AudioCodes Reports Second Quarter 2019 Results
LOD, Israel, July 23, 2019 /PRNewswire/ --
Second Quarter Highlights
-- Quarterly revenues increased by 13.8% year-over-year to $49.5 million; -- Quarterly service revenues increased by 23.5% year-over-year to $16.7 million; -- Quarterly UC-SIP revenues increased more than 20% year-over-year; -- Quarterly GAAP gross margin percentage was 63.3%; quarterly Non-GAAP gross margin percentage was 63.5%; -- Quarterly GAAP operating margin percentage was 11.9%; quarterly Non-GAAP operating margin percentage was 14.1%; -- Quarterly cash flow from operating activities was $8.4 million; -- Quarterly GAAP net income was $4.8 million, or $0.16 per diluted share; -- Quarterly Non-GAAP net income was $6.8 million, or $0.22 per diluted share; -- AudioCodes repurchased 473,235 of its ordinary shares during the quarter at an aggregate cost of $7.05 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 second quarter ended June 30, 2019.
Revenues for the second quarter of 2019 were $49.5 million compared to $46.6 million for the first quarter of 2019 and $43.5 million for the second quarter of 2018.
Net income was $4.8 million, or $0.16 per diluted share, for the second quarter of 2019 compared to $2.4 million, or $0.08 per diluted share, for the second quarter of 2018.
On a Non-GAAP basis, net income was $6.8 million, or $0.22 per diluted share, for the second quarter of 2019 compared to $4.1 million, or $0.14 per diluted share, for the second quarter of 2018.
Non-GAAP net income excludes: (i) share-based compensation expenses; (ii) amortization expenses related to intangible assets; (iii) expenses or income related to revaluation of an earn-out liability in connection with the acquisition of Active Communications Europe; (iv) financial income or expenses related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies and (v) non-cash deferred tax 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 second quarter of 2019. Cash and cash equivalents, long- and short-term bank deposits and short-term marketable securities were $69.1 million as of June 30, 2019 compared to $65.4 million as of December 31, 2018. The increase in cash and cash equivalents, long- and short-term bank deposits and short-term marketable securities was the result of cash from operating activities offset, in part, by 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 in the first quarter of 2019.
"We are pleased to report record financial results for the second quarter of 2019," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "We continue to enjoy strong growth in the UC and UCaaS markets and a faster pace of migration of service providers to All-IP. Coupling these growth trends with strong execution across our business lines we continue to expand our business while demonstrating improved financial and operational efficiency. By surpassing our financial plan for the first half of 2019, we are confident in our ability to outperform our initial plan for the year and deliver higher revenues and profitability than previously announced."
"We continue to increase our investments in the Microsoft Teams space as this collaboration solution continues to gain traction in the market. We are confident in our ability to grow our business in this area in 2019 and beyond. At the same time, we continue to foster new partnerships with more leading players in the UCaaS and Contact Center markets, and make progress in our efforts and investments in the voice.ai area. We continue to prudently invest in our future offerings and remain focused on maximizing the return on investments for our shareholders," concluded Mr. Adlersberg.
Share Buy Back Program
As of June 30, 2019, AudioCodes had acquired an aggregate of 18.1 million of its ordinary shares since August 2014 for an aggregate consideration of $102.1 million. During the quarter ended June 30, 2019, AudioCodes acquired 473,235 of its ordinary shares under its share repurchase program for a total consideration of $7.05 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 permitted AudioCodes to declare a dividend of any part of the Permitted Amount during the approved validity period. This court approval expired on July 1, 2019.
On May 28, 2019, the Board of Directors of AudioCodes approved the submission of a new application to the Israeli court, requesting approval of an additional repurchase program for $12 million of ordinary shares following the expiration of the existing program. The application also requests the court to permit AudioCodes to declare a dividend of any part of this amount. The new application was submitted to the court and a decision is expected during August 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 first quarter of 2019 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
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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: AUDC) (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 June 30, December 31, 2019 2018 (Unaudited) (Audited) --- ASSETS CURRENT ASSETS: Cash and cash equivalents $39,400 $31,503 Short-term and restricted bank deposits 7,385 12,381 Short-term marketable securities and accrued interest 21,035 19,602 Trade receivables, net 24,716 22,279 Other receivables and prepaid expenses 5,687 5,885 Inventories 29,832 22,620 Total current assets 128,055 114,270 LONG-TERM ASSETS: Long-term and restricted bank deposits $1,294 $1,894 Deferred tax assets 3,263 4,350 Operating lease right-of-use assets 32,253 - Severance pay funds 18,393 17,518 Total long-term assets 55,203 23,762 PROPERTY AND EQUIPMENT, NET 4,522 3,865 GOODWILL, INTANGIBLE ASSETS AND OTHER, NET 37,299 37,475 Total assets $225,079 $179,372 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term bank loans $2,483 $2,487 Trade payables 9,855 6,188 Other payables and accrued expenses 23,766 22,541 Deferred revenues 29,542 23,727 Short-term operating lease liabilities 8,513 - Total current liabilities 74,159 54,943 LONG-TERM LIABILITIES: Accrued severance pay $19,488 $18,728 Long-term bank loans 2,442 3,687 Deferred revenues and other liabilities 8,948 7,466 Long-term operating lease liabilities 25,090 - Total long-term liabilities 55,968 29,881 Total shareholders' equity 94,952 94,548 Total liabilities and shareholders' equity $225,079 $179,372
