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AudioCodes Reports Third Quarter 2017 Results

Mittwoch, 25.10.2017 08:05 von PR Newswire

PR Newswire

LOD, Israel, Oct. 25, 2017 /PRNewswire/ --

Third Quarter Highlights:

  • Quarterly revenues increased by 5.4% year-over-year to $39.2 million;
  • Quarterly service revenues increased by 12.4% year-over-year to $12.7 million;
  • Quarterly UC-SIP revenues increased more than 15% year-over-year;
  • Quarterly GAAP gross margin was 62.8%; quarterly Non-GAAP gross margin was 63.2%;
  • Quarterly GAAP operating margin was 6.6%; quarterly Non-GAAP operating margin was 8.8%;
  • Quarterly cash flow from operating activities was $6.2 million;
  • Quarterly GAAP net income was $1.0 million, or $0.03 per diluted share, compared to $971,000, or $0.03 per diluted share, in the prior year period;
  • Quarterly Non-GAAP net income was $3.4 million, or $0.10 per diluted share, compared to $2.9 million, or $0.08 per diluted share, in the prior year period; and
  • AudioCodes repurchased 940,000 of its ordinary shares during the quarter at an aggregate cost of $6.4 million.

Details:

AudioCodes (Nasdaq: AUDC), a leading provider of voice networking solutions that enable enterprises and service providers to transition to all-IP voice networks, today announced financial results for the third quarter ended September 30, 2017.

Revenues for the third quarter of 2017 were $39.2 million, compared to $38.7 million for the second quarter of 2017 and $37.2 million for the third quarter of 2016.

Net income was $1.0 million, or $0.03 per diluted share, for the third quarter of 2017, compared to $971,000, or $0.03 per diluted share, for the third quarter of 2016.

On a Non-GAAP basis, the Company reported quarterly net income of $3.4 million, or $0.10 per diluted share, compared to $2.9 million, or $0.08 per diluted share, in the third quarter of 2016.

Non-GAAP net income excludes: (i) stock-based compensation expenses; (ii) amortization expenses related to intangible assets; (iii) expenses related to deferred payments in connection with the acquisition of Active Communications Europe; and (iv) non-cash deferred tax benefit or expenses. A reconciliation of net income on a GAAP basis to a non-GAAP basis is provided in the tables that accompany the condensed consolidated financial statements contained in this press release.

Net cash provided by operating activities for the third quarter of 2017 totaled $6.2 million. Cash and cash equivalents, long- and short-term bank deposits and long- and short-term marketable securities were $60.1 million as of September 30, 2017, compared to $65.1 million as of September 30, 2016. The decrease in cash and cash equivalents, long and short-term bank deposits and long and short-term marketable securities was the result of the use of cash for the continued repurchasing of the Company's ordinary shares pursuant to its share repurchase program.

"We are pleased to report strong financial results for the third quarter of 2017," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "As demonstrated over the past 5 years, we continued to execute on our UC-SIP strategic plan, and grew sales of UC-SIP solutions, products and services in the third quarter by more than 15% compared to the year ago quarter. We believe we are now on track to deliver about 15% annual growth for the UC-SIP business which is expected to reach $100 million of annual revenues by 2020. Our performance continues to rely primarily on collaboration with our application and system integration partners worldwide, as well as through winning enterprise voice deployments and service provider network transformation projects on a global basis.

"Along with our higher sales, we continued to improve the efficiency of our operations. We increased gross margin to a record 63.2%, grew quarterly operating margin to a record 8.8% and had quarterly net income of $3.4 million, an 18% increase over the year ago quarter. We are now expecting to deliver about 25% growth in net income for 2017 compared to 2016. At the same time, we continued to invest in our new intelligent voice applications which we believe will start to contribute to improved revenues and profits in coming years. Finally, as in recent previous quarters, we continued to buy back shares to return value to our shareholders," concluded Mr. Adlersberg.

Share Buy Back Program

During the quarter ended September 30, 2017, AudioCodes acquired 940,000 of its ordinary shares under its share repurchase program for a total consideration of approximately $6.4 million. As of September 30, 2017, AudioCodes had acquired an aggregate of 14.5 million of its ordinary shares since August 2014 for an aggregate consideration of approximately $70.7 million.

In May 2017, AudioCodes received court approval in Israel to purchase up to an aggregate of $15 million of additional ordinary shares pursuant to its share repurchase program. As of September 30, 2017, $5.8 million remained available to the Company for repurchasing shares under this court approval. The current court approval for share repurchases expires on November 15, 2017.

