PR Newswire | Jul 28, 2020 02:01AM EDT

07/28 01:00 CDT

AudioCodes Reports Second Quarter 2020 Results LOD, Israel, July 28, 2020

LOD, Israel, July 28, 2020 /PRNewswire/ --

Second Quarter Highlights

* Quarterly revenues increased by 8.1% year-over-year to $53.5 million; * Quarterly service revenues increased by 3% year-over-year to $17.1 million; * Quarterly UC-SIP revenues increased more than 20% year-over-year; * GAAP results: - Quarterly GAAP gross margin percentage was 66.7%; - Quarterly GAAP operating margin percentage was 16.5%; - Quarterly GAAP net income was $6.6 million, or $0.21 per diluted share; * Non-GAAP results: - Quarterly Non-GAAP gross margin percentage was 66.9%; - Quarterly Non-GAAP operating margin percentage was 20.1%; - Quarterly Non-GAAP net income was $10.5 million, or $0.32 per diluted share; * Net cash provided by operating activities was $10.7 million for the quarter; * $85.4 million in new capital, net of expenses of the offering, raised through public offering of ordinary shares.

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 second quarter ended June 30, 2020.

Revenues for the second quarter of 2020 were $53.5 million compared to $52.0 million for the first quarter of 2020 and $49.5 million for the second quarter of 2019.

Net income was $6.6 million, or $0.21 per diluted share, for the second quarter of 2020, compared to $4.8 million, or $0.16 per diluted share, for the second quarter of 2019.

On a Non-GAAP basis, net income was $10.5 million, or $0.32 per diluted share, for the second quarter of 2020 compared to $6.8 million, or $0.22 per diluted share, for the second 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.

During the second quarter of 2020 the Company raised approximately $85.4 million in net proceeds from the public offering of 2,600,000 ordinary shares at a purchase price of $35 per share.

Net cash provided by operating activities was $10.7 million for the second quarter of 2020. Cash and cash equivalents and long- and short-term bank deposits were $170.4 million as of June 30, 2020 compared to $71.9 million as of December 31, 2019. The increase in cash and cash equivalents and long- and short-term bank deposits was primarily a result of the receipt of the net proceeds of the public offering in June 2020, as well as due to cash provided by operating activities.

"We are pleased to report strong financial results for the second quarter of 2020," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "Work-from-home (WFH) has become the new normal in recent months and UCaaS and Collaboration have taken center stage in the transition of many enterprises to a digital workplace. As a result, we experienced good business momentum across most of the market segments we participate in, most notably in the UCaaS and the Contact Center market segments. Coupling this favorable sales momentum with lower than anticipated operating expenses resulting from the COVID-19 pandemic, we continued to improve our financial performance year-over-year. Underscoring our financial success were improved gross margin, which increased to 66.9% in the second quarter from 63.5% in the year-ago quarter, and the substantial increase in operating income to 20.1% from 14.1% in the second quarter of 2019. As a result, net income increased above 50% year-over-year and we have generated strong cash flow from operations. Continuing the sales trend of the first quarter of 2020, we experienced increased market activity and demand for Microsoft Teams. Revenue related to the MS Teams ecosystem grew more than 300% from the year-ago quarter, reaching a level of above $10 million. In addition, newly created opportunities related to MS Teams have doubled year over year in the second quarter."

"The progress made in our Voice.ai business was also noteworthy. We saw continued progress in the introduction of Meeting Insights, a productivity enhancement software tool for group collaboration. In the voice.ai gateway (VAIG) business we saw an increase in opportunities relating to adding voice and telephony channels to virtual agents and enterprise intelligent assistants, a rapidly growing use these days. Looking forward, we expect that Collaboration and WFH will continue to take hold as mainstream market trends for coming years. While the full impact of COVID-19 is still uncertain and may remain a global challenge for the next few years, we believe in our ability to respond to new developments and challenges in our markets. We plan to continue our investment in future product offerings and focus on the return on investment to our shareholders," concluded Mr. Adlersberg.

Conference Call & Web Cast Information

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

(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.

Company ContactsNiran 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

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

Summary financial data follows

AUDIOCODES LTD. AND ITS SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

June 30, December 31,

2020 2019

(Unaudited) (Audited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents $ 163,849 $ 64,773

Short-term and restricted bank deposits 5,965 6,416

Trade receivables, net 30,144 27,501

Other receivables and prepaid expenses 7,419 5,626

Inventories 29,469 28,275

Total current assets 236,846 132,591

LONG-TERM ASSETS:

Long-term and restricted bank deposits $ 544 $ 694

Deferred tax assets 17,311 20,466

Operating lease right-of-use assets 26,489 29,688

Severance pay funds 18,783 19,370

Total long-term assets 63,127 70,218

PROPERTY AND EQUIPMENT, NET 4,294 4,392

GOODWILL, INTANGIBLE ASSETS AND OTHER, NET 36,957 37,123

Total assets $ 341,224 $ 244,324

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Current maturities of long-term bank loans $ 1,836 $ 2,473

Trade payables 4,611 6,628

Other payables and accrued expenses 25,335 24,692

IIA settlement liability 10,780 10,750

Deferred revenues 35,770 33,538

Short-term operating lease liabilities 8,332 8,579

Total current liabilities 86,664 86,660

LONG-TERM LIABILITIES:

Accrued severance pay $ 20,350 $ 20,313

Long-term bank loans 600 1,200

IIA settlement liability 10,780 10,749

Deferred revenues and other liabilities 10,777 9,831

Long-term operating lease liabilities 19,859 23,097

Total long-term liabilities 62,366 65,190

Total shareholders' equity 192,194 92,474

Total liabilities and shareholders' equity $ 341,224 $ 244,324

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Six months ended Three months ended

