (3,049) (815) (1,642)
---
Net income $8,963 $3,358 $4,135 $1,049
===
Basic earnings per share $0.31 $0.11 $0.14 $0.03
===
Diluted earnings per share $0.30 $0.10 $0.14 $0.03
===
Weighted average number of shares 28,855 31,500 28,797 30,918
used in computing basic earnings per share (in thousands)
===
Weighted average number of shares 30,118 32,534 30,272 31,959
used in 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
Nine months ended Three months ended
September 30, September 30,
---
2018 2017 2018 2017
---
(Unaudited) (Unaudited)
---
GAAP net income $8,963 $3,358 $4,135 $1,049
===
GAAP earnings per share $0.30 $0.10 $0.14 $0.03
===
Cost of revenues:
Share-based compensation (1) 138 59 51 17
Amortization expenses (2) 522 522 174 174
660 581 225 191
Research and development, net:
Share-based compensation (1) 445 278 181 97
Deferred payments expenses (3) 136 63
445 414 181 160
Selling and marketing:
Share-based compensation (1) 861 779 307 239
Amortization expenses (2) 45 90 15 30
---
906 869 322 269
General and administrative:
Share-based compensation (1) 854 565 314 219
Revaluation of earn-out liability (4) 200 -
1,054 565 314 219
Income taxes:
Deferred tax (5) 1,752 2,560 584 1,496
---
Non-GAAP net income $13,780 $8,347 $5,761 $3,384
===
Non-GAAP diluted earnings per share $0.45 $0.25 $0.19 $0.10
===
(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
Nine months ended Three months ended
September 30, September 30,
2018 2017 2018 2017
(Unaudited) (Unaudited)
Cash flows from operating activities:
---
Net income $8,963 $3,358 $4,135 $1,049
Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 1,666 1,859 561 599
Amortization of marketable securities premiums and accretion of discounts, net 271 475 83 146
Increase in accrued severance pay, net 43 232 182 284
Share-based compensation expenses 2,298 1,681 853 572
Decrease (increase) in accrued interest and exchange rate effect of loans, marketable securities and
bank deposits (79) 251 (64) 36
Decrease in long- term deferred tax assets 1,689 2,497 563 1,475
Decrease (increase) in trade receivables, net (4,395) 851 (1,500) 960
Decrease (increase) in other receivables and prepaid expenses (3,133) (1,789) (2,063) 2,398
Increase in inventories (5,500) (98) (3,414) (488)
Increase (decrease) in trade payables 988 (2,315) 530 386
Increase (decrease) in other payables and accrued expenses 2,761 1,594 1,880 (63)
Increase (decrease) in deferred revenues 8,392 809 1,736 (1,160)
Net cash provided by operating activities 13,964 9,405 3,482 6,194
Cash flows from investing activities:
---
Proceeds from short-term deposits, net 496 400 161
Investment in short-term deposits, net (3,500)
Proceeds from long-term bank deposits 807 900 300 300
Proceeds from redemption of marketable securities 1,577 5,350 4,500
Purchase of property and equipment (978) (1,041) (362) (395)
Net cash provided by (used in) investing activities (2,094) 5,705 338 4,566
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Nine months ended Three months ended
September 30, September 30,
2018 2017 2018 2017
(Unaudited) (Unaudited)
Cash flows from financing activities:
---
Purchase of treasury shares (11,569) (16,548) (1,058) (6,366)
Repayment of bank loans (1,887) (2,878) (625) (953)
Cash dividends paid to shareholders (5,761) (5,761)
Payment related to the acquisition of ACS (151)
Proceeds from issuance of shares upon exercise of options and warrants 4,583 2,012 2,906 479
Net cash used in financing activities (14,785) (17,414) (4,538) (6,840)
Net increase (decrease) in cash, cash equivalents, and restricted cash (2,915) (2,304) (718) 3,920
Cash, cash equivalents and restricted cash at beginning of period 24,235 24,344 22,038 18,120
Cash, cash equivalents and restricted cash at end of period $21,320 $22,040 $21,320 $22,040
Company Contacts
IR Agency Contact
Niran Baruch,
Shirley Nakar,
Philip Carlson
VP Finance & Chief Financial Officer
Director, Investor Relations
KCSA 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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SOURCE AudioCodes Ltd.
