AudioCodes Reports Fourth Quarter and Full Year 2023 Results and Declares Semi-Annual Dividend of 18 cents per share
LOD, Israel, Feb. 6, 2024 /PRNewswire/ -- Fourth Quarter and Full Year 2023 Highlights
-- Quarterly revenues increased by 3.2% sequentially to $63.6 million;full
year 2023 revenues decreased by 11.2% to $244.4 million.
-- Quarterly Service revenues of $30.9 million accounted for 48.6% of
revenues;full year 2023 service revenues increased by 8.7% to $120.4
million.
-- GAAP results:- Quarterly GAAP gross margin was 66.7% compared to 66.5%
in the prior quarter;- Quarterly GAAP operating margin was 11.4%
compared to 9.4% in the prior quarter;- Quarterly GAAP net income was
$3.7 million, or $0.12 per diluted share compared to $4.3 million, or
$0.14 per diluted share, in the prior quarter;- Full 2023 year GAAP net
income was $8.8 million, or $0.28 per diluted share.
-- Non-GAAP results:- Quarterly Non-GAAP gross margin was 67.6% compared to
67.3% in the prior quarter;- Quarterly Non-GAAP operating margin was
16.9% compared to 15.5% in the prior quarter;- Quarterly Non-GAAP net
income was $8.9 million, or $0.28 per diluted share compared to $8.3
million, or $0.25 per diluted share in the prior quarter;- Full 2023
year Non-GAAP net income was $25.0 million, or $0.77 per diluted share.
-- Net cash provided by operating activities was $9.3 million for the
quarter and $14.9 million for the full year.
-- AudioCodes repurchased 595,583 of its ordinary shares during the quarter
at an aggregate cost of $6.3 million.
Details
AudioCodes (NASDAQ: AUDC), a leading vendor of advanced communications software, products and productivity solutions for the digital workplace, today announced its financial results for the fourth quarter and full year period ended December 31, 2023.
Revenues for the fourth quarter of 2023 were $63.6 million compared to $61.6 million for the third quarter of 2023. Revenues were $244.4 million in 2023 compared to $275.1 million in 2022.
Net income was $3.7 million, or $0.12 per diluted share, for the fourth quarter of 2023 compared to $4.3 million, or $0.14 per diluted share, for the third quarter of 2023. Net income was $8.8 million, or $0.28 per diluted share, in 2023 compared to $28.5 million, or $0.88 per diluted share, in 2022.
On a Non-GAAP basis, net income was $8.9 million, or $0.28 per diluted share, for the fourth quarter of 2023 compared to $8.3 million, or $0.25 per diluted share, for the third quarter of 2023. Non-GAAP net income was $25.0 million, or $0.77 per diluted share, in 2023 compared to $45 million, or $1.35 per diluted share, in 2022.
Non-GAAP net income excludes: (i) share-based compensation expenses; (ii) amortization expenses related to intangible assets; (iii) expenses related to deferred payments in connection with the acquisition of Callverso Ltd; (iv) other income related to a payment made by the landlord to AudioCodes Inc., a subsidiary of the Company, in connection with the termination of a lease agreement for its offices in New Jersey; (v) financial income related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies; (vi) non-cash deferred tax expenses (income); and (vii) non-cash lease expense which is required to be recorded during the quarter even though this is a free rent period under the lease for the Company's new headquarters. 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 $9.3 million for the fourth quarter of 2023 and $14.9 million for 2023.
Cash and cash equivalents, long and short-term bank deposits, long and short-term marketable securities and long and short-term financial investments were $106.7 million as of December 31, 2023 compared to $124.3 million as of December 31, 2022. The decrease in cash and cash equivalents, long and short-term bank deposits, long and short-term marketable securities and long and short-term financial investments was the result of 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 during each of the first and third quarters of 2023.
"I am pleased to report solid fourth quarter 2023 results with strength across the strategic areas of our business," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes.
We continued to perform well in the enterprise space with business reaching roughly 90% for the fourth quarter and the full year. Microsoft-related business in the quarter grew 5% year-over-year, within which Teams grew 10% year-over-year. Full year Microsoft increased 7% year over year while Teams related business grew 13% year over year. We experienced continued strong momentum of our AudioCodes Live managed services, with ARR growing 50% year-over-year ending the quarter at $48 million, consistent with our expectations.
Importantly, our customer experience (CX) and conversational AI (CAI) operations have clearly emerged as a second major growth pillar in our business. CX growth accelerated in the fourth quarter to over 40% year-over -year and to 19% for the full year. Conversational AI bookings grew over 50% for the quarter and the full year. Leading the growth in the CX and CAI markets has been Voca CIC, our Azure-native CCaaS solution for the Teams ecosystem, having won two large opportunities in North America. We have also seen solid growth with Meeting Insights, our enterprise grade solution for the meeting space.
