AudioCodes Reports Fourth Quarter and Full Year 2023 Results and Declares Semi-Annual Dividend of 18 cents per share

    Date:

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    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 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

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    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

     

    143,925


     

    147,459


    35,158


    37,822

    Operating income

     

    14,424


     

    31,319


    7,234


    8,336

    Financial income (loss), net

    (52)


    2,864


    (1,740)


    669









    Income before taxes on income

    14,372


    34,183


    5,494


    9,005

     

    Taxes on income, net

    (5,592)


    (5,717)


    (1,839)


    (1,456)

    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

    computing basic net earnings per share (in

    thousands)

    31,401


    31,849


    30,678


    31,642

    Weighted average number of shares used in

    computing diluted net earnings per share (in

    thousands)

    31,579


    32,500


    30,893


    32,145

     

     

    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

    computing Non-GAAP diluted net earnings per share

    (in thousands)

    32,637


    33,359


    31,937


    33,088










    (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

         accretion of discounts, net

    1,348


    1,533


    321


    378

    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

         expenses

    625


    (1,621)


    (947)


    (277)

    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

         expenses

    (6,233)


    (4,077)


    181


    2,126

    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

     options and warrants

    802


    1,055


    548


    522


    Net cash used in financing activities

    (28,856)


    (48,596)


    (5,738)


    (2,336)











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

     restricted cash

    6,011


    (59,988)


    2,867


    (357)


    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

     period

    $ 30,546


    $ 24,535


    $ 30,546


    $ 24,535












     

    SOURCE AudioCodes

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