AudioCodes Reports Second Quarter 2014 Results

AudioCodes Reports Second Quarter 2014 Results

Second Quarter Revenues Increase 11.5% Year-Over-Year to $37.6 Million

LOD, Israel, July 29, 2014 (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 second quarter ended June 30, 2014.

Second Quarter 2014 Highlights:

  *Revenues totaled $37.6 million, an 11.5% increase over the year ago
    quarter
  *Quarterly networking revenues totaled $33.2 million, an increase of 15.3%
    year-over-year
  *GAAP net loss of $46,000, or $0.00 per diluted share
  *Non-GAAP net income of $1.6 million, or $0.04 per diluted share
  *Revenues from sales of SBC products grew above 100% year-over-year
  *Revenues from our New Products group category grew above 30% over the
    previous quarter

Revenues for the second quarter of 2014 were $37.6 million, compared to $36.0
million for the first quarter of 2014 and $33.7 million for the second quarter
of 2013.

Net loss in accordance with U.S. generally accepted accounting principles
(GAAP) was $46,000, or $0.00 per diluted share, for the second quarter of
2014, compared to a GAAP net loss of $278,000, or ($0.01) per diluted share,
for the first quarter of 2014, and GAAP net income of $441,000, or $0.01 per
diluted share, for the second quarter of 2013.

Non-GAAP net income for the second quarter of 2014 was $1.6 million, or $0.04
per diluted share, compared to $1.1 million, or $0.03 per diluted share, for
the first quarter of 2014, and $1.0 million, or $0.03 per diluted share, for
the second quarter of 2013.

Non-GAAP net income (loss) excludes: (i) stock-based compensation expenses;
(ii) amortization expenses related to intangible assets; and (iii) non-cash
deferred tax 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 used in operating activities for the second quarter of 2014 totaled
$386,000. Cash and cash equivalents, bank deposits and marketable securities
were $91.8 million as of June 30, 2014 compared to $94.0 million as of March
31, 2014 and $57.5 million as of June 30, 2013. The increase from a year ago
was primarily a result of the receipt of net proceeds of approximately $29.7
million in connection with a public offering of the Company's ordinary shares
in March 2014.

"We are very pleased to report strong growth of our networking business for
the second quarter of 2014. This business comprised 88% of our revenues in the
quarter. Driven by solid progress across all market segments, our networking
business revenues grew 15.3% over the year-ago quarter, and 8.1% over the
previous quarter," said Shabtai Adlersberg, President and Chief Executive
Officer of AudioCodes. "We experienced record sales of our Session Border
Controller line which grew more than 100% over the year-ago quarter and more
than 30% over the previous quarter. Sales of the New Products group category
comprising of SBC, Multi-service routers and IP Phones increased more than 30%
compared to the previous quarter. In addition to these successes, we continued
to grow in the Microsoft Lync segment in-line with our stated plan for 2014 to
grow this segment by more than 40% over 2013."

"To advance growth initiatives, we continue to introduce new products and
solutions. The launch of AudioCodes One Box 365, a new One Voice for Lync
solution that provides our partners an intuitive and quick way to bring
enterprise voice alongside Office 365 in both pure cloud and hybrid on-premise
solutions, expands our market opportunity in the Microsoft Lync ecosystem."

"During the quarter, we launched and opened our new Cloud Delivery Network
Architecture (CDNA) Research and Development Center that is supported by the
Israeli Office of the Chief Scientist. This new R&D center is expected to
provide a highly efficient platform to develop new cutting edge cloud-based
real-time communications technologies and services, and to support further
growth in revenues beginning in 2015. These activities are expected to further
strengthen our foundation for AudioCodes' growth in the years ahead,"
concluded Mr. Adlersberg.

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 8:00 A.M., Eastern Time today to
discuss the Company's first quarter 2014 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 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, 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.

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.

