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AudioCodes Reports Second Quarter 2015 Results
[July 28, 2015]

AudioCodes Reports Second Quarter 2015 Results


LOD, Israel, July 28, 2015 /PRNewswire/ -- AudioCodes (NasdaqGS: AUDC), a leading provider of converged voice solutions, which enables enterprises and service providers to transition to all-IP voice networks, today announced financial results for the second quarter ended June 30, 2015.

Second Quarter Highlights:

  • Quarterly revenues decreased 13.7% year-over-year to $32.4 million;
  • Service revenues increased 13.7% year-over-year to $9.3 million from $8.2 million;
  • Quarterly Non-GAAP gross margin was 59.9%, compared to 60.0% in the prior year period;
  • Quarterly Non-GAAP operating expenses decreased 4.2% year-over-year to $20.2 million;
  • Quarterly cash flow from operating activities remained positive at $3.4 million;
  • Quarterly Non-GAAP net loss was $537,000, or ($0.01) per diluted share, compared to net income of $1.6 million, or $0.04 per diluted share, in the prior year period;
  • AudioCodes repurchased 1,449,000 of its ordinary shares at an aggregate cost of $6.1 million during the quarter.

Revenues for the second quarter of 2015 were $32.4 million, compared to $37.6 million for the second quarter of 2014.

Net loss was $1.9 million, or ($0.05) per diluted share, for the second quarter of 2015, compared to a net loss of $46,000, or ($0.00) per diluted share, for the second quarter of 2014.

On a Non-GAAP basis, the Company reported a quarterly net loss of $537,000, or ($0.01) per diluted share, compared to net income of $1.6 million, or $0.04 per diluted share, in the second quarter last year.

Non-GAAP net income (loss) excludes: (i) stock-based compensation expenses; (ii) amortization expenses related to intangible assets; and (iii) non-cash deferred tax benefit or expenses. A reconciliation of net income (loss) 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 second quarter of 2015 totaled $3.4 million. Cash and cash equivalents, bank deposits and marketable securities were $78.6 million as of June 30, 2015 compared to $91.8 million as of June 30, 2014. The decrease in cash and cash equivalents, bank deposits and marketable securities was the result of the use of cash to repurchase the Company's ordinary shares pursuant to its share repurchase program.

"We are disappointed with the financial results for the second quarter of 2015, more so in view of our growing business activity and the progress made in the second quarter in the unified communications and the business services market segments. As pre-announced on June 9th, AudioCodes' second quarter results reflect weakness in our business in Central and Latin America and certain markets in Europe. In addition, we experienced larger than expected weakness in the contact center market, and lower gateway revenues in the areas of low and mid capacity and legacy residential gateways," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "On a more positive note, we saw encouraging developments in our Microsoft Lync business and in our service provider activity, reflected in increased success in sales of CPE products into the hosted PBX market and projects related to the All-IP transformation trend. In order to compensate for the decline in revenues, we have initiated a cost reduction plan. The plan is expected to generate an estimated annualized savings of 5% to 10% of the Company's operating expenses and be implemented over the next six to twelve months. We expect the initial steps already taken to reduce our operating expenses by approximately 5% below the level of expenses in the first quarter as early as the fourth quarter of this year. In addition, we have started a full review of our business line activities in order to support our plan to return to profitability and growth in the second half of 2015 and beyond," Mr. Adlersberg added.

"Our Skype for Business One Voice Solution, and the One Box 365 solution continue to gain market traction. We see great potential, and saw good progress with our service provider activity, mainly as a result of targeting our efforts towards the global trend of migrating public telephony and voice services into All-IP networks. In this space, we made progress towards winning two large multi-year projects with leading tier-1 service providers. Additionally, we continued to focus our efforts on developing and selling more complete end-to-end solutions and software products to end customers, which we believe will support further growth in coming years. As we continue to adapt and align our offering towards industry trends such as NFV and SDN, as well as the migration to hybrid and pure Cloud environments, we are confident in our ability to weather challenging market conditions and drive growth and success in the future," concluded Mr. Adlersberg.

Share Buy Back Program
In August 2014, AudioCodes announced that its Board of Directors had approved a program to repurchase up to $3.0 million of its Ordinary Shares. In November 2014, AudioCodes received court approval to repurchase up to an additional $15.0 million of its Ordinary Shares and in May 2015 the court approved an additional $15.0 million in share repurchases. During the quarter ended June 30, 2015, AudioCodes acquired 1,449,000 shares under this program for a total consideration of approximately $6.1 million. As of June 30, 2015, AudioCodes had acquired an aggregate of 3,537,000 shares under this program for an aggregate consideration of approximately $16.6 million.

2015 Full Year Outlook update
AudioCodes is updating its full year guidance. The Company's outlook is based on current indications for its business, which are subject to change.
We now expect revenues for 2015 to be in the range of $137 million to $143 million compared with the prior forecast of a range of $158 million to $162 million.  We are now forecasting non-GAAP net income per diluted share to be in the range of $0.09 to $0.12 compared with the prior forecast of $0.24 to $0.28.