On the operations side, I am glad to report solid progress in non-GAAP gross margin, which has recovered from early 2023 to reach 67.6%. Coupled with disciplined expense management, non-GAAP operating margin reached 16.9% in the quarter. With continued focus on shifting our business model into subscription and recurring sales, and the shift to higher margin cloud software solutions, we are making significant progress in our transformation to becoming a software and services company. With increased focus and investments in technologies and services for the UCaaS, CX and Conversational AI markets backed by strong Live bookings mainly in Teams, Live CX, and Voca CIC, we believe we are on the right path to execute on our plan to achieve revenue growth and drive improved profitability in 2024," concluded Mr. Adlersberg.
Share Buy Back Program
During the quarter ended December 31, 2023, the Company acquired 595,583 of its ordinary shares under its share repurchase program for a total consideration of $6.3 million.
In December 2023, the Company received court approval in Israel to purchase up to an aggregate amount of $20 million of additional ordinary shares. The court approval also permits AudioCodes to declare a dividend out of any part of this amount. The approval is valid through June 18, 2024.
As of December 31, 2023, the Company had $19.2 million available under the approval for the repurchase of shares and/or declaration of cash dividends.
Cash Dividend
AudioCodes also announced today that the Company's Board of Directors has declared a cash dividend in the amount of 18 cents per share. The aggregate amount of the dividend is approximately $5.5 million. The dividend is payable on March 6, 2024, to all of the Company's shareholders of record at the close of trading on the NASDAQ Global Select Market on February 20, 2024.
In accordance with Israeli tax law, the dividend is subject to withholding tax at source at the rate of 25% of the dividend amount payable to each shareholder of record, subject to applicable exemptions. If the recipient of the dividend is at the time of distribution or was at any time during the preceding 12-month period the holder of 10% or more of the Company's share capital, the withholding rate is 30%.
The dividend will be paid in U.S. dollars on the ordinary shares of AudioCodes Ltd. that are traded on the Nasdaq Global Select Market or the Tel-Aviv Stock Exchange. The amount and timing of any other dividends will be determined by the Board.
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 2023 operating performance, financial results and outlook. Interested parties may participate in the conference call by dialing one of the following numbers:
United States Participants: 888-506-0062
International Participants: +1 (973) 528-0011
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 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; the effects of the current terrorist attacks by Hamas in Israel, and the war and hostilities between Israel and Hamas, and Israel and Hezbollah as well as the possibility that this could develop into a broader regional conflict involving Israel with other parties, may affect our operations and may limit our ability to produce and sell our solutions; any disruption in our operations by the obligations of our personnel to perform military service as a result of current or future military actions involving Israel; 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.
©2024 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,
2023 2022
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $30,546 $24,535
Short-term and restricted bank
deposits 212 5,210
Short-term marketable securities 7,438 2,120
Short-term
financial investments - 15,258
Trade receivables, net 51,125 56,424
Other receivables and prepaid expenses 9,381 10,006
Inventories 43,959 36,377
Total current assets 142,661 149,930
LONG-TERM ASSETS:
Long-term Trade receivables $16,798 $13,099
Long-term marketable securities 65,732 75,946
Long-term financial investments 2,730 1,242
Deferred tax assets 6,208 9,073
Operating lease right-of-use assets 36,712 13,517
Severance pay funds 17,202 17,933
Total long-term assets 145,382 130,810
PROPERTY AND EQUIPMENT, NET 10,893 3,965
GOODWILL, INTANGIBLE ASSETS AND OTHER, NET 38,581 39,126
Total assets $337,517 $323,831
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables 7,556 11,338
Other payables and accrued expenses 29,943 38,316
Deferred revenues 38,820 36,634
Short-term operating lease liabilities 7,878 8,169
Total current liabilities 84,197 94,457
LONG-TERM LIABILITIES:
Accrued severance pay $16,662 $17,755
Deferred revenues and other liabilities 17,142 16,308
Long-term operating lease liabilities 31,404 5,551
Total long-term liabilities 65,208 39,614
Total shareholders' equity 188,112 189,760
Total liabilities and shareholders' equity $337,517 $323,831
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,
2023 2022 2023 2022
(Unaudited) (Audited) (Unaudited)
Revenues:
Products $123,991 $164,302 $32,692 $42,017
Services 120,392 110,791 30,867 28,639
Total Revenues 244,383 275,093 63,559 70,656
---
Cost of revenues:
Products 47,964 63,686 11,396 15,835
Services 38,070 32,629 9,771 8,663
Total Cost of revenues 86,034 96,315 21,167 24,498
---
Gross profit 158,349 178,778 42,392 46,158
Operating expenses:
Research and development, net 57,169 59,842 13,806 15,090
Selling and marketing 70,243 70,123 17,496 18,088
