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AudioCodes Reports Third Quarter 2013 Results



AudioCodes Reports Third Quarter 2013 Results

Revenue Increased 11.7% Year-Over-Year to $35.0 Million, Driving Significant
Improvements in Profitability

LOD, Israel, Oct. 30, 2013 (GLOBE NEWSWIRE) -- AudioCodes (Nasdaq:AUDC), a
leading provider of converged voice solutions that enable enterprises and
service providers to transition to all-IP voice networks, today announced
financial results for the third quarter ended September 30, 2013.

Third Quarter Highlights:

  * Revenues totaled $35.0 million, an 11.7% increase over the year ago
    quarter
  * 13.4% increase in revenues from the networking business over the year ago
    quarter
  * GAAP net income was $935,000 or $0.02 per diluted share
  * Non-GAAP net income was $1.8 million or $0.04 per diluted share
  * Net cash provided by operating activities was $1.6 million

Revenues for the third quarter of 2013 were $35.0 million, compared to $33.7
million for the second quarter of 2013 and $31.4 million for the third quarter
of 2012.

Net income in accordance with U.S. generally accepted accounting principles
(GAAP) was $935,000, or $0.02 per diluted share, for the third quarter of
2013, compared to GAAP net income of $441,000, or $0.01 per diluted share, for
the second quarter of 2013, and a GAAP net loss of $1.1 million, or ($0.03)
per diluted share, for the third quarter of 2012.

Non-GAAP net income for the third quarter of 2013 was $1.8 million, or $0.04
per diluted share, compared to non-GAAP net income of $1.0 million, or $0.03
per diluted share, for the second quarter of 2013, and a non-GAAP net loss of
$419,000, or ($0.01) per diluted share, for the third quarter of 2012.

Non-GAAP net income (loss) excludes: (i) stock-based compensation expenses;
and (ii) amortization expenses related to intangible assets. 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 third quarter of 2013
totaled $1.6 million. Cash and cash equivalents, bank deposits and marketable
securities were $58.0 million as of September 30, 2013 compared to $57.5
million as of June 30, 2013 and $54.1 million as of September 30, 2012.

"We are very pleased to report another quarter of growing revenues and
earnings, our fifth consecutive quarter of growth and expansion in our markets
for unified communications and business services," said Shabtai Adlersberg,
President and Chief Executive Officer of AudioCodes. "This series of
successful quarters illustrates our ability to deliver consistent growth and
success that we expect will continue in future years."

Mr. Adlersberg continued, "In the third quarter of 2013, we made important
strides with our One Voice strategic initiative to become a leader in full
service, end-to-end voice solutions in our industry. Our 'One Voice for Lync'
program announced in early 2013 has proven to be effective and successful, and
has contributed to our performance in the third quarter. Early in the fourth
quarter we have made further progress in the One Voice Initiative by
announcing a second program, AudioCodes One Voice for Hosted Services, a
program which targets the fast developing market for Hosted PBX Services and
SIP Trunking for service providers' business services market.

Overall, innovation remains the foundation of our growth strategy. Our recent
demonstration of the world's first WebRTC HD call between an internet browser
and an IP phone is expected to accelerate the adoption of browser-based
real-time voice and video communications. Our ability to tap these
opportunities among global carrier and enterprise customers is strengthened by
our robust network of international partners which is further enhancing our
ability to grow."

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 9:00 A.M., Eastern Time today to
discuss the Company's third quarter 2013 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) 407-8031

                International Participants: +1 (201) 689-8031

The conference call will also be simultaneously Web cast. Investors are
invited to listen to the call live via Web cast at the AudioCodes corporate
website at www.audiocodes.com.

About AudioCodes

AudioCodes Ltd. (Nasdaq: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 and Value
Added Applications. 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.

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.

©2013 AudioCodes Ltd. All rights reserved. AudioCodes, AC, HD VoIP, HD VoIP
Sounds Better, IPmedia, Mediant, MediaPack, OSN, SmartTAP, VMAS, VoIPerfect,
VoIPerfectHD, Your Gateway To VoIP and 3GX 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,
                                                    2013          2012
                                                    Unaudited     Audited
ASSETS                                                             
                                                                   
CURRENT ASSETS:                                                    
Cash and cash equivalents                           $ 21,598      $ 15,219
Short-term and restricted bank deposits             9,601         10,330
Short-term marketable securities and accrued        19,345        7,966
interest
Trade receivables, net                              28,070         24,198
Other receivables and prepaid expenses              9,137         7,274
Inventories                                         13,393        16,797
Total current assets                                101,144       81,784
                                                                   
LONG-TERM ASSETS:                                                  
Long-term and restricted bank deposits              $ 7,479       $ 9,251
Long-term marketable securities                     --            15,762
Investments in an affiliated company                --            1,084
Deferred tax assets                                 3,668         3,565
Severance pay funds                                 17,765        15,772
Total long-term assets                              28,912        45,434
                                                                   
