AudioCodes Reports Fourth Quarter and Full Year 2020 Results

LOD, Israel, Jan. 26, 2021 /PRNewswire/ --

Fourth Quarter and Full Year 2020 Highlights

    --  Quarterly revenues increased by 11.1% year-over-year to $58.7 million;
        full 2020 year revenues increased by 10.2% to $220.8 million;
    --  Quarterly service revenues increased by 19.9% year-over-year to $21
        million; full 2020 year service revenues increased by 16.7% to $75.4
        million; and
    --  Quarterly and full 2020 year UC-SIP revenues increased more than 20%
        year-over-year.




    --  GAAP results:      o Quarterly GAAP gross margin was 71.4%;       o
        Quarterly GAAP operating margin was 20.7%;      o Quarterly GAAP net
        income was $8.4 million, or $0.24 per diluted share; and       o Full
        2020 year GAAP net income was $27.2 million, or $0.83 per diluted share.




    --  Non-GAAP results:      o Quarterly Non-GAAP gross margin was 71.5%;     
        o Quarterly Non-GAAP operating margin was 26.2%;       o Quarterly
        Non-GAAP net income was $15.2 million, or $0.44 per diluted share; and  
        o Full 2020 year Non-GAAP net income was $46.7 million, or $1.41 per
        diluted share.
    --  Net cash provided by operating activities was $10.1 million for the
        quarter and $38.5 million for the full year.

Details

AudioCodes (NASDAQ: AUDC), a leading vendor of advanced communications software, products and productivity solutions for the digital workplace, today announced financial results for the fourth quarter and full year periods ended December 31, 2020.

Revenues for the fourth quarter of 2020 were $58.7 million compared to $56.6 million for the third quarter of 2020 and $52.8 million for the fourth quarter of 2019. Revenues were $220.8 million in 2020 compared to $200.3 million in 2019.

Net income was $8.4 million, or $0.24 per diluted share, for the fourth quarter of 2020, compared to a net loss of $8.2 million, or $(0.28) per diluted share, for the fourth quarter of 2019. Net income was $27.2 million, or $0.83 per diluted share, in 2020 compared to $4.0 million, or $0.13 per diluted share, in 2019.

On a Non-GAAP basis, net income was $15.2 million, or $0.44 per diluted share, for the fourth quarter of 2020 compared to $8.1 million, or $0.26 per diluted share, in the fourth quarter of 2019. Non-GAAP net income was $46.7 million, or $1.41 per diluted share, in 2020 compared to $27.8 million, or $0.89 per diluted share, in 2019.

Non-GAAP net income excludes: (i) share-based compensation expenses; (ii) amortization expenses related to intangible assets; (iii) expenses related to the payment required to be made pursuant to the royalty buyout agreement with the Israel National Authority for Technology and Innovation ("IIA")entered into in November 2019; (iv) expenses or income related to revaluation of an earn-out liability in connection with the acquisition of Active Communications Europe; (v) financial income or expenses related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies and (vi) non-cash deferred tax expenses (benefit). 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 $10.1 million for the fourth quarter of 2020 and $38.5 million for 2020. Net cash provided by operating activities in both periods was impacted by the $11.6 million payment made in December 2020 which was the second installment payment pursuant to the royalty buyout agreement.

Cash and cash equivalents, long and short-term bank deposits and long and short-term marketable securities were $186.3 million as of December 31, 2020 compared to $71.9 million as of December 31, 2019. The increase in cash and cash equivalents, long and short-term bank deposits and long and short-term marketable securities was the result of the receipt of the net proceeds of the Company's public offering in June 2020, as well as due to cash provided by operating activities, offset, in part, by the payments of cash dividends during 2020.

"We are pleased to report record financial results for the fourth quarter and full year 2020," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes.

"The year 2020 ended on a strong note, underscoring our excellent performance for the full year, and providing continued momentum heading into 2021. With collaboration and work from home trends becoming key for business continuity and workplace productivity in the Covid-19 pandemic era, we have seen increased demand for our comprehensive portfolio of solutions and services for the UCaas and Contact Center markets. Most notable was the more than 17% growth in our Enterprise business during 2020, which now comprises about 78% of revenue, driven mainly by continued success in voice solutions for Microsoft Teams where annual revenue grew by over 300% year-over-year, and more than 30% compared to the third quarter of 2020. Additionally, we witnessed higher than anticipated revenue in the Contact Center business, which grew over 15% in 2020. With continued focus on collaboration tools and on work from home in the coming years, we anticipate similar growth in 2021 and beyond."