On October 24, 2017, the Company's Board of Directors approved filing a new application with the court in Israel requesting approval for an additional repurchase program for up to $20 million of Ordinary Shares. The Company expects to file a new application shortly and receive a decision from the court in the coming weeks.

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 8:00 A.M., Eastern Time today to discuss the Company's third quarter 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.

To download AudioCodes' investor relations app, which offers access to its SEC filings, press releases, videos, audiocasts and more, please visit Apple's App Store for the iPhone and iPad or Google Play for Android mobile devices.

About AudioCodes

AudioCodes Ltd. (NASDAQ, TASE: AUDC) designs, develops and sells advanced Voice-over-IP (VoIP) and converged VoIP and Data networking products and applications to Service Providers and Enterprises. AudioCodes is a VoIP technology market leader, focused on converged VoIP and data communications, and its products are deployed globally in Broadband, Mobile, Enterprise networks and Cable. The Company provides a range of innovative, cost-effective products including Media Gateways, Multi-Service Business Routers, Session Border Controllers (SBC), Residential Gateways, IP Phones, Media Servers, Value Added Applications and Professional Services. AudioCodes' underlying technology, VoIPerfectHD™, relies on AudioCodes' leadership in DSP, voice coding and voice processing technologies. AudioCodes' High Definition (HD) VoIP technologies and products provide enhanced intelligibility and a better end user communication experience in Voice communications. 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.

©2017 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.

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands







September 30,


December 31,


2017


2016


(Unaudited)


(Audited)

ASSETS








CURRENT ASSETS:




Cash and cash equivalents

$ 22,040


$ 24,344

Short-term and restricted bank deposits

2,905


3,401

Short-term marketable securities and accrued interest

3,104


6,778

Trade receivables, net

24,597


25,448

Other receivables and prepaid expenses

5,207


3,377

Inventories

16,431


16,333

Total current assets

74,284


79,681





LONG-TERM ASSETS:




Long-term and restricted bank deposits

$ 4,507


$ 5,407

Long-term marketable securities

27,552


29,540

Deferred tax assets

9,030


11,607

Severance pay funds

19,690


17,820

Total long-term assets

60,779


64,374





PROPERTY AND EQUIPMENT, NET

3,676


3,867





GOODWILL, INTANGIBLE ASSETS AND OTHER, NET

38,427


39,054





Total assets

$ 177,166


$ 186,976





LIABILITIES AND EQUITY








CURRENT LIABILITIES:




Current maturities of long-term bank loans

$ 2,507


$ 3,451

Trade payables

5,395


7,710

Other payables and accrued expenses

20,466


18,618

Deferred revenues

15,616


14,951

Total current liabilities

43,984


44,730





LONG-TERM LIABILITIES:




Accrued severance pay

$ 21,043


$ 18,941

Long-term bank loans

6,840


8,493

Deferred revenues and other liabilities

5,839


6,153

Total long-term liabilities

33,722


33,587





Total equity

99,460


108,659

Total liabilities and equity

$ 177,166


$ 186,976

 

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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






 Nine months ended


Three months ended


 September 30,


September 30,


2017


2016


2017


2016


(Unaudited)


(Unaudited)

Revenues:








Products

$ 79,450


$ 75,920


$ 26,522


$ 25,904

Services

35,871


31,891


12,686


11,282

Total revenues

115,321


107,811


39,208


37,186

Cost of revenues:








Products

35,241


34,896


11,909


12,042

Services

8,359


7,578


2,692


2,464

Total cost of revenues

43,600


42,474


14,601


14,506

Gross profit

71,721


65,337


24,607


22,680

Operating expenses:








Research and development, net

22,222


21,457


7,686


7,296

Selling and marketing

36,549


33,715


12,151


11,518

General and administrative

6,537


5,998


2,176


1,898

Total operating expenses

65,308


61,170


22,013


20,712

Operating income

6,413


4,167


2,594


1,968

Financial income (expenses), net

(6)


(33)


97


(7)

Income before taxes on income

6,407


4,134


2,691


1,961

Taxes on income, net

(3,049)


(2,664)


(1,642)


(990)

Net income

$ 3,358


$ 1,470


$ 1,049


$ 971

Basic net earnings per share

$ 0.11


$ 0.04


$ 0.03


$ 0.03

Diluted net earnings per share

$ 0.10


$ 0.04


$ 0.03


$ 0.03

Weighted average number of shares used in

computing basic net earnings per share (in

thousands)                                                      

