AudioCodes Reports Third Quarter 2020 Results

LOD, Israel, Oct. 27, 2020 /PRNewswire/ --

Third Quarter Highlights

  • Quarterly revenues increased by 10% year-over-year to $56.6 million;
  • Quarterly service revenues increased by 19.9% year-over-year to $19.6 million; and
  • Quarterly UC-SIP revenues increased by about 20% year-over-year.
  • GAAP results:
       -   Quarterly GAAP gross margin percentage was 67.1%;
       -   Quarterly GAAP operating margin percentage was 19.8%; and
       -   Quarterly GAAP net income was $7.0 million, or $0.20 per diluted share.
  • Non-GAAP results:
       -   Quarterly Non-GAAP gross margin percentage was 67.4%;
       -   Quarterly Non-GAAP operating margin percentage was 23.7%; and
       -   Quarterly Non-GAAP net income was $13.3 million, or $0.38 per diluted share.
  • Net cash provided by operating activities was $10.9 million for the quarter.
  • AudioCodes declared a cash dividend of 14 cents per share. The dividend, in the aggregate amount of $4.6 million, was paid on September 1, 2020.

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 third quarter ended September 30, 2020.

Revenues for the third quarter of 2020 were $56.6 million compared to $53.5 million for the second quarter of 2020 and $51.4 million for the third quarter of 2019.

Net income was $7.0 million, or $0.20 per diluted share, for the third quarter of 2020, compared to $4.4 million, or $0.14 per diluted share, for the third quarter of 2019.

On a Non-GAAP basis, net income was $13.3 million, or $0.38 per diluted share, for the third quarter of 2020 compared to $7.4 million, or $0.24 per diluted share, for the third quarter of 2019.

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 $10.9 million for the third quarter of 2020. Cash and cash equivalents, long- and short-term bank deposits and long- and short-term marketable securities were $176.4 million as of September 30, 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 payment of cash dividends during 2020.

"We are pleased to report record financial results for the third quarter of 2020," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "With work-from-home (WFH) becoming the new normal in today's world, we see Collaboration taking center stage in enabling the agenda and implementation plans of many organizations in order to enhance their productivity and competitiveness in the markets they serve. This trend has driven the accelerated transition to a digital workplace by many enterprises, and presents us with an opportunity to take part in this accelerated digital transformation trend and increased reliance on digital collaboration tools."

Mr. Adlersberg continued, "As a result, we experienced strong demand and business momentum across the key segments we serve such as the UCaaS and Contact Center markets. Coupling this favorable business momentum with our continued improved efficiency and productivity, we improved our financial performance year-over-year to record levels. Underscoring our financial success were improved gross margin and operating margin, increase of net income above 75% compared to the year-ago-quarter, and strong cash flow from operations.

"We continued to experience increased demand and activity related to the Microsoft Teams collaboration solution. As in previous quarters, we continued to make progress in our Voice.ai business, including with our Meeting Insights which targets meetings recap applications, the Voice.ai Gateway, which facilitates voice interaction with virtual agents, and in our Voca business where we saw increased demand for conversational AI. Looking forward, we expect that Collaboration and WFH will continue to drive success in our business and remain a mainstream industry trend for coming years. We plan to continue our investment in future solutions and product offerings in the UCaaS market and focus on the return on investment to our shareholders," concluded Mr. Adlersberg.

Cash Dividend 

On August 5, 2020, the Company declared a cash dividend of $0.14 per share. The dividend, in the aggregate amount of $4.6 million, was paid on September 1, 2020 to all of the Company's shareholders of record on August 17, 2020.

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 8:30 A.M., Eastern Time today to discuss the Company's third quarter 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, 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.