AudioCodes management believes that Non-GAAP financial guidance provides the best comparative basis for investors to understand the Company's on-going operations and prospects for the future. Non-GAAP net income per diluted share should be evaluated in light of the Company's financial results prepared in accordance with U.S. GAAP.

Conference Call & Web Cast Information
AudioCodes will conduct a conference call at 8:00 A.M., Eastern Time today to discuss the Company's second 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.

About AudioCodes

AudioCodes Ltd. (NasdaqGS, 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.

To download the 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.

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.

©2015 AudioCodes Ltd. All rights reserved. AudioCodes, AC, HD VoIP, HD VoIP Sounds Better, IPmedia, Mediant, MediaPack, What's Inside Matters, OSN, SmartTAP, VMAS, VoIPerfect, VoIPerfectHD, Your Gateway To VoIP, 3GX, VocaNom and One Box 365 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



June 30,


December 31,



2015


2014



(Unaudited)


(Audited)


ASSETS










CURRENT ASSETS:





Cash and cash equivalents

$ 15,307


$ 14,797


Short-term and restricted bank deposits

4,361


7,630


Short-term marketable securities and accrued interest

4,100


543


Trade receivables, net

28,059


31,056


Other receivables and prepaid expenses

8,279


9,564


Inventories

15,132


14,736


 

Total current assets

75,238


78,326







LONG-TERM ASSETS:





Long-term and restricted bank deposits

2,733


4,066


Long-term marketable securities

52,107


58,684


Deferred tax assets

-


872


Severance pay funds

18,579


17,835


 

Total long-term assets

73,419


81,457







PROPERTY AND EQUIPMENT, NET

4,226


3,856







GOODWILL, INTANGIBLE ASSETS AND OTHER, NET

36,080


36,745







Total assets

$ 188,963


$ 200,384







LIABILITIES AND EQUITY









CURRENT LIABILITIES:





Current maturities of long-term bank loans

$ 4,686


$ 4,686


Trade payables

6,442


10,111







Other payables and accrued expenses

16,401


15,758


Deferred revenues

12,166


10,233


 

Total current liabilities

39,695


40,788







LONG-TERM LIABILITIES:





Accrued severance pay

18,731


17,908


Long-term bank loans

2,763


5,105


Deferred revenues and other liabilities

3,896


2,862


 

Total  long-term liabilities

25,390


25,875







Total equity

123,878


133,721


 

Total liabilities and equity

$ 188,963


$ 200,384



 

 


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,


2015


2014


2015


2014


(Unaudited)


(Unaudited)

Revenues:








Products

$ 51,673


$ 57,917


$ 23,089


$ 29,369

Services

18,212


15,600


9,316


8,197

 

Total Revenues

69,885


73,517


32,405


37,566

 

Cost of revenues:








Products

23,821


26,193


10,678


13,276

Services

4,823


3,961


2,577


2,036

 

Total Cost of revenues

28,644


30,154


13,255


15,312

 

Gross profit

41,241


43,363


19,150


22,254

 

Operating expenses:








Research and development, net

14,676


16,228


7,097


8,416

Selling and marketing

22,637


22,895


11,340


11,669

General and administrative

4,655


3,716


2,493


1,802

 

Total operating expenses

41,968


42,839


20,930


21,887

 

Operating income (loss)

(727)


524


(1,780)


367

Financial income, net

606


102


541


15

 

Income (loss) before taxes on income

(121)


626


(1,239)


382

Taxes on income, net

(2,179)


(950)


(683)


(428)

 

Net loss

$ (2,300)


$ (324)


$ (1,922)


$ (46)

 

Basic net loss per share

$ (0.06)


$ (0.01)


$ (0.05)


$ (0.00)

 

Diluted net loss per share

$ (0.06)


$ (0.01)


$ (0.05)


$ (0.00)

 

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

41,391


41,600


40,813


43,230

 

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

41,391


41,600


40,813


43,230

 

 

AUDIOCODES LTD. AND ITS SUBSIDIARIES
NON-GAAP PROFORMA STATEMENTS OF OPERATIONS

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



 Six months ended


Three months ended


 June 30,


June 30,


2015


2014


2015


2014


(Unaudited)


(Unaudited)

Revenues:








Products

$ 51,673


$ 57,917


$ 23,089


$ 29,369

Services

18,212


15,600


9,316


8,197

Total Revenues

69,885


73,517


32,405


37,566

Cost of revenues:








Products

23,422


25,762


10,484


13,063

Services

4,677


3,845


2,497


1,976

Total Cost of revenues (1) (2)

28,099


29,607


12,981


15,039

Gross profit

41,786


43,910


19,424


22,527

Operating expenses:








Research and development, net (1)

14,438


15,922


6,980


8,253

Selling and marketing (1) (2)

21,906


22,167


10,992


11,278

General and administrative (1)

4,203


3,303


2,266


1,595

Total operating expenses

40,547


41,392


20,238


21,126

Operating income (loss)

1,239


2,518


(814)


1,401

Financial income, net

606


102


541


15

Income (loss) before taxes on income

1,845


2,620


(273)


1,416

Taxes on income, net (3)

(432)


11


(264)


153

Net income (loss)

$ 1,413


$ 2,631


$ (537)


$ 1,569

Diluted net earnings (loss) per share

$ 0.03


$ 0.06


$ (0.01)


$ 0.04

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

42,172


43,175


 

41,453


 

44,616

 

(1) Excluding 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 Nuera, Netrake and Mailvision assets.