31,500


35,913


30,918


33,975

Weighted average number of shares used in

computing diluted net earnings per share (in

thousands)

32,534


36,419


31,959


34,615

 

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,


2017


2016


2017


2016


(Unaudited)


(Unaudited)

GAAP net income

$ 3,358


$ 1,470


$ 1,049


$ 971

GAAP net earnings per share

$ 0.10


$ 0.04


$ 0.03


$ 0.03

Cost of revenues:








Stock-based compensation (1)

59


87


17


32

Amortization expenses (2)

522


878


174


246


581


965


191


278

Research and development, net:








Stock-based compensation (1)

278


346


97


118

Deferred payments expenses (3)

136


564


63


188


414


910


160


306

Selling and marketing:








Stock-based compensation (1)

779


837


239


278

Amortization expenses (2)

90


90


30


30


869


927


269


308

General and administrative:








Stock-based compensation (1)

565


554


219


194

Income taxes:








Deferred tax (4)

2,560


1,993


1,496


817

Non-GAAP net income

$ 8,347


$ 6,819


$ 3,384


$2,874

Non-GAAP diluted net earnings per share    

$ 0.25


$ 0.19


$ 0.10


$ 0.08

(1) Stock-based compensation expenses related to options and restricted stock units granted to employees and others.

(2) Excluding amortization of intangible assets related to the acquisitions of Netrake, Mailvision and Active Communications Europe assets.

(3) Excluding expenses related to deferred payments in connection with the acquisition of Active Communications Europe.

(4) 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,



2017


2016


2017


2016



(Unaudited)


(Unaudited)

Cash flows from operating activities:









Net income


$ 3,358


$ 1,470


$ 1,049


$ 971

Adjustments required to reconcile net income to

   net cash provided by or used in operating

   activities:









Depreciation and amortization


1,859


2,262


599


712

Amortization of marketable securities premiums

   and accretion of discounts, net


475


677


146


187

Increase in accrued severance pay, net


232


583


284


103

Stock-based compensation expenses


1,681


1,824


572


622

Decrease (increase) in accrued interest and

   exchange rate effect of loans, marketable

   securities and bank deposits


251


187


36


(43)

Decrease in long-term deferred tax assets, net


2,497


2,055


1,475


837

Decrease (increase) in trade receivables, net


851


(211)


960


(1,262)

Decrease (increase) in other receivables and

   prepaid expenses


(1,789)


(658)


2,398


(599)

Decrease (increase) in inventories


(98)


1,111


(488)


(642)

Increase (decrease) in trade payables


(2,315)


313


386


2,494

Increase (decrease) in other payables and accrued

   expenses


1,594


1,638


(63)


1,373

Increase (decrease) in deferred revenues


809


400


(1,160)


(1,319)

Net cash provided by operating activities


9,405


11,651


6,194


3,434










Cash flows from investing activities:









Proceeds from sale of marketable securities


-


12,429


-


-

Decrease in short-term deposits, net


496


1,729


161


13,508

Decrease in long-term bank deposits


900


477


300


150

Proceeds from redemption of marketable securities


5,350


900


4,500


-

Purchase of property and equipment


(1,041)


(1,189)


(395)


(367)

Net cash provided by investing activities


5,705


14,346


4,566


13,291



















 

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,



2017


2016


2017


2016



(Unaudited)


(Unaudited)

Cash flows from financing activities:









Purchase of treasury stock


(16,548)


(21,726)


(6,366)


(15,000)

Repayment of long-term bank loans


(2,878)


(4,275)


(953)


(1,296)

Consideration related to payment for acquisition

   of Mailvision


-


(233)


-


-

Proceeds from issuance of shares upon exercise

   of options and warrants


2,012


561


479


342

Net cash used in financing activities


(17,414)


(25,673)


(6,840)


(15,954)










Increase (decrease) in cash and cash equivalents


(2,304)


324


3,920


771

Cash and cash equivalents at the beginning of the

   period


24,344


18,908


18,120


18,461

Cash and cash equivalents at the end of the

   period


$ 22,040


$ 19,232


$ 22,040


$ 19,232

 

 

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

Philip Carlson/Elizabeth Barker

KCSA Strategic Communications

Tel: +1-212-896-1233

audc@kcsa.com

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SOURCE AudioCodes Ltd.