AudioCodes Reports First Quarter 2024 Results

Lod, Israel – May 7, 2024 – AudioCodes (NASDAQ: AUDC) Press Release

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 first quarter ended March 31, 2024.

Revenues for the first quarter of 2024 were $60.1 million compared to $59.2 million for the first quarter of 2023.

Net income was $2.1 million, or $0.07 per diluted share, for the first quarter of 2024 compared to net loss of $0.2 million, or $0.01 per diluted share, for the first quarter of 2023.

On a Non-GAAP basis, net income was $5.2 million, or $0.17 per diluted share, for the first quarter of 2024 compared to $2.7 million, or $0.08 per diluted share, for the first quarter of 2023.

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) financial income related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies; (v) non-cash deferred tax expenses (income); and (vi) 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 $15.0 million for the first quarter of 2024. Cash and cash equivalents, long and short-term bank deposits, long and short-term marketable securities and long and short-term financial investments were $106.0 million as of March 31, 2024 compared to $106.7 million as of December 31, 2023. 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 the first quarter of 2024, , offset, in part, by cash from operating activities.

“Our first quarter 2024 results were highlighted by healthy revenue growth of 1.5% year-over-year and progress made in strategic areas for our business”, said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. “In parallel with the nice growth in key business lines such as Microsoft Teams, voice services for CX, and conversational AI applications, we saw continued decline in our legacy gateway networking business, similar to trends seen in 2023. The continued transition from capex to recurring revenue model also posed revenue headwinds in the quarter.

Growth in key business lines for our future continued as planned. Microsoft business grew 8% year-over-year, with steady increase in the Live managed services, which grew 45% year-over-year, and have reached ARR of $53M exiting 1Q24. We are thus confident that we are on track to achieve our Live ARR plan of $64-$70 million for 2024. Live managed services represent now nearly 45% of our Microsoft business compared to 25% in the year ago quarter, and thus we believe the impact of our shift to recurring revenue model should ease in coming quarters. We also enjoyed growth in total contract value of Live services which grew above 45% year-over-year. Additionally, we have seen strong performance in customer experience (CX) and conversational AI (CAI), up 15% and 50% year over year, respectively. The strength has been driven by sales of our voice connectivity solutions in the CX market, and cross-selling of our Voca CIC AI first, Azure-native contact center for Teams. We are heartened by the market’s growing recognition of Voca CIC, which has recently been awarded by CX Today as the best Microsoft Teams Contact Center solution. We expect Voca CIC to be a major growth pillar of our CX and of the Company over the long-term. We believe we are the de facto leader for complete calling and contact center solutions for Microsoft Teams.

On the financial front, we enjoyed strong positive cash flow from operations in the quarter. To support further margin expansion, we have recently initiated the second phase of cost rationalization plans discussed previously.

Overall, while we had a slower than expected start of revenue growth to the year due to the decline in gateways and muted business spending as a result of the elevated interest rate environment in 2024, we remain confident in our ability to sustain healthy top-line growth long-term while driving significant margin expansion in 2024 and beyond,” concluded Mr. Adlersberg.

Share Buy Back Program and Cash Dividend

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.

On February 6, 2024, the Company declared a cash dividend of 18 cents per share. The dividend, in the aggregate amount of approximately $5.5 million, was paid on March 6, 2024 to all of the Company's shareholders of record on February 20, 2024.

During the quarter ended March 31, 2024, the Company acquired 301,937 of its ordinary shares under its share repurchase program for a total consideration of $3.6 million.

As of March 31, 2024, the Company had $10.2 million available under this approval for the repurchase of shares and/or declaration of cash dividends.

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 8:30 A.M., Eastern Time today to discuss the Company's first quarter of 2024 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 www.audiocodes.com/investors-lobby.