©2020 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  



September 30,


December 31,


2020


2019


(Unaudited)


(Audited)

ASSETS








CURRENT ASSETS:




Cash and cash equivalents

$ 58,635


$ 64,773

Restricted cash

5,000


5,000

Short-term and restricted bank deposits

84,742


1,416

Short-term marketable securities and accrued interest

247


-

Trade receivables, net

31,154


27,501

Other receivables and prepaid expenses

8,742


5,626

Inventories

30,322


28,275

Total current assets

218,842


132,591





LONG-TERM ASSETS:




Long-term and restricted bank deposits

$ 469


$ 694

Long-term marketable securities and accrued interest

27,281


-

Deferred tax assets

12,787


20,466

Operating lease right-of-use assets

25,901


29,688

Severance pay funds

19,370


19,370

Total long-term assets

85,808


70,218





PROPERTY AND EQUIPMENT, NET

4,622


4,392





GOODWILL, INTANGIBLE ASSETS AND OTHER, NET

36,874


37,123





Total assets

$ 346,146


$ 244,324





LIABILITIES AND SHAREHOLDERS' EQUITY








CURRENT LIABILITIES:




Current maturities of long-term bank loans

$ 1,525


$ 2,473

Trade payables

6,594


6,628

Other payables and accrued expenses

25,436


24,692

IIA settlement liability

10,885


10,750

Deferred revenues

36,175


33,538

Short-term operating lease liabilities

8,535


8,579

Total current liabilities

89,150


86,660





LONG-TERM LIABILITIES:




Accrued severance pay

$ 20,736


$ 20,313

Long-term bank loans

300


1,200

IIA settlement liability

10,885


10,749

Deferred revenues and other liabilities

11,050


9,831

Long-term operating lease liabilities

17,568


23,097

Total long-term liabilities

60,539


65,190





Total shareholders' equity

196,457


92,474

Total liabilities and shareholders' equity

$ 346,146


$ 244,324

 

 

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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





 Nine months ended


Three months ended


 September 30,


September 30,


2020


2019


2020


2019


(Unaudited)


(Unaudited)

Revenues:








Products

$ 107,688


$ 100,375


$ 36,987


$ 35,079

Services

54,420


47,115


19,577


16,333

Total Revenues

162,108


147,490


56,564


51,412

Cost of revenues:








Products

42,313


43,682


14,520


15,532

Services

11,839


10,914


4,065


3,529

Total Cost of revenues

54,152


54,596


18,585


19,061

Gross profit

107,956


92,894


37,979


32,351

Operating expenses:








Research and development, net

33,544


30,258


10,738


10,599

Selling and marketing

38,107


37,885


12,521


12,665

General and administrative

10,073


8,354


3,495


3,091

Total operating expenses

81,724


76,497


26,754


26,355

Operating income

26,232


16,397


11,225


5,996

Financial income (expenses), net

958


(1,992)


504


(913)

Income before taxes on income

27,190


14,405


11,729


5,083

Taxes on income, net

(8,323)


(2,195)


(4,765)


(716)

Net income

$ 18,867


$ 12,210


$ 6,964


$ 4,367

Basic net earnings per share

$ 0.61


$ 0.42


$ 0.21


$ 0.15

Diluted net earnings per share

$ 0.58


$ 0.40


$ 0.20


$ 0.14

Weighted average number of shares used in
computing basic net earnings per share (in
thousands)

30,951


29,195


32,673


29,157

Weighted average number of shares used in
computing diluted net earnings per share (in
thousands)

32,484


30,705


34,198


30,642

 

 

AUDIOCODES LTD. AND ITS SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

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



Nine months ended


Three months ended


September 30,


September 30,


2020


2019


2020


2019


(Unaudited)


(Unaudited)









GAAP net income

$ 18,867


$ 12,210


$ 6,964


$ 4,367

GAAP net earnings per share

$ 0.58


$ 0.40


$ 0.20


$ 0.14

Cost of revenues:








Share-based compensation (1)

157


121


58


55

Amortization expenses (2)

204


204


68


68


361


325


126


123

Research and development, net:








Share-based compensation (1)

764


648


274


226

Selling and marketing:








Share-based compensation (1)

2,668


1,360


1,045


606

Amortization expenses (2)

45


45


15


15


2,713


1,405


1,060


621

General and administrative:








Share-based compensation (1)

1,984


1,204


720


465

Revaluation of earn-out liability (3)

-


(23)


-


-


1,984


1,181


720


465

Financial expenses:








