AudioCodes Reports Fourth Quarter and Full Year 2018 Results
LOD, Israel, Jan. 28, 2019 /PRNewswire/ --
Fourth Quarter and Full Year 2018 Highlights
-- Quarterly revenues increased by 10.5% year-over-year to $45.8 million;
full 2018 year revenues increased by 12.4% to $176.2 million;
-- Quarterly service revenues increased by 13.0% year-over-year to $15.1
million; full 2018 year service revenues increased by 14.4% to $56.3
million;
-- Quarterly UC-SIP revenues increased more than 30% year-over-year;
-- Quarterly GAAP gross margin percentage was 62.6%; quarterly Non-GAAP
gross margin percentage was 63.0%;
-- Quarterly GAAP operating margin percentage was 11.2%; quarterly Non-GAAP
operating margin percentage was 13.7%;
-- Cash flow from operating activities was $11.6 million for the quarter
and $25.6 million for the full year;
-- Quarterly GAAP net income was $4.5 million, or $0.15 per diluted share;
Quarterly Non-GAAP net income was $6.3 million, or $0.20 per diluted
share;
-- Full 2018 year GAAP net income was $13.5 million, or $0.45 per diluted
share; full 2018 year Non-GAAP net income was $20.0 million, or $0.65
per diluted share;
-- AudioCodes repurchased 250,000 of its ordinary shares during the quarter
at an aggregate cost of $2.8 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, 2018.
Revenues for the fourth quarter of 2018 were $45.8 million, compared to $44.5 million for the third quarter of 2018 and $41.4 million for the fourth quarter of 2017. Revenues were $176.2 million in 2018 compared to $156.7 million in 2017.
Net income was $4.5 million, or $0.15 per diluted share, for the fourth quarter of 2018, compared to $672,000, or $0.02 per diluted share, for the fourth quarter of 2017. Net income in 2018 was $13.5 million, or $0.45 per diluted share, compared to $4.0 million, or $0.13 per diluted share, in 2017.
On a Non-GAAP basis, net income was $6.3 million, or $0.20 per diluted share, for the fourth quarter of 2018 compared to $3.8 million, or $0.12 per diluted share, in the fourth quarter last year. Non-GAAP net income in 2018 was $20.0 million, or $0.65 per diluted share, compared to $12.2 million, or $0.37 per diluted share, in 2017.
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 $11.6 million for the fourth quarter of 2018 and $25.6 million for 2018. Cash and cash equivalents, long- and short-term bank deposits and long- and short-term marketable securities were $65.4 million as of December 31, 2018 compared to $58.7 million as of December 31, 2017. The increase in cash and cash equivalents, long- and short-term bank deposits and long- and short-term marketable securities was the result of cash provided by operating activities offset, in part, by the use of cash in 2018 for the continued repurchasing of the Company's ordinary shares pursuant to its share repurchase program and for the payment of a cash dividend.
"We are pleased to report record financial results for the fourth quarter and full year 2018," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes.
"2018 was a very strong year for us, our most successful year ever, and a very important milestone in our mission of building a strong and successful voice networking business for years to come. Growing our top line revenue by 12.4% year-over-year, improving non-GAAP annual operating income to 11.7% from 8.2% in the prior year, and growing non-GAAP annual net income by 64.9% compared to 2017, all demonstrate the strength of our Company's performance. A key factor driving this significant growth is the strength in our UC-SIP business which increased more than 30% year-over-year. Our success in growing our UC-SIP business is intertwined with the continued trend of digital transformation and transition towards a digital workplace. Our continued investment in building a solid foundation for the Company is echoed in a strong industry position and successful execution in the markets we serve.
"In 2018, we continued to lead the Enterprise Voice segment with voice connectivity solutions, and continued to invest in the recently announced voice.ai business unit, an investment which is already bearing fruit. Looking forward, and based on current business momentum, we are confident in our ability to continue to expand our business in 2019 and beyond. We plan to continue our investment in future offerings, and focus on the return on investment to our shareholders."
Share Buy Back Program
As of December 31, 2018, AudioCodes had acquired an aggregate of 17.6 million of its ordinary shares since August 2014 for an aggregate consideration of $94.1 million. During the quarter ended December 31, 2018, AudioCodes acquired 250,000 of its ordinary shares under its share repurchase program for a total consideration of $2.8 million. During 2018, AudioCodes acquired 1.8 million of its ordinary shares for a total consideration of $14.3 million.
In January 2019, AudioCodes received court approval in Israel to purchase up to an aggregate of $12 million ("Permitted Amount") of additional ordinary shares pursuant to its share repurchase program. The court approval also permits AudioCodes to declare a dividend of any part of the Permitted Amount during the approved validity period. The current court approval will expire on July 1, 2019.
Conference Call & Web Cast Information
AudioCodes will conduct a conference call at 8:30 A.M., Eastern Time today to discuss the Company's fourth quarter and full year of 2018 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.