PROPERTY AND EQUIPMENT, NET                         3,303         3,619
                                                                   
GOODWILL, INTANGIBLE ASSETS AND OTHER, NET          38,340        34,952
                                                                   
Total assets                                        $ 171,699     $ 165,789
                                                                   
LIABILITIES AND EQUITY                                             
                                                                   
CURRENT LIABILITIES:                                               
Current maturities of long-term bank loans          $ 4,686       $ 8,436
Trade payables                                      8,614         6,817
Other payables and accrued expenses                 16,580        15,062
Deferred revenues                                   7,257         4,871
Total current liabilities                           37,137        35,186
                                                                   
LONG-TERM LIABILITIES:                                             
Accrued severance pay                               $ 18,770      $ 16,284
Long-term bank loans                                11,157        14,477
Senior convertible notes                            353           353
Deferred revenues and other liabilities             2,389         1,192
Total long-term liabilities                         32,669        32,306
                                                                   
Total equity                                        101,893       98,297
                                                                   
Total liabilities and equity                         $ 171,699    $ 165,789

 
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,
                                         2013     2012      2013     2012
                                         (Unaudited)        (Unaudited)
Revenues:                                                             
Products                                 $ 82,746 $ 77,581  $ 29,034 $ 25,638
Services                                 18,234   17,103    5,991    5,725
Total Revenues                           100,980  94,684    35,025   31,363
                                                                      
Cost of revenues:                                                     
Products                                 38,410   35,758    13,704   12,065
Services                                 4,699    4,436     1,595    1,486
Total Cost of revenues                   43,109   40,194    15,299   13,551
                                                                      
Gross profit                             57,871   54,490    19,726   17,812
                                                                      
Operating expenses:                                                   
Research and development, net            20,994   22,446    6,714    7,201
Selling and marketing                    28,991   30,319    10,035   9,567
General and administrative               6,408    6,481     2,292    2,278
                                                                      
Total operating expenses                 56,393   59,246    19,041   19,046
                                                                      
Operating income (loss)                  1,478    (4,756)   685      (1,234)
Financial income, net                    151      366       273      231
                                                                      
Income (loss) before taxes on income     1,629    (4,390)   958      (1,003)
Income tax expenses, net                 (161)    (284)     (23)     (101)
Equity in losses of an affiliated        (21)     (27)      --       (4)
company, net
                                                                      
Net income (loss)                        $ 1,447  $ (4,701) $ 935    $ (1,108)
                                                                      
Basic net earnings (loss) per share      $ 0.04   $ (0.12)  $ 0.02   $ (0.03)
                                                                      
Diluted net earnings (loss) per share    $ 0.04   $ (0.12)  $ 0.02   $ (0.03)
                                                                      
Weighted average number of shares used
in computing basic net earnings (loss)    38,121   39,523    38,294    38,673
per share (in thousands)
                                                                      
Weighted average number of shares used
in computing diluted net earnings (loss)  38,854   39,523    39,332   38,673
per share (in thousands)

 
AUDIOCODES LTD. AND ITS SUBSIDIARIES
NON-GAAP PROFORMA STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per share data
 
                                                                     
                            Nine months ended          Three months ended
                            September 30,              September 30,
                            2013         2012          2013         2012
                            (Unaudited)                (Unaudited)
Revenues:                                                            
Products                    $ 82,746     $ 77,581      $ 29,034     $ 25,638
Services                    18,234       17,103        5,991        5,725
Total Revenues              100,980      94,684        35,025       31,363
                                                                     
Cost of revenues:                                                    
Products                    37,882       35,142        13,470       11,882
Services                    4,584        4,378         1,547        1,445
Total Cost of revenues (1)  42,466       39,520        15,017       13,327
(2)
                                                                     
Gross profit                58,514       55,164        20,008       18,036
                                                                     
Operating expenses:                                                  
Research and development,   20,710       22,144        6,616        7,110
net (1)
Selling and marketing (1)   28,308       29,707        9,742        9,342
(2)
General and administrative  5,984        6,026         2,142        2,129
(1)
                                                                     
Total operating expenses    55,002       57,877        18,500       18,581
                                                                     
Operating income (loss)     3,512        (2,713)       1,508        (545)
Financial income, net       151          366           273          231
                                                                     
Income (loss) before taxes  3,663        (2,347)       1,781        (314)
on income
Income tax expenses, net    (161)        (284)         (23)         (101)
Equity in losses of an      (21)         (27)          --           (4)
affiliated company, net
                                                                     
Net income (loss)           $ 3,481      $ (2,658)     $ 1,758      $ (419)
                                                                     
Diluted net earnings (loss) $ 0.09       $ (0.07)      $ 0.04       $ (0.01)
per share
                                                                     