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, --- 2019 2018 2019 2018 --- (Unaudited) (Unaudited) --- Revenues: Products $65,296 $58,775 $32,843 $30,012 Services 30,782 27,152 16,656 13,490 --- Total Revenues 96,078 85,927 49,499 43,502 --- --- Cost of revenues: Products 28,150 25,014 14,372 13,119 Services 7,385 6,658 3,813 3,287 --- Total Cost of revenues 35,535 31,672 18,185 16,406 --- --- Gross profit 60,543 54,255 31,314 27,096 --- Operating expenses: Research and development, net 19,659 17,343 10,179 8,710 Selling and marketing 25,220 25,357 12,659 12,369 General and administrative 5,263 5,311 2,592 2,730 --- Total operating expenses 50,142 48,011 25,430 23,809 --- Operating income 10,401 6,244 5,884 3,287 Financial income (expenses), net (1,079) 223 (280) (20) --- Income before taxes on income 9,322 6,467 5,604 3,267 Taxes on income, net (1,479) (1,639) (810) (873) --- Net income $7,843 $4,828 $4,794 $2,394 === Basic net earnings per share $0.27 $0.17 $0.16 $0.08 === Diluted net earnings per share $0.26 $0.16 $0.16 $0.08 === Weighted average number of shares used in computing basic net earnings per share (in thousands) 29,214 28,884 29,214 28,609 === Weighted average number of shares used in computing diluted net earnings per share (in thousands) 30,737 30,041 30,744 29,733 ===
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, --- 2019 2018 2019 2018 --- (Unaudited) (Unaudited) --- GAAP net income $7,843 $4,828 $4,794 $2,394 === GAAP net earnings per share $0.26 $0.16 $0.16 $0.08 === Cost of revenues: Share-based compensation (1) 66 87 30 48 Amortization expenses (2) 136 348 68 174 202 435 98 222 Research and development, net: Share-based compensation (1) 422 264 210 151 Selling and marketing: Share-based compensation (1) 754 554 421 280 Amortization expenses (2) 30 30 15 15 --- 784 584 436 295 General and administrative: Share-based compensation (1) 739 540 373 271 Revaluation of earn-out liability (3) (23) 200 200 716 740 373 471 Financial expenses: Exchange rate differences (4) 1,258 358 - Income taxes: Deferred tax (5) 1,088 1,168 544 584 --- Non-GAAP net income $12,313 $8,019 $6,813 $4,117 === Non-GAAP diluted net earnings per share $0.40 $0.26 $0.22 $0.14 ===
(1) Share-based compensation expenses related to options and restricted share units granted to employees and others.
(2) Amortization of intangible assets related to the acquisitions of Mailvision and Active Communications Europe assets.
(3) Expenses or income related to revaluation of an earn-out liability in connection with the acquisition of Active Communications Europe.
(4) Financial income or expenses related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies.
(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, 2019 2018 2019 2018 (Unaudited) (Unaudited) Cash flows from operating activities: --- Net income $7,843 $4,828 $4,794 $2,394 Adjustments required to reconcile net income to net cash provided by operating activities: Depreciation and amortization 980 1,105 506 565 Amortization of marketable securities premiums and accretion of discounts, net 79 188 23 85 Increase in accrued severance pay, net (115) (139) (276) (186) Share-based compensation expenses 1,981 1,445 1,034 750 Decrease in deferred tax assets, net 953 1,126 528 563 Decrease (increase) in accrued interest and exchange rate effect of loans, marketable securities and bank deposits 159 (15) 170 (30) Changes in operating leases, net 1,350 1,783 Decrease (increase) in trade receivables, net (2,623) (2,895) 2,237 (3,284) Decrease (increase) in other receivables and prepaid expenses 203 (1,070) 457 664 Increase in inventories (7,256) (2,086) (4,357) (1,115) Increase in trade payables 3,667 458 3,040 296 Increase (decrease) in other payables and accrued expenses 2,065 881 (2,401) 1,962 Increase (decrease) in deferred revenues 7,431 6,656 884 (468) Net cash provided by operating activities 16,717 10,482 8,422 2,196 Cash flows from investing activities: --- Investment in short-term deposits (399) (399) Proceeds from short-term deposits 5,971 Proceeds from long-term deposits 600 300 Proceeds from redemption of marketable securities 19,385 1,577 12,094 850 Purchase of marketable securities (21,035) (21,035) Purchase of property and equipment (1,361) (616) (245) (336) Net cash provided by (used in) investing activities 3,560 562 (8,886) 115
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, 2019 2018 2019 2018 (Unaudited) (Unaudited) Cash flows from financing activities: --- Purchase of treasury shares (8,002) (10,511) (7,051) (3,287) Repayment of bank loans (1,237) (1,262) (619) (626) Cash dividends paid to shareholders (3,218) Payment related to the acquisition of ACS (410) (151) Proceeds from issuance of shares upon exercise of options and warrants 1,462 1,677 348 231 Net cash used in financing activities (11,405) (10,247) (7,322) (3,682) Net increase (decrease) in cash, cash equivalents, and restricted cash 8,872 797 (7,786) (1,371) Cash, cash equivalents and restricted cash at beginning of period 31,503 31,181 48,161 33,349 Cash, cash equivalents and restricted cash at end of period $40,375 $31,978 $40,375 $31,978
Company Contacts IR Agency Contact Niran Baruch, Shirley Nakar, Rob Fink, VP Finance & Chief Financial Officer Director, Investor Relations Hayden IR AudioCodes AudioCodes Tel: +1-646-415-8972 Tel: +972-3-976-4000 Tel: +972-3-976-4000 audc@haydenir.com Niran.baruch@audiocodes.com shirley@audiocodes.com ---
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SOURCE AudioCodes Ltd.