©2014 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
                                                     June 30,  December 31,
                                                     2014      2013
                                                     Unaudited Audited
ASSETS                                                         
                                                              
CURRENT ASSETS:                                                
Cash and cash equivalents                             $18,201   $30,763
Short-term and restricted bank deposits               8,101     9,101
Short-term marketable securities and accrued interest 535       15,706
Trade receivables, net                                30,794    26,431
Other receivables and prepaid expenses                8,503     6,199
Inventories                                           14,045    13,811
Total current assets                                  80,179    102,011
                                                              
LONG-TERM ASSETS:                                              
Long-term and restricted bank deposits                $5,382    $6,697
Long-term marketable securities                       59,582    --
Deferred tax assets                                   3,888     4,855
Severance pay funds                                   19,579    19,549
Total long-term assets                                88,431    31,101
                                                              
PROPERTY AND EQUIPMENT, NET                           2,959     3,191
                                                              
GOODWILL, INTANGIBLE ASSETS AND OTHER, NET            37,323    38,001
                                                              
Total assets                                          $208,892  $174,304
                                                              
LIABILITIES AND EQUITY                                         
                                                              
CURRENT LIABILITIES:                                           
Current maturities of long-term bank loans            $4,686    $4,686
Trade payables                                        7,761     7,215
Senior convertible notes                              53        353
Other payables and accrued expenses                   18,887    17,958
Deferred revenues                                     9,872     6,940
Total current liabilities                             41,259    37,152
                                                              
LONG-TERM LIABILITIES:                                         
Accrued severance pay                                 $19,689   $19,845
Long-term bank loans                                  7,448     9,791
Deferred revenues and other liabilities               2,839     2,707
Total long-term liabilities                           29,976    32,343
                                                              
Total equity                                          137,657   104,809
Total liabilities and equity                          $208,892  $174,304

                                                                 
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,
                                      2014      2013      2014      2013
                                      (Unaudited)         (Unaudited)
Revenues:                                                         
Products                               $57,917 $53,712 $29,369 $27,541
Services                               15,600    12,243    8,197     6,146
Total Revenues                         73,517    65,955    37,566    33,687
Cost of revenues:                                                 
Products                               26,193    24,706    13,276    12,912
Services                               3,961     3,104     2,036     1,566
Total Cost of revenues                 30,154    27,810    15,312    14,478
Gross profit                           43,363    38,145    22,254    19,209
Operating expenses:                                               
Research and development, net          16,228    14,280    8,416     6,970
Selling and marketing                  22,895    18,956    11,669    9,742
General and administrative             3,716     4,116     1,802     2,077
Total operating expenses               42,839    37,352    21,887    18,789
Operating income                       524       793       367       420
Financial income (expenses), net       102       (122)     15        81
Income before taxes on income          626       671       382       501
Taxes on income, net                   (950)     (138)     (428)     (60)
Equity in losses of an affiliated      --        (21)      --        --
company, net
Net income (loss)                      $(324)  $512    $(46)   $441
Basic net earnings (loss) per share    $(0.01) $0.01   $--    $0.01
Diluted net earnings (loss) per share  $(0.01) $0.01   $--    $0.01
Weighted average number of shares used
in computing basic net earnings (loss) 41,600    38,035    43,230    38,060
per share (in thousands)
Weighted average number of shares used
in computing diluted net earnings      41,600    38,615    43,230    38,653
(loss) per share (in thousands)