Mr. Adlersberg continued, "Given the ramp up in conversational AI opportunities we experienced in the second half of 2020, and looking to the future, we expect voice.ai to be a new growth engine for us over the next several years. In 2020, we experienced over 50% growth in the revenues of our conversational IVR, recording and voice.ai connect solutions. Driven by the current environment and trends, the need for quick and efficient access to contact centers has become a top priority for many. We see rising demand and requirements for automation of customer calls and self-service solutions. Meeting recap is another growth area for us where we integrate an intelligent assistant into our Meeting Insight solution, targeting to automate various enterprise business processes across the organization. As such, we see much potential and growth in voice.ai related applications."

"As we enter 2021 with growth engines such as solutions for Microsoft Teams, contact centers and conversational AI, we are confident in our decision to continue to invest in future solutions and service offerings in the UCaaS and Contact Center enterprise market and to focus on the return on investment to our shareholders," concluded Mr. Adlersberg.

Court Approval of Share Purchases and/or Cash Dividends

In January 2021, the Company received court approval in Israel to purchase up to an aggregate amount of $30 million of additional ordinary shares. The court approval also permits AudioCodes to declare a dividend of any part of this amount. The approval is valid through July 19, 2021.

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 2020 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: AUDC) (TASE: AUDC) is a leading vendor of advanced communications software, products and productivity 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; possible adverse impact of the COVID-19 pandemic on our business and results of operations; 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.

©2021 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, AudioCodes Meeting Insights, AudioCodes Room Experience 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,


                                                                                     2020          2019



                                                              
     
           (Unaudited)         (Audited)

                                                                                                   ---


       
              ASSETS





       CURRENT ASSETS:



       Cash and cash equivalents                                                 $40,934       $64,773



       Restricted cash                                                             5,100         5,000



       Short-term and restricted bank deposits                                    84,817         1,416



       Short-term marketable securities and accrued interest                         449             -



       Trade receivables, net                                                     34,518        27,501



       Other receivables and prepaid expenses                                      8,631         5,626



       Inventories                                                                29,193        28,275




       Total current assets                                                      203,642       132,591






       LONG-TERM ASSETS:



       Long-term and restricted bank deposits                                        $94          $694



       Long-term marketable securities and accrued interest                       54,895             -



       Deferred tax assets                                                        12,081        20,466



       Operating lease right-of-use assets                                        25,430        29,688



       Severance pay funds                                                        20,597        19,370




       Total long-term assets                                                    113,097        70,218






       PROPERTY AND EQUIPMENT, NET                                                 4,593         4,392






       GOODWILL, INTANGIBLE ASSETS AND OTHER, NET                                 36,791        37,123





       Total assets                                                             $358,123      $244,324






       
              LIABILITIES AND SHAREHOLDERS' EQUITY





       CURRENT LIABILITIES:



       Current maturities of long-term bank loans                                 $1,200        $2,473



       Trade payables                                                              6,984         6,628



       Other payables and accrued expenses                                        28,531        24,692



       IIA settlement liability                                                   11,684        10,750



       Deferred revenues                                                          37,182        33,538



       Short-term operating lease liabilities                                      9,178         8,579




       Total current liabilities                                                  94,759        86,660






       LONG-TERM LIABILITIES:



       Accrued severance pay                                                     $21,830       $20,313



       Long-term bank loans                                                            -        1,200



       IIA settlement liability                                                        -       10,749



       Deferred revenues and other liabilities                                    12,243         9,831



       Long-term operating lease liabilities                                      19,436        23,097




       Total long-term liabilities                                                53,509        65,190






       Total shareholders' equity                                                209,855        92,474




       Total liabilities and shareholders' equity                               $358,123      $244,324



              
                AUDIOCODES LTD. AND ITS SUBSIDIARIES



              
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

    ---


              
                U.S. dollars in thousands, except per share data




                                                                                          Year ended                                     Three months ended


                                                                                         December 31,                                    December 31,

                                                                                                                         ---

                                                                                    2020                            2019      2020                   2019

                                                                                                                                                   ---

                                                                             (Unaudited)              (Audited)                    (Unaudited)

                                                                                                                           ---


              Revenues:



              Products                                                         $145,332                        $135,646   $37,644                $35,271



              Services                                                           75,442                          64,641    21,022                 17,526

