AudioCodes Ltd. (AUDC) Tops Q1 EPS by 2c, Revenues Beat

AudioCodes Ltd. (NASDAQ: AUDC) reported Q1 EPS of $0.25, $0.02 better than the analyst estimate of $0.23. Revenue for the quarter came in at $52 million versus the consensus estimate of $50.85 million.

• Quarterly revenues increased by 11.7% year-over-year to $52.0 million;
• Quarterly service revenues increased by 25.2% year-over-year to $17.7 million;
• Quarterly UC-SIP revenues increased more than 20% year-over-year;
• GAAP results:
  • Quarterly GAAP gross margin percentage was 65.9%;
  • Quarterly GAAP operating margin percentage was 11.8%;
  • Quarterly GAAP net income was $5.3 million, or $0.17 per diluted share;
• Non-GAAP results:
  • Quarterly Non-GAAP gross margin percentage was 66.1%;
  • Quarterly Non-GAAP operating margin percentage was 15.2%;
  • Quarterly Non-GAAP net income was $7.8 million, or $0.25 per diluted share;
  • Net cash provided by operating activities was $6.8 million for the quarter.
  • AudioCodes declared a semiannual cash dividend of 13 cents per share. The dividend, in the aggregate amount of $3.9 million, was paid on March 4, 2020

"We are pleased to report strong financial results for the first quarter of 2020," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "We continued to enjoy good business momentum in the quarter in both the enterprise and the service providers' space. We experienced growth in all of the major market segments in which we participate, including the UCaaS market, the Contact Center market and the service providers' all-IP migration market. As a result, we continued to improve our financial performance year-over-year with respect to both revenues and profits. Our continued positive operating cash flow and the improved operational efficiency as exhibited by the increase in the Non-GAAP operating margin percentage to 15.2% underscores our financial success."

"Turning to the impact of the COVID-19 pandemic, around the middle of the first quarter we experienced difficulties in the manufacturing of our hardware products in China. We were able to quickly recover from the associated delay and were able to ship all of our products as planned during the quarter. In compliance with the Israeli regulations meant to cope with the COVID-19 crisis, we have moved the majority of HQ employees to a work-from-home basis, a transition that went smoothly. Based on business activity during the 1Q20 and past few weeks, we believe that we should be able to meet our original targeted performance plan for the full year and the second quarter." added Mr. Adlersberg.

"On a positive note, we have seen increased market activity and demand in two of our leading business activities: the Microsoft Teams application for UCaaS and the rapidly growing trend of work-from-home (WFH). Demand in both areas was driven by the stay-at-home and remote work/social distancing policies dictated by steps taken by governments worldwide to manage the COVID-19 pandemic crisis. Revenue related to MS Teams ecosystem grew above 80% year over year, and newly created opportunities more than doubled year over year. On March 23rd we announced AudioCodes Live for MS teams which provides a managed service to fully voice-enable Teams deployments. The core service includes Teams Direct Route connectivity, Microsoft tenant management, user lifecycle management and several more services. Noteworthy also is the progress made in our Voice.ai business where we introduced Meeting Insights, a productivity enhancement software tool for group collaboration, and the One-Click Telephony Gateway, a SaaS offering allowing to connect Google Dialogflow based virtual agents to telephony, a rapidly growing use case in the Covid-19 era. Looking forward, we are confident in our ability to continue to expand our business in 2020 and beyond. While the full impact of COVID-19 is still uncertain and remains a global challenge, thus far any immediate business setbacks we have encountered have been balanced by new business opportunities presented to us. We plan to continue our investment in future offerings, and focus on the return on investment to our shareholders," concluded Mr. Adlersberg.

For earnings history and earnings-related data on AudioCodes Ltd. (AUDC) click here.

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