AudioCodes Reports Third Quarter 2021 Results

·15 min read

LOD, Israel, Oct. 26, 2021 /PRNewswire/ --

Third Quarter Highlights

  • Quarterly revenues increased by 12.1% year-over-year to $63.4 million; Quarterly service revenues increased by 26.7% year-over-year to $24.8 million.

  • GAAP results:
    - Quarterly GAAP gross margin was 69.6%;
    - Quarterly GAAP operating margin was 15.8%; and
    - Quarterly GAAP net income was $8.3 million, or $0.24 per diluted share.

  • Non-GAAP results:
    - Quarterly Non-GAAP gross margin was 69.9%;
    - Quarterly Non-GAAP operating margin was 21.4%; and
    - Quarterly Non-GAAP net income was $12.9 million, or $0.38 per diluted share.

  • Net cash provided by operating activities was $13.0 million for the quarter.

  • AudioCodes repurchased 424,307 of its ordinary shares during the quarter at an aggregate cost of $13.8 million.

Details

AudioCodes (NASDAQ: AUDC), a leading vendor of advanced communications software, products and productivity solutions for the digital workplace, today announced its financial results for the third quarter ended September 30, 2021.

Revenues for the third quarter of 2021 were $63.4 million compared to $60.6 million for the second quarter of 2021 and $56.6 million for the third quarter of 2020.

Net income was $8.3 million, or $0.24 per diluted share, for the third quarter of 2021, compared to a net income of $7.0 million, or $0.20 per diluted share, for the third quarter of 2020.

On a Non-GAAP basis, net income was $12.9 million, or $0.38 per diluted share, for the third quarter of 2021 compared to $13.3 million, or $0.38 per diluted share, for the third quarter of 2020.

Non-GAAP net income excludes: (i) share-based compensation expenses; (ii) amortization expenses related to the acquisition of Active Communications Europe assets; (iii) financial income or expenses related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies and (iv) 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 $13.0 million for the third quarter of 2021. Cash and cash equivalents, long and short-term bank deposits and long and short-term marketable securities were $184.9 million as of September 30, 2021 compared to $186.3 million as of December 31, 2020. Cash and cash equivalents, long and short-term bank deposits and long and short-term marketable securities were about the same as of the end of both periods as the use of cash for the repurchasing of the Company's ordinary shares pursuant to its share repurchase program and the payment of cash dividends during 2021 was basically offset by cash generated from operating activities.

"We are pleased to report strong financial results for the third quarter of 2021," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes.

"In the third quarter of 2021 we saw continued momentum in our enterprise operations related to the UCaaS and Contact Center/customer experience (CX) markets. Contributing close to 85% of our revenues in the third quarter, and generating growth of above 20% year-over-year, the enterprise business provides a solid base for continued growth. At the core of this success was our UCaaS business which grew about 18% year-over-year and our contact center business which grew more than 20% year-over-year."

"We experienced continued expansion in our services operations as revenues from services grew more than 25% year-over-year, representing close to 40% of our revenue in the third quarter of 2021 and becoming key to our continued business expansion. Growth in our services business was substantially related to the shift towards use of cloud communications and our focus on becoming a leading provider of Teams Voice as a Service. The increase in Services revenue was driven primarily by strength in our professional and managed services offerings. Key to this growth is our continued progress in generating recurring revenues with strong execution in our AudioCodes Live offering operations."

"We continue to enjoy success in expanding our Voice.ai operations where bookings grew more than 100% year-over-year for both the three and nine month periods ended September 30, 2021. We now forecast Voice.ai bookings for 2021 to reach a level of $5M for the full year. We continue to invest heavily in this growth engine and believe that it will grow to become a meaningful line of business for us in coming years. Voice.ai which is part of our AudioCodes Live offering provides strong foundation for growth in recurring revenues over time," concluded Mr. Adlersberg.

Share Buy Back Program

In July 2021, the Company received court approval in Israel to purchase up to an aggregate amount of $35 million of additional ordinary shares. The court approval also permits AudioCodes to declare a dividend of any part of this amount. The approval is valid through January 03, 2022.