                                                                                                                                                   ---


              
                Total Revenues                                       220,774                         200,287    58,666                 52,797

    ---                                                                                                                                            ---


              Cost of revenues:



              Products                                                           54,384                          59,022    12,071                 15,340



              Services                                                           16,574                          14,129     4,735                  3,215



              Expense related to royalty buyout agreement with                                                  32,178                          32,178
    the IIA




              
                Total Cost of revenues                                70,958                         105,329    16,806                 50,733

    ---                                                                                                                                            ---


              Gross profit                                                      149,816                          94,958    41,860                  2,064

                                                                                                                                                   ---


              Operating expenses:



              Research and development, net                                      46,072                          41,199    12,528                 10,941



              Selling and marketing                                              51,217                          51,535    13,110                 13,650



              General and administrative                                         14,177                          11,778     4,104                  3,424

                                                                                                                                                   ---


              Total operating expenses                                          111,466                         104,512    29,742                 28,015

                                                                                                                                                   ---


              Operating income (loss)                                            38,350                         (9,554)   12,118               (25,951)



              Financial income (expenses), net                                  (1,703)                        (1,761)  (2,661)                   231

                                                                                                                                                   ---


              Income (loss) before taxes on income                               36,647                        (11,315)    9,457               (25,720)



              Tax benefit (taxes on income), net                                (9,399)                         15,292   (1,076)                17,487

                                                                                                                                                   ---


              Net income (loss)                                                 $27,248                          $3,977    $8,381               $(8,233)

                                                                                                                                                   ===


              Basic net earnings (loss) per share                                 $0.87                           $0.14     $0.25                $(0.28)

                                                                                                                                                   ===


              Diluted net earnings (loss) per share                               $0.83                           $0.13     $0.24                $(0.28)

                                                                                                                                                   ===


              Weighted average number of shares used in                          31,440                          29,252    32,907                 29,423
    computing basic net earnings (loss) per share (in
    thousands)

                                                                                                                                                   ===


              Weighted average number of shares used in                          32,916                          30,800    34,210                 29,423
    computing diluted net earnings (loss) 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,

                                                                                                                                 ---

                                                                                            2020                            2019      2020                               2019

                                                                                                                                                                       ---

                                                                                     (Unaudited)              (Audited)                    (Unaudited)

                                                                                                                                   ---


           GAAP net income (loss)                                                       $27,248                          $3,977    $8,381                           $(8,233)

                                                                                                                                                                       ===


           GAAP net earnings (loss) per share                                             $0.83                           $0.13     $0.24                            $(0.28)

                                                                                                                                                                       ===


           Cost of revenues:



           Share-based compensation (1)                                                     181                             183        24                                 62



           Amortization expenses (2)                                                        272                             272        68                                 68



           Expense related to royalty buyout agreement with the                                                         32,178                                      32,178
    IIA (3)


                                                                                             453                          32,633        92                             32,308



           Research and development, net:



           Share-based compensation (1)                                                   1,535                             937       771                                289



           Selling and marketing:



           Share-based compensation (1)                                                   3,635                           2,171       967                                811



           Amortization expenses (2)                                                         60                              60        15                                 15

                                                                                                                                                                       ---

                                                                                           3,695                           2,231       982                                826



           General and administrative:



           Share-based compensation (1)                                                   3,420                           2,001     1,436                                797



           Revaluation of earn-out liability (4)                                                                          (23)                                          -



                                                                                           3,420                           1,978     1,436                                797



           Financial expenses:



           Exchange rate differences (5)                                                  1,973                           2,172     2,844                              (158)





           Income taxes:



           Deferred tax (6)                                                               8,398                        (16,099)      720                           (17,731)

                                                                                                                                                                       ---


           Non-GAAP net income                                                          $46,722                         $27,829   $15,226                             $8,098

                                                                                                                                                                       ===


           Non-GAAP diluted net earnings per share                                        $1.41                           $0.89     $0.44                              $0.26

                                                                                                                                                                       ===

(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 Active Communications Europe assets.
(3) Expense related to royalty buyout agreement with the IIA.
(4) Income related to revaluation of an earn-out liability in connection with the acquisition of Active Communications Europe.
(5) Financial income or expenses related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies.
(6) 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 STATEMENT OF CASH FLOWS

    ---


             
                U.S. dollars in thousands




                                                                           Year ended            Three months ended


                                                                          December 31,              December 31,



                                                                                  2020                          2019                   2020       2019



                                                                          (Unaudited)  (Audited)                     (Unaudited)




