PR Newswire | Oct 27, 2020 03:03AM EDT

10/27 02:01 CDT

AudioCodes Reports Third Quarter 2020 Results LOD, Israel, Oct. 27, 2020

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.

(c)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 247 -interest

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 27,281 -interest

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 incomputing basic net earnings per share (in 30,951 29,195 32,673 29,157thousands)

Weighted average number of shares used incomputing diluted net earnings per share (in 32,484 30,705 34,198 30,642thousands)

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 38 79 38 - accretion of discounts, net

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 (19) 120 (20) (39) deposits

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 (1,749) 482 (1,732) 279 expenses

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 (304) 1,424 673)) (641) expenses

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 1,376 2,233 325 771 options and warrants

Net cash provided by (used in) financing activities 77,350 (14,752) (4,251) (3,347)

Net increase (decrease) in cash, cash equivalents, and (6,138) 25,569 (105,214) (4,338) restricted cash

Cash, cash equivalents and restricted cash at beginning 69,773 31,503 168,849 61,410 of period

Cash, cash equivalents and restricted cash at end of $ 63,635 $ 57,072 $ 63,635 $ 57,072 period

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Company Contacts IR Agency Contact

Niran Baruch, Shirley Nakar,

VP Finance & Chief Financial Officer Director, Investor Relations Brett Maas, Managing DirectorAudioCodes AudioCodes Hayden IR Tel: +1-646-536-7331Tel: +972-3-976-4000 Tel: +972-3-976-4000 brett@haydenir.com

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

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SOURCE AudioCodes