June 30, June 30,

2020 2019 2020 2019

(Unaudited) (Unaudited)

Revenues:

Products $ 70,701 $ 65,296 $ 36,367 $ 32,843

Services 34,843 30,782 17,155 16,656

Total Revenues 105,544 96,078 53,522 49,499

Cost of revenues:

Products 27,793 28,150 14,031 14,372

Services 7,774 7,385 3,793 3,813

Total Cost of revenues 35,567 35,535 17,824 18,185

Gross profit 69,977 60,543 35,698 31,314

Operating expenses:

Research and development, net 22,806 19,659 11,224 10,179

Selling and marketing 25,586 25,220 12,317 12,659

General and administrative 6,578 5,263 3,313 2,592

Total operating expenses 54,970 50,142 26,854 25,430

Operating income 15,007 10,401 8,844 5,884

Financial income (expenses), net 454 (1,079) (852) (280)

Income before taxes on income 15,461 9,322 7,992 5,604

Taxes on income, net (3,558) (1,479) (1,353) (810)

Net income $ 11,903 $ 7,843 $ 6,639 $ 4,794

Basic net earnings per share $ 0.40 $ 0.27 $ 0.22 $ 0.16

Diluted net earnings per share $ 0.38 $ 0.26 $ 0.21 $ 0.16

Weighted average number of shares used incomputing basic net earnings per share 30,017 29,214 30,493 29,214(in thousands)

Weighted average number of shares used incomputing diluted net earnings per share 31,554 30,737 32,062 30,744(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

Six months ended Three months ended

June 30, June 30,

2020 2019 2020 2019

(Unaudited) (Unaudited)

GAAP net income $ 11,903 $ 7,843 $ 6,639 $ 4,794

GAAP net earnings per share $ 0.38 $ 0.26 $ 0.21 $ 0.16

Cost of revenues:

Share-based compensation (1) 99 66 49 30

Amortization expenses (2) 136 136 68 68

235 202 117 98

Research and development, net:

Share-based compensation (1) 490 422 247 210

Selling and marketing:

Share-based compensation (1) 1,623 754 864 421

Amortization expenses (2) 30 30 15 15

1,653 784 879 436

General and administrative:

Share-based compensation (1) 1,264 739 657 373

Revaluation of earn-out liability (3) - (23) - -

1,264 716 657 373

Financial expenses:

Exchange rate differences (4) (453) 1,258 829 358

Income taxes:

Deferred tax (5) 3,154 1,088 1,124 544

Non-GAAP net income $ 18,246 $ 12,313 $ 10,492 $ 6,813

Non-GAAP diluted net earnings per share $ 0.57 $ 0.40 $ 0.32 $ 0.22

(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

Six months ended Three months ended

June 30, June 30,

2020 2019 2020 2019

(Unaudited) (Unaudited)

Cash flows from operating activities:

Net income $ 11,903 $ 7,843 $ 6,639 $ 4,794

Adjustments required to reconcile net income to net cashprovided by operating activities:

Depreciation and amortization 1,119 980 551 506

Amortization of marketable securities premiums and - 79 - 23accretion of discounts, net

Increase (decrease) in accrued severance pay, net 624 (115) 312 (276)

Share-based compensation expenses 3,476 1,981 1,817 1,034

Decrease in deferred tax assets, net 3,127 953 1,110 528

Increase in accrued interest and exchange rate effect of 1 159 13 170loans, marketable securities and bank deposits

Decrease in operating lease right-of-use assets 3,898 4,063 2,022 2,159

Increase (decrease) in operating lease liabilities (4,184) (2,713) 60 (376)

Changes in IIA settlement liability, net 61 - 667 -

Decrease (increase) in trade receivables, net (2,643) (2,623) (1,868) 2,237

Decrease (increase) in other receivables and prepaid (17) 203 58 457expenses

Increase in inventories (1,408) (7,256) (2,695) (4,357)

Increase (decrease) in trade payables (2,017) 3,667 (742) 3,040

Increase (decrease) in other payables and accrued 369 2,065 2,278 (2,401)expenses

Increase in deferred revenues 3,206 7,431 508 884

Net cash provided by operating activities 17,515 16,717 10,730 8,422

Cash flows from investing activities:

Proceeds from short-term deposits 451 5,971 301 -

Proceeds from long-term deposits 150 600 - 300

Proceeds from redemption of marketable securities - 19,385 - 12,094

Purchase of marketable securities - (21,035) - (21,035)

Purchase of property and equipment (641) (1,361) (293) (245)

Net cash provided by (used in) investing activities (40) 3,560 8 (8,886)

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

U.S. dollars in thousands

Six months ended Three months ended

June 30, June 30,

2020 2019 2020 2019

(Unaudited) (Unaudited)

Cash flows from financing activities:

Purchase of treasury shares - (8,002) - (7,051)

Repayment of bank loans (1,238) (1,237) (619) (619)

Cash dividends paid to shareholders (3,866) (3,218) - -

Payment related to the acquisition of ACS - (410) - -

Proceeds from issuance of shares, net 85,654 - 85,654 -

Proceeds from issuance of shares upon exercise of options and warrants 1,051 1,462 703 348

Net cash provided by (used in) financing activities 81,601 (11,405) 85,738 (7,322)

Net increase (decrease) in cash, cash equivalents, and restricted cash 99,076 8,872 96,476 (7,786)

Cash, cash equivalents and restricted cash at beginning of period 69,773 31,503 72,373 48,161

Cash, cash equivalents and restricted cash at end of period $ 168,849 $ 40,375 $ 168,849 $ 40,375

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SOURCE AudioCodes