Weighted average number of
shares used in computing     39,185       39,523        39,712       38,673
basic net earnings (loss)
per share (in thousands)
                                                                     
(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, CTI Squared and Mailvision assets.
                                                                     
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 INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS)
U.S. dollars in thousands, except per share data
                                                                  
                            Nine months ended         Three months ended
                            September 30,             September 30,
                            2013        2012          2013       2012
                            (Unaudited)               (Unaudited)             
GAAP net income (loss)      $ 1,447     $ (4,701)     $ 935      $ (1,108)    
                                                                              
GAAP net earnings (loss)    $ 0.04      $ (0.12)      $ 0.02     $ (0.03)     
per share
                                                                              
Cost of revenues:                                                             
Stock-based compensation    34          56            15         18           
(1)
Amortization expenses (2)   609         618           267        206          
                            643         674           282        224          
Research and development,                                                     
net:
Stock-based compensation    284         302           98         91           
(1)
                                                                              
Selling and marketing:                                                        
Stock-based compensation    437         384           199        149          
(1)
Amortization expenses (2)   246         228           94         76           
                            683         612           293        225          
General and administrative:                                                   
Stock-based compensation    424         455           150        149          
(1)
                                                                              
Non-GAAP net income (loss)  $ 3,481     $ (2,658)     $ 1,758    $ (419)      
Non-GAAP Diluted net        $ 0.09      $ (0.07)      $ 0.04     $ (0.01)     
earnings (loss) per share
                                                                              
(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, CTI Squared and Mailvision assets.
                                                                              
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,
                               2013        2012        2013        2012
                               (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flows from operating                                           
activities:
Net income (loss)               $ 1,447     $ (4,701)   $ 935       $ (1,108)
Adjustments required to
reconcile net income or loss                                        
to net cash provided by or
used in operating activities:
Depreciation and amortization   2,233       2,136       854         735
Amortization of marketable
securities premiums and         268         327         76          110
accretion of discounts, net 
Equity in losses of an          21          14          --          (9)
affiliated company, net
Increase (decrease) in accrued  214         (309)       100         (89)
severance pay, net
Stock-based compensation        1,179       1,197       462         407
expenses
Increase in accrued interest
on marketable securities, bank  115         5           63          -- 
deposits and structured notes
Increase in long- term          (103)       --          (103)       -- 
deferred tax assets
Decrease (increase) in trade    (3,893)     4,205       (1,664)     195
receivables, net
Increase in other receivables   (2,663)     (2,408)     (1,927)     (895)
and prepaid expenses
Decrease in inventories         3,404       1,683       73          838
Increase (decrease) in trade    1,802       (5,698)     2,337       (462)
payables
Increase (decrease) in          3,143       99          (57)        (844)
deferred revenues
Increase (decrease) in other    1,193       (1,789)     467         (123)
payables and accrued expenses
                                                                    
Net cash provided by (used in)  8,360       (5,239)     1,616       (1,245)
operating activities
                                                                    
Cash flows from investing                                           
activities:
Decrease (increase) in          729         730         998         (959)
short-term deposits, net
Investment in affiliated        (1,211)     (72)        --          (22)
company
Proceeds from redemption of     1,772       1,590       460         600
long-term bank deposits
Proceeds from redemption of
marketable securities upon      4,000       --          --          -- 
maturity
Purchase of property and        (1,063)     (1,844)     (390)       (674)
equipment 
Net cash provided by (used in)  4,227       404         1,068       (1,055)
investing activities
                                                                    
                                Nine months ended      Three months ended
                                September 30,          September 30,
                               2013        2012        2013        2012
                               (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flows from financing                                           
activities:
Purchase of treasury stock      --          (6,299)     --          (2,050)
Repayment of long-term bank     (7,070)     (7,376)     (1,727)     (2,477)
loans 
Consideration related to        (515)       (336)       --          -- 
payment of acquisition of NSC
Proceeds from issuance of
shares upon exercise of         1,377       35          1,167       -- 
options and warrants
Net cash used in financing      (6,208)     (13,976)    (560)       (4,527)
activities
                                                                    
Increase (decrease) in cash     6,379       (18,811)    2,124       (6,827)
and cash equivalents
Cash and cash equivalents at    15,219      28,257      19,474      16,273
the beginning of the period
Cash and cash equivalents at    $ 21,598    $ 9,446     $ 21,598    $ 9,446
the end of the period

CONTACT: Company Contacts
         Guy Avidan,
         VP Finance & CFO
         AudioCodes
         Tel: +972-3-976-4000
         guy.avidan@audiocodes.com

         Shirley Nakar,
         Director, Investor Relations
         AudioCodes
         Tel: +972-3-976-4000
         shirley@audiocodes.com

         IR Agency Contact
         Erik Knettel,
         Grayling
         Tel: +1-646-284-9415
         erik.knettel@grayling.com
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