©2019 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,
2018 2017
(Unaudited)
(Audited)
---
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $31,503 $24,235
Short-term and restricted
bank deposits 11,181 2,739
Short-term marketable
securities and accrued
interest 19,602 7,087
Trade receivables, net 19,080 22,059
Other receivables and prepaid
expenses 5,203 4,693
Inventories 23,302 16,563
Total current assets 109,871 77,376
LONG-TERM ASSETS:
Long-term and restricted
bank deposits $3,094 $4,207
Long-term marketable
securities - 20,475
Deferred tax assets 4,350 6,685
Severance pay funds 17,518 20,138
Total long-term assets 24,962 51,505
PROPERTY AND EQUIPMENT, NET 3,865 3,835
GOODWILL, INTANGIBLE ASSETS
AND OTHER, NET 37,475 38,222
Total assets $176,173 $170,938
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-
term bank loans $2,487 $2,519
Trade payables 6,188 5,639
Other payables and accrued
expenses 20,269 20,786
Deferred revenues 22,800 16,417
Total current liabilities 51,744 45,361
LONG-TERM LIABILITIES:
Accrued severance pay $18,728 $21,228
Long-term bank loans 3,687 6,237
Deferred revenues and other
liabilities 7,466 5,731
Total long-term liabilities 29,881 33,196
Total shareholders' equity 94,548 92,381
Total liabilities and
shareholders' equity $176,173 $170,938
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
---
U.S. dollars in thousands,
except share and per share data
Year ended Three months ended
December 31, December 31,
---
2018 2017 2018 2017
---
(Unaudited) (Audited) (Unaudited)
Revenues:
Products $119,887 $107,482 $30,650 $28,032
Services 56,336 49,257 15,127 13,386
---
Total Revenues 176,223 156,739 45,777 41,418
--- ---
Cost of revenues:
Products 51,878 47,445 13,450 12,204
Services 13,739 11,449 3,668 3,090
---
Total Cost of revenues 65,617 58,894 17,118 15,294
--- ---
Gross profit 110,606 97,845 28,659 26,124
---
Operating expenses:
Research and development, net 34,661 30,348 9,035 8,126
Selling and marketing 49,335 48,954 11,958 12,405
General and administrative 10,251 8,893 2,538 2,356
---
Total operating expenses 94,247 88,195 23,531 22,887
---
Operating income 16,359 9,650 5,128 3,237
Financial income (expenses), net 228 (10) 42 (4)
---
Income before taxes on income 16,587 9,640 5,170 3,233
Taxes on income, net (3,094) (5,610) (640) (2,561)
---
Net income $13,493 $4,030 $4,530 $672
===
Basic net earnings per share $0.47 $0.13 $0.16 $0.02
===
Diluted net earnings per share $0.45 $0.13 $0.15 $0.02
===
Weighted average number of shares used in 28,928 31,104 29,147 29,915
computing basic net earnings per share
(in thousands)
===
Weighted average number of shares used in 30,220 32,168 30,525 31,071
computing diluted net 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
Year ended Three months ended
December 31, December 31,
---
2018 2017 2018 2017
---
(Unaudited)
(Audited) (Unaudited)
GAAP net income $13,493 $4,030 $4,530 $672
===
GAAP net earnings per share $0.45 $0.13 $0.15 $0.02
===
Cost of revenues:
Share-based compensation (1) 186 84 48 25
Amortization expenses (2) 667 696 145 174
853 780 193 199
Research and development, net:
Share-based compensation (1) 651 383 206 105
Deferred payments expenses (3) 198 62
651 581 206 167
Selling and marketing:
Share-based compensation (1) 1,238 1,024 377 245
Amortization expenses (2) 60 116 15 26
---
1,298 1,140 392 271
General and administrative:
Share-based compensation (1) 1,212 816 358 251
Revaluation of earn-out liability (4) 200 (118) (118)
1,412 698 358 133
Income taxes:
Deferred tax (5) 2,334 4,922 582 2,362
---
Non-GAAP net income $20,041 $12,151 $6,261 $3,804
===
Non-GAAP diluted net earnings per share $0.65 $0.37 $0.20 $0.12
===
(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,
2018 2017 2018 2017
(Unaudited) (Audited) (Unaudited)
Cash flows from operating activities:
---
Net income $13,493 $4,030 $4,530 $672
Adjustments required to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,309 2,438 643 579
Amortization of marketable securities premiums 353 570 82 95
and accretion of discounts, net
Increase (decrease) in accrued severance pay, net 120 (31) 77 (263)
Share-based compensation expenses 3,287 2,307 989 626
Decrease in long-term deferred tax assets, net 2,251 4,838 562 2,341
Decrease (increase) in accrued interest and (32) 403 47 152
exchange rate effect of loans, marketable
securities and bank deposits
Decrease in trade receivables, net 2,979 3,389 7,374 2,538
Decrease (increase) in other receivables and (330) (1,316) 2,803 473
prepaid expenses
Increase in inventories (6,991) (230) (1,491) (132)
Increase (decrease) in trade payables 549 (2,071) (439) 244
Increase (decrease) in other payables and (835) 1,798 (3,596) 204
accrued expenses
Increase in deferred revenues 8,427 1,640 35 831
Net cash provided by operating activities 25,580 17,765 11,616 8,360
Cash flows from investing activities:
---
Investment in short-term deposits (8,436) (4,936)
Proceeds from short-term deposits 662 166
Proceeds from long-term deposits 1,107 1,200 300 300
Proceeds from redemption of marketable securities 7,577 8,116 6,000 2,766
Purchase of property and equipment (1,340) (1,574) (362) (533)
Net cash provided by (used in) investing activities (1,092) 8,404 1,002 2,699
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,
2018 2017 2018 2017
(Unaudited) (Audited) (Unaudited)
Cash flows from financing activities:
---
Purchase of treasury share (14,321) (25,563) (2,752) (9,015)
Repayment of long-term bank loans (2,508) (3,504) (621) (626)
Cash dividends paid to shareholders (5,761)
Payment related to the acquisition of ACS (151)
Proceeds from issuance of shares upon exercise of options and warrants 5,521 2,789 938 777
Net cash used in financing activities (17,220) (26,278) (2,435) (8,864)
Increase (decrease) in cash and cash equivalents 7,268 (109) 10,183 2,195
Cash and cash equivalents at the beginning of the period 24,235 $24,344 21,320 $22,040
Cash and cash equivalents at the end of the period $31,503 $24,235 $31,503 $24,235
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