Exchange rate differences (4)

(871)


2,330


(418)


1,072









Income taxes:








Deferred tax expense (5)

7,678


1,632


4,524


544

Non-GAAP net income

$ 31,496


$ 19,731


$ 13,250


$ 7,418

Non-GAAP diluted net earnings per share

$ 0.96


$ 0.63


$ 0.38


$ 0.24

(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)  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 STATEMENT OF CASH FLOWS

U.S. dollars in thousands




Nine months ended


Three months ended



September 30,


September 30,



2020


2019


2020


2019



(Unaudited)


(Unaudited)

Cash flows from operating activities:









Net income


$ 18,867


$ 12,210


$ 6,964


$ 4,367

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









Depreciation and amortization


1,681


1,522


562


542

Amortization of marketable securities premiums and 
     accretion of discounts, net


38


79


38


-

Increase (decrease) in accrued severance pay, net


423


124


(201)


239

Share-based compensation expenses


5,573


3,333


2,097


1,352

Decrease in deferred tax assets, net


7,637


1,481


4,510


528

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


(19)


120


(20)


(39)

Decrease in operating lease right-of-use assets


5,720


5,901


1,822


1,838

Decrease in operating lease liabilities


(7,506)


(5,516)


(3,322)


(2,803)

Changes in IIA settlement liability, net


271


-


210


-

Decrease (increase) in trade receivables, net


(3,653)


(2,006)


(1,010)


617

Decrease (increase) in other receivables and prepaid 
     expenses


(1,749)


482


(1,732)


279

Increase in inventories


(2,454)


(7,677)


(1,046)


(421)

Increase (decrease) in trade payables


(34)


1,631


1,983


(2,036)

Increase (decrease) in other payables and accrued 
     expenses


(304)


1,424


673))


(641)

Increase in deferred revenues


3,898


7,648


692


217

Net cash provided by operating activities


28,389


20,756


10,874


4,039










Cash flows from investing activities:









Investment in short-term deposits


(84,000)


-


(84,000)


-

Proceeds from short-term deposits


674


10,962


223


4,991

Proceeds from long-term deposits


225


900


75


300

Proceeds from redemption of marketable securities


-


19,385


-


-

Purchase of marketable securities


(27,664)


(10,006)


(27,664)


(10,006)

Purchase of property and equipment


(1,112)


(1,676)


(471)


(315)

Net cash provided by (used in) investing activities


(111,877)


19,565


(111,837)


(5,030)










 

 

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

U.S. dollars in thousands




Nine months ended


Three months ended



September 30,


September 30,



2020


2019


2020


2019



(Unaudited)


(Unaudited)

Cash flows from financing activities:









Purchase of treasury shares


-


(8,002)


-


-

Repayment of bank loans


(1,865)


(1,853)


(627)


(616)

Cash dividends paid to shareholders


(7,587)


(6,720)


(3,721)


(3,502)

Payment related to the acquisition of ACS


-


(410)


-


-

Proceeds from issuance of shares, net


85,426


-


(228)


-

Proceeds from issuance of shares upon exercise of 
     options and warrants


1,376


2,233


325


771

Net cash provided by (used in) financing activities


77,350


(14,752)


(4,251)


(3,347)










Net increase (decrease) in cash, cash equivalents, and 
     restricted cash


(6,138)


25,569


(105,214)


(4,338)

Cash, cash equivalents and restricted cash at beginning 
     of period


69,773


31,503


168,849


61,410

Cash, cash equivalents and restricted cash at end of 
     period


$ 63,635


$ 57,072


$ 63,635


$ 57,072

 

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Company Contacts


IR Agency Contact

Niran Baruch,

VP Finance & Chief Financial Officer

AudioCodes

Tel: +972-3-976-4000

Niran.baruch@audiocodes.com

Shirley Nakar,

Director, Investor Relations

AudioCodes

Tel: +972-3-976-4000

shirley@audiocodes.com

Brett Maas,
Managing Director
Hayden IR
Tel: +1-646-536-7331
brett@haydenir.com

 

 

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SOURCE AudioCodes

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