During the quarter ended September 30, 2021, the Company acquired 424,307 of its ordinary shares under its share repurchase program for a total consideration of $13.8 million.

Cash Dividend

On July 27, 2021, the Company declared a cash dividend of $0.17 per share. The dividend, in the aggregate amount of approximately $5.6 million, was paid on August 26, 2021 to all of the Company's shareholders of record on August 11, 2021.

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%.

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 2021 operating performance, financial results and outlook. Interested parties may participate in the conference call by dialing one the following numbers:

United States Participants: 888-506-0062

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; 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.

©2021 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,


2021


2020


(Unaudited)


(Audited)

ASSETS








CURRENT ASSETS:




Cash and cash equivalents

$ 88,448


$ 40,934

Restricted cash

5,100


5,100

Short-term and restricted bank deposits

363


84,817

Short-term marketable securities and accrued interest

752


449

Trade receivables, net

40,270


34,518

Other receivables and prepaid expenses

8,102


8,631

Inventories

23,841


29,193

Total current assets

166,876


203,642





LONG-TERM ASSETS:




Long-term and restricted bank deposits

$ 94


$ 94

Long-term marketable securities and accrued interest

90,133


54,895

Deferred tax assets

9,362


12,081

Operating lease right-of-use assets

21,103


25,430

Severance pay funds

21,333


20,597

Total long-term assets

142,025


113,097





PROPERTY AND EQUIPMENT, NET

4,608


4,593





GOODWILL, INTANGIBLE ASSETS AND OTHER, NET

36,577


36,791





Total assets

$ 350,086


$ 358,123





LIABILITIES AND SHAREHOLDERS' EQUITY








CURRENT LIABILITIES:




Current maturities of long-term bank loans

$ 300


$ 1,200

Trade payables

5,204


6,984

Other payables and accrued expenses

31,960


28,531

IIA settlement liability

11,860


11,684

Deferred revenues

40,268


37,182

Short-term operating lease liabilities

8,987


9,178

Total current liabilities

98,579


94,759





LONG-TERM LIABILITIES:




Accrued severance pay

$ 21,858


$ 21,830

Deferred revenues and other liabilities

13,388


12,243

Long-term operating lease liabilities

12,760


19,436

Total long-term liabilities

48,006


53,509





Total shareholders' equity

203,501


209,855

Total liabilities and shareholders' equity

$ 350,086


$ 358,123

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,


2021


2020


2021


2020


(Unaudited)


(Unaudited)

Revenues:








Products

$ 113,423


$ 107,688


$ 38,610


$ 36,987

Services

69,398


54,420


24,798


19,577

Total Revenues

182,821


162,108


63,408


56,564

Cost of revenues:








Products

40,483


42,313


13,513


14,520

Services

15,884


11,839


5,772


4,065

Total Cost of revenues

56,367


54,152


19,285


18,585

Gross profit

126,454


107,956


44,123


37,979

Operating expenses:








Research and development, net

38,944


33,544


14,172


10,738

Selling and marketing

45,460


38,107


15,781


12,521

General and administrative

11,797


10,073


4,172


3,495

Total operating expenses

96,201


81,724


34,125


26,754

Operating income

30,253


26,232


9,998


11,225

Financial income, net

1,099


958


103


504

Income before taxes on income

31,352


27,190


10,101


11,729

Taxes on income, net

(4,856)


(8,323)


(1,838)


(4,765)

Net income

$ 26,496


$ 18,867


$ 8,263


$ 6,964

Basic net earnings per share

$ 0.81


$ 0.61


$ 0.25


$ 0.21

Diluted net earnings per share

$ 0.78


$ 0.58


$ 0.24


$ 0.20

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

32,790


30,951


32,618


32,673

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

34,005


32,484


33,843


34,198


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,


2021


2020


2021


2020


(Unaudited)


(Unaudited)

GAAP net income

$ 26,496


$ 18,867


$ 8,263


$ 6,964

GAAP net earnings per share

$ 0.78


$ 0.58


$ 0.24


$ 0.20

Cost of revenues:








Share-based compensation (1)

277


157


123


58

Amortization expenses (2)