                                                               
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,
                             2014         2013       2014         2013
                             (Unaudited)             (Unaudited)
Revenues:                                                       
Products                      $57,917      $53,712    $29,369      $27,541
Services                      15,600       12,243     8,197        6,146
Total Revenues                73,517       65,955     37,566       33,687
Cost of revenues:                                               
Products                      25,762       24,412     13,063       12,788
Services                      3,845        3,037      1,976        1,538
Total Cost of revenues (1)    29,607       27,449     15,039       14,326
(2)
Gross profit                  43,910       38,506     22,527       19,361
Operating expenses:                                             
Research and development, net 15,922       14,094     8,253        6,877
(1)
Selling and marketing (1) (2) 22,167       18,566     11,278       9,533
General and administrative    3,303        3,842      1,595        1,940
(1)
Total operating expenses      41,392       36,502     21,126       18,350
Operating income              2,518        2,004      1,401        1,011
Financial income (expenses),  102          (122)      15           81
net
Income before taxes on income 2,620        1,882      1,416        1,092
Taxes on income, net (3)      11           (138)      153          -60
Equity in losses of an        --           (21)       --           --
affiliated company, net
Net income                    $2,631       $1,723     $1,569       $1,032
Diluted net earnings per      $0.06        $0.04      $0.04        $0.03
share
Weighted average number of
shares used in computing      43,175       38,922     44,616       38,949
basic net earnings 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.
(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 INCOME (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,
                          2014          2013         2014         2013
                          (Unaudited)                (Unaudited)
GAAP net income (loss)     $(324)      $512       $(46)      $441
GAAP net earnings (loss)   $(0.01)     $0.01      $--       $0.01
per share
Cost of revenues:                                               
Stock-based compensation   51            19           25           10
(1)
Amortization expenses (2)  496           342          248          142
                          547           361          273          152
Research and development,                                       
net:
Stock-based compensation   306           186          163          93
(1)
Selling and marketing:                                          
Stock-based compensation   546           238          300          133
(1)
Amortization expenses (2)  182           152          91           76
                          728           390          391          209
General and                                                     
administrative:
Stock-based compensation   413           274          207          137
(1)
Income taxes:                                                   
Deferred tax (3)           961           --           581          --
Non-GAAP net income        $2,631      $1,723     $1,569     $1,032
Non-GAAP diluted net       $0.06       $0.04      $0.04      $0.03
earnings 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.
(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,
                          2014         2013         2014         2013
                          ( Unaudited) ( Unaudited) ( Unaudited) ( Unaudited)
Cash flows from operating                                      
activities:
Net income (loss)          $(324)     $512       $(46)      $441
Adjustments required to
reconcile net income or
loss to net cash provided                                      
by or used in operating
activities:
Depreciation and           1,629        1,379        773          597
amortization
Amortization of marketable
securities premiums and    195          192          156          85
accretion of discounts,
net
Equity in losses of an     --           21           --           --
affiliated company, net
Increase (decrease) in     (186)        114          26           (152)
accrued severance pay, net
Stock-based compensation   1,316        717          695          373
expenses
Decrease in long-term      967          --           496          --
deferred tax assets, net
Amortization of senior
convertible notes discount (15)         --           --           --
and deferred charges
Decrease (increase) in
accrued interest on
marketable securities,     174          52           (4)          45
bank deposits and
structured notes
Increase in trade          (4,363)      (2,229)      (3,751)      (1,524)
receivables, net
Increase in other
receivables and prepaid    (2,370)      (736)        (231)        (96)
expenses
Decrease (increase) in     (234)        3,331        (277)        2,065
inventories
Increase (decrease) in     546          (535)        (1,515)      991
trade payables
Increase in deferred       3,273        3,200        17           1,348
revenues
Increase (decrease) in
other payables and accrued 953          726          3,275        (112)
expenses
Net cash provided by (used 1,561        6,744        (386)        4,061
in) operating activities
Cash flows from investing                                      
activities:
Purchase of marketable     (60,170)     --           (60,170)     --
securities
Decrease (increase) in     1,000        (269)        --           (675)
short-term deposits, net
Investment in affiliated   --           (1,211)      --           (596)
company
Proceeds from redemption   1,381        1,312        851          851
of long-term bank deposits
Proceeds from redemption
of marketable securities   15,390       4,000        4,000        4,000
upon maturity
Purchase of property and   (719)        (673)        (308)        (395)
equipment
Net cash provided by (used (43,118)     3,159        (55,627)     3,185
in) investing activities


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,
                          2014         2013         2014         2013
                          ( Unaudited) ( Unaudited) ( Unaudited) ( Unaudited)
Cash flows from financing                                      
activities:
Repayment of senior        (285)        --           --           --
convertible notes
Repayment of long-term     (2,343)      (5,343)      (1,367)      (2,866)
bank loans
Consideration related to
payment of acquisition of  --           (515)        --           (120)
NSC
Consideration related to
payment of acquisition of  (233)        --           (233)        --
Mailvision
Proceeds from issuance of
shares upon exercise of    2,112        210          388          81
options and warrants
Proceeds from issuance of  29,744       --           --           --
shares, net
Payment of issuance costs  --           --           (111)        --
Net cash provided by (used 28,995       (5,648)      (1,323)      (2,905)
in) financing activities
                                                              
Increase (decrease) in     (12,562)     4,255        (57,336)     4,341
cash and cash equivalents
Cash and cash equivalents
at the beginning of the    30,763       15,219       75,537       15,133
period
Cash and cash equivalents  $18,201    $19,474    $18,201    $19,474
at 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
         Rob Fink / Chris Harrison
         KCSA Strategic Communications
         Tel: +1-212-896-1206
         Email: audc@kcsa.com
 
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