General and administrative 16,513 17,494 3,856 4,644
Total operating expenses 35,158 37,822
143,925 147,459
Operating income 7,234 8,336
14,424 31,319
Financial income (loss), net (52) 2,864 (1,740) 669
Income before taxes on income 14,372 34,183 5,494 9,005
(5,592) (5,717) (1,839) (1,456)
Taxes on income, net
Net income $8,780 $28,466 $3,655 $7,549
Basic net earnings per share $0.28 $0.89 $0.12 $0.24
Diluted net earnings per share $0.28 $0.88 $0.12 $0.23
Weighted average number of shares used in 31,401 31,849 30,678 31,642
computing basic net earnings per share (in
thousands)
Weighted average number of shares used in 31,579 32,500 30,893 32,145
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,
2023 2022 2023 2022
(Unaudited) (Audited) (Unaudited)
GAAP net income $8,780 $28,466 $3,655 $7,549
GAAP net earnings per share $0.28 $0.88 $0.12 $0.23
Cost of revenues:
Share-based compensation (1) 388 425 84 125
Amortization expenses (2) 501 760 122 190
Lease expenses (7) 685 363
1,574 1,185 569 315
Research and development, net:
Share-based compensation (1) 2,685 3,481 595 839
Deferred payments expenses (3) 770 500 408 125
Lease expenses (7) 430 55
3,885 3,981 1,058 964
Selling and marketing:
Share-based compensation (1) 4,297 6,032 917 1,338
Amortization expenses (2) 44 44 11 11
Deferred payments expenses (3) 86 500 46 125
Lease expenses (7) 430 55
4,857 6,576 1,029 1,474
General and administrative:
Share-based compensation (1) 4,010 5,184 768 1,450
Other Income (4) - (1,093)
Lease expenses (7) 171 91
4,181 4,091 859 1,450
Financial expenses:
Exchange rate differences (5) 205 (1,321) 1,442 (227)
Income taxes:
Deferred tax (6) 1,549 1,974 302 398
Non-GAAP net income $25,031 $44,952 $8,914 $11,923
Non-GAAP diluted net earnings per share $0.77 $1.35 $0.28 $0.36
Weighted average number of shares used in 32,637 33,359 31,937 33,088
computing Non-GAAP diluted net earnings per share
(in thousands)
((1) Share-based compensation expenses related to options and restricted share units granted to employees and others.
)((2) Amortization expenses related to intangible assets.
)((3) Expenses related to deferred payments in connection with the acquisition of Callverso Ltd.
)((4) Other income related to a payment made to AudioCodes Inc. in connection with the termination of a lease agreement for its offices in New Jersey.
)((5) Financial 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.
)((7) Non-cash lease expense which is required to be recorded during the quarter even though this is a free rent period under the lease for the Company's new headquarters.)
(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,
2023 2022 2023 2022
(Unaudited) (Audited) (Unaudited)
Cash flows from operating activities:
---
Net income $8,780 $28,466 $3,655 $7,549
Adjustments required to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,596 2,984 624 723
Amortization of marketable securities premiums and 1,348 1,533 321 378
accretion of discounts, net
Increase (decrease) in accrued severance pay, net (362) (349) 131 (17)
Share-based compensation expenses 11,380 15,122 2,364 3,752
Decrease in deferred tax assets, net 1,437 1,780 273 356
Cash financial loss (income), net (218) (912) 179 (184)
Decrease in operating lease right-of-use assets 9,281 6,712 2,593 2,073
Increase (decrease) in operating lease liabilities (6,914) (9,582) 1,497 (324)
Decrease (increase
(
in trade receivables, net 1,600 (20,567) (3,045) (8,080)
Decrease (increase) in other receivables and prepaid 625 (1,621) (947) (277)
expenses
Decrease (increase) in inventories (7,791) (12,653) 814 (4,605)
Increase (decrease) in trade payables (3,782) 3,475 918 (1,164)
Increase (decrease)
in other payables and accrued (6,233) (4,077) 181 2,126
expenses
Increase (decrease) in deferred revenues 3,144 (2,030) (279) (1,883)
Net cash provided by operating activities 14,891 8,281 9,279 423
Cash flows from investing activities:
---
Investment in short-term deposits - (5,000) (5)
Proceeds from
short-term deposits 4,998 10 (10)
Proceeds from
long-term deposits - 94
Proceeds from redemption of marketable securities 3,084 1,123
Proceeds from redemption of financial investments 14,094 1,052 1,052
Purchase of financial investments (81) (16,615) (405)
Proceeds from sale of marketable securities 3,846 2,250 2,250
Net cash paid in acquisition of subsidiary - (1,100) (1,000)
Purchase of property and equipment (5,965) (1,487) (664) (336)
Net cash provided by (used in) investing activities 19,976 (19,673) (674) 1,556
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,
2023 2022 2023 2022
(Unaudited) (Audited) (Unaudited)
Cash flows from financing activities:
---
Purchase of treasury shares (18,259) (38,099) (6,286) (2,858)
Cash dividends paid to shareholders (11,399) (11,552)
Proceeds from issuance of shares upon exercise of 802 1,055 548 522
options and warrants
Net cash used in financing activities (28,856) (48,596) (5,738) (2,336)
Net increase (decrease) in cash, cash equivalents, and 6,011 (59,988) 2,867 (357)
restricted cash
Cash, cash equivalents and restricted cash at beginning of period 24,535 84,523 27,679 24,892
Cash, cash equivalents and restricted cash at end of $30,546 $24,535 $30,546 $24,535
period
Company Contacts
Niran Baruch,
Roger L. Chuchen
Chief Financial Officer VP, Investor Relations
AudioCodes AudioCodes
Tel: +972-3-976-4000 Tel: 732-764-2552
niran.baruch@audiocodes.com roger.chuchen@audiocodes.com
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