204


204


68


68


481


361


191


126

Research and development, net:








Share-based compensation (1)

2,018


764


776


274

Selling and marketing:








Share-based compensation (1)

4,246


2,668


1,401


1,045

Amortization expenses (2)

10


45


2


15


4,256


2,713


1,403


1,060

General and administrative:








Share-based compensation (1)

3,286


1,984


1,174


720


3,286


1,984


1,174


720

Financial expenses (income):








Exchange rate differences (3)

(944)


(871)


38


(418)









Income taxes:








Deferred tax (4)

2,763


7,678


1,094


4,524

Non-GAAP net income

$ 38,356


$ 31,496


$ 12,939


$ 13,250

Non-GAAP diluted net earnings per share

$ 1.11


$ 0.96


$ 0.38


$ 0.38

(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) Financial expenses (income) related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies.

(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,




2021


2020


2021


2020




(Unaudited)


(Unaudited)


Cash flows from operating activities:










Net income


$ 26,496


$ 18,867


$ 8,263


$ 6,964


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










Depreciation and amortization


1,746


1,681


588


562


Amortization of marketable securities premiums and

accretion of discounts, net


1,241


38


500


38


Increase (decrease) in accrued severance pay, net


(708)


423


284


(201)


Share-based compensation expenses


9,827


5,573


3,474


2,097


Decrease in deferred tax assets, net


2,729


7,637


1,082


4,510


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


(31)


(19)


(54)


(20)


Decrease in operating lease right-of-use assets


5,705


5,720


1,843


1,822


Decrease in operating lease liabilities


(8,245)


(7,506)


(3,638)


(3,322)


Changes in IIA settlement liability, net


176


271


235


210


Increase in trade receivables, net


(5,752)


(3,653)


(3,267)


(1,010)


Increase in other receivables and prepaid expenses


(960)


(1,749)


(1,757)


(1,732)


Decrease (increase) in inventories


4,748


(2,454)


794


(1,046)


Increase (decrease) in trade payables


(1,780)


(34)


2,588


1,983


Increase (decrease) in other payables and accrued expenses


3,429


(304)


3,197


673))


Increase (decrease) in deferred revenues


4,470


3,898


(1,119)


692


Net cash provided by operating activities


43,091


28,389


13,013


10,874


Cash flows from investing activities:










Investment in short-term deposits


-


(84,000)


-


(84,000)


Proceeds from short-term deposits


84,454


674


151


223


Proceeds from long-term deposits


-


225


-


75


Proceeds from redemption of marketable securities


1,053


-


-


-


Purchase of marketable securities


(41,094)


(27,664)


(23,569)


(27,664)


Proceeds from sale of marketable securities


2,571


-


2,061


-


Purchase of property and equipment


(943)


(1,112)


(527)


(471)


Net cash provided by (used in) investing activities


46,041


(111,877)


(21,884)


(111,837)












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,



2021


2020


2021


2020



(Unaudited)


(Unaudited)

Cash flows from financing activities:









Purchase of treasury shares


(31,199)


-


(13,848)


-

Repayment of bank loans


(900)


(1,865)


(300)


(627)

Cash dividends paid to shareholders


(10,865)


(7,587)


(5,563)


(3,721)

Proceeds from issuance of shares, net


-


85,426


-


(228)

Proceeds from issuance of shares upon exercise of options and warrants


1,346


1,376


609


325

Net cash provided by (used in) financing activities


(41,618)


77,350


(19,102)


(4,251)










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


47,514


(6,138)


(27,973)


(105,214)

Cash, cash equivalents and restricted cash at beginning of period


46,034


69,773


121,521


168,849

Cash, cash equivalents and restricted cash at end of period


$ 93,548


$ 63,635


$ 93,548


$ 63,635

Company Contacts



Niran Baruch,
Chief Financial Officer
AudioCodes

Tel: +972-3-976-4000
niran.baruch@audiocodes.com


Roger L. Chuchen

VP, Investor Relations
AudioCodes

Tel: 732-764-2552

Mobile: 347-752-0780

roger.chuchen@audiocodes.com

Cision
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SOURCE AudioCodes

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