(3) Excluding 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

RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME (LOSS)

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






Six months ended


Three months ended


June 30,


June 30,


2015


2014


2015


2014


(Unaudited)


(Unaudited)

 

GAAP net loss

$ (2,300)


$ (324)


$ (1,922)


$ (46)


GAAP net loss per share

$ (0.06)


$ (0.01)


$ (0.05)


$ (0.00)


Cost of revenues:









Stock-based compensation (1)

49


51


26


25


Amortization expenses (2)

496


496


248


248



545


547


274


273


Research and development, net:









Stock-based compensation (1)

238


306


117


163


Selling and marketing:









Stock-based compensation (1)

568


546


276


300


Amortization expenses (2)

163


182


72


91



731


728


348


391


General and administrative:









Stock-based compensation (1)

452


413


227


207


Income taxes:









Deferred tax (3)

1,328


961


419


581


Non-GAAP net income (loss)

$ 994


$ 2,631


$ (537)


$ 1,569


Non-GAAP diluted net earnings (loss) per share

$ 0.03


$ 0.06


$ (0.01)


$ 0.04



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

(2) Amortization of intangible assets related to the acquisitions of Nuera, Netrake and Mailvision assets.  

(3) 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,



2015


2014


2015


2014



( Unaudited)


( Unaudited)

Cash flows from operating activities:









Net loss


$ (2,300)


$ (324)


$ (1,922)


$ (46)

Adjustments required to reconcile net income or 
     loss to net cashprovided by or used in operating 
     activities:









Depreciation and amortization


1,627


1,629


803


773

Amortization of marketable securities premiums 
     and accretion of discounts, net


552


195


239


156

Increase (decrease) in accrued severance pay, net


79


(186)


(82)


26

Stock-based compensation expenses


1,307


1,316


646


695

Decrease in long-term deferred tax assets, net


872


967


253


496

Amortization of senior convertible notes discount 
     and deferred charges


-


(15)


-


-

Decrease (increase) in accrued interest on 
     marketable securities, bank deposits and 
     structured notes


29


174


177


(4)

Decrease (increase) in trade receivables, net


2,997


(4,363)


2,853


(3,751)

Decrease (increase)  in other receivables and 
     prepaid expenses


2,810


(2,370)


2,519


(231)

Increase in inventories


(396)


(234)


(528)


(277)

Increase (decrease) in trade payables


(3,669)


546


(1,145)


(1,515)

Increase (decrease) in deferred revenues


3,212


3,273


(1,010)


17

Increase in other payables and accrued expenses


950


953


554


3,275

 

Net cash provided by (used in) operating activities


8,070


1,561


3,357


(386)

 

Cash flows from investing activities:









Purchase of marketable securities


-


(60,170)


-


(60,170)

Decrease (increase) in short-term deposits, net


3,269


1,000


(7)


-

Proceeds from redemption of long-term bank 
     deposits


1,365


1,381


850


851

Proceeds from redemption of marketable securities 
     upon maturity


2,711


15,390


2,711


4,000

Purchase of property and equipment


(1,332)


(719)


(490)


(308)

Net cash provided by (used in) investing activities


6,013


(43,118)


3,064


(55,627)



















 

 

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,



2015


2014


2015


2014



( Unaudited)


( Unaudited)

Cash flows from financing activities:









Purchase of treasury stock


(11,329)


-


(6,080)


-

Repayment of senior convertible notes


-


(285)


-


-

Repayment of long-term bank loans


(2,342)


(2,343)


(1,366)


(1,367)

Consideration related to payment of acquisition of 
     Mailvision


(233)


(233)


(233)


(233)

Proceeds from issuance of shares upon exercise of 
     options and warrants


331


2,112


59


388

Proceeds from issuance of shares, net


-


29,744


-


-

Payment of issuance costs


-


-


-


(111)


Net cash provided by (used in) financing activities


(13,573)


28,995


(7,620)


(1,323)










Increase (decrease) in cash and cash equivalents


510


(12,562)


(1,199 )


(57,336)

Cash and cash equivalents at the beginning of the      
     period


14,797


30,763


16,506


75,537

Cash and cash equivalents at the end of the period


$ 15,307


$ 18,201


$ 15,307


$ 18,201

 

 

Company Contacts


IR Agency Contact

Niran Baruch,

Shirley Nakar,

Philip Carlson/Collin Dennis

VP Finance & Chief Accounting Officer

Director, Investor Relations

KCSA Strategic

AudioCodes

AudioCodes

Communications

Tel: +972-3-976-4000

Tel: +972-3-976-4000

Tel: +1-212-896-1233

[email protected]

[email protected]

[email protected]

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/audiocodes-reports-second-quarter-2015-results-300119553.html

SOURCE AudioCodes


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