             
                Cash flows from operating activities:

    ---


             Net income (loss)                                                $27,248                        $3,977                 $8,381   $(8,233)



             Adjustments required to reconcile net income to net
        cash provided by operating activities:



             Depreciation and amortization                                      2,268                         2,044                    587        522



             Amortization of marketable securities premiums and                   172                            79                    134
        accretion of discounts, net



             Increase (decrease) in accrued severance pay, net                    290                         (267)                 (133)     (391)



             Share-based compensation expenses                                  8,771                         5,292                  3,198      1,959



             Decrease (increase) in deferred tax assets, net                    8,329                      (16,282)                   692   (17,763)



             Increase (decrease) in accrued interest and exchange                (26)                          140                    (7)        20
        rate effect of loans, marketable securities and bank
        deposits



             Decrease in operating lease right-of-use assets                    7,913                         7,444                  2,193      1,543



             Increase (decrease) in operating lease liabilities               (6,717)                      (5,456)                   789         60



             Changes in IIA settlement liability, net                         (9,815)                       21,499               (10,086)     21,499



             Increase in trade receivables, net                               (7,017)                      (5,222)               (3,364)   (3,216)



             Decrease (increase) in other receivables and prepaid             (1,516)                          259                    233      (223)
        expenses



             Decrease (increase) in inventories                               (1,525)                      (5,925)                   929      1,752



             Increase (decrease) in trade payables                                356                           440                    390    (1,191)



             Increase in other payables and accrued expenses                    3,839                         2,805                  4,143      1,381



             Increase in deferred revenues                                      5,906                        12,342                  2,008      4,694



             Net cash provided by operating activities                         38,476                        23,169                 10,087      2,413






             
                Cash flows from investing activities:

    ---


             Investment in short-term deposits                               (84,000)



             Proceeds from (investment in) short-term deposits                    599                        10,962                   (75)



             Proceeds from long-term deposits                                     600                         1,200                    375        300



             Proceeds from redemption of marketable securities                                              29,412                           10,027



             Purchase of marketable securities                               (54,977)                     (10,025)              (27,313)       (19)



             Purchase of property and equipment                               (1,530)                      (1,949)                 (418)     (273)




             Net cash provided by (used in) investing activities            (139,308)                       29,600               (27,431)     10,035



             
                AUDIOCODES LTD. AND ITS SUBSIDIARIES



             
                CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

    ---


             
                U.S. dollars in thousands




                                                                           Year ended            Three months ended


                                                                          December 31,              December 31,



                                                                                  2020                          2019                  2020     2019



                                                                          (Unaudited)  (Audited)                     (Unaudited)




             
                Cash flows from financing activities:

    ---


             Purchase of treasury shares                                                                   (8,002)



             Repayment of bank loans                                          (2,497)                      (2,470)                (632)   (617)



             Cash dividends paid to shareholders                              (8,442)                      (6,720)                (855)



             Payment related to the acquisition of ACS                                                       (410)



             Proceeds from issuance of shares, net                             85,426



             Proceeds from issuance of shares upon exercise of                  2,606                         3,103                 1,230      870
        options and warrants




             Net cash provided by (used in) financing activities               77,093                      (14,499)                (257)     253






             Net increase (decrease) in cash, cash equivalents, and          (23,739)                       38,270              (17,601)   12,701
        restricted cash



             Cash, cash equivalents and restricted cash at beginning           69,773                        31,503                63,635   57,072
        of period




             Cash, cash equivalents and restricted cash at end of             $46,034                       $69,773               $46,034  $69,773
        period





       
                Company Contacts                                                                                
     
                  IR Agency Contact



       Niran Baruch,                                           
     Shirley Nakar,                                     
     Brett Maas,
                                                                                                                     
     Managing Director

       VP Finance & Chief Financial Officer                    
     Director, Investor Relations                       
     Hayden IR
                                                                                                                     
     Tel: +1-646-536-7331

       AudioCodes                                              
     AudioCodes                                         
     
                brett@haydenir.com


       Tel: +972-3-976-4000                                    
     Tel: +972-3-976-4000


       
                
                  Niran.baruch@audiocodes.com 
     
                
                  shirley@audiocodes.com

    ---

View original content:http://www.prnewswire.com/news-releases/audiocodes-reports-fourth-quarter-and-full-year-2020-results-301214679.html

SOURCE AudioCodes