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AudioCodes Reports Second Quarter 2014 Results

July 28, 2014 --

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 company, net

--

(21)

--

--

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) per share (in thousands)

41,600

38,035

43,230

38,060

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

41,600

38,615

43,230

38,653













































































































































































































































 

 

 

 

 

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) (2)

29,607

27,449

15,039

14,326

Gross profit

43,910

38,506

22,527

19,361

Operating expenses:

 

 

 

 

Research and development, net (1)

15,922

14,094

8,253

6,877

Selling and marketing (1) (2)

22,167

18,566

11,278

9,533

General and administrative (1)

3,303

3,842

1,595

1,940

Total operating expenses

41,392

36,502

21,126

18,350

Operating income

2,518

2,004

1,401

1,011

Financial income (expenses), net

102

(122)

15

81

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 affiliated company, net

--

(21)

--

--

Net income

$2,631

$1,723

$1,569

$1,032

Diluted net earnings per share

$0.06

$0.04

$0.04

$0.03

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

43,175

38,922

44,616

38,949

 

 

 

 

 

(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) per share

 $ (0.01)

 $ 0.01

 $ -- 

 $ 0.01

Cost of revenues:

 

 

 

 

Stock-based compensation (1)

51

19

25

10

Amortization expenses (2)

496

342

248

142

 

547

361

273

152

Research and development, net:

 

 

 

 

Stock-based compensation (1)

306

186

163

93

Selling and marketing:

 

 

 

 

Stock-based compensation (1)

546

238

300

133

Amortization expenses (2)

182

152

91

76

 

728

390

391

209

General and administrative:

 

 

 

 

Stock-based compensation (1)

413

274

207

137

Income taxes:

 

 

 

 

Deferred tax (3)

961

--

581

--

Non-GAAP net income

 $ 2,631

 $ 1,723

 $ 1,569

 $ 1,032

Non-GAAP diluted net earnings per share

 $ 0.06

 $ 0.04

 $ 0.04

 $ 0.03

 

 

 

 

 

(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 amortization

1,629

1,379

773

597

Amortization of marketable securities premiums and accretion of discounts, net

195

192

156

85

Equity in losses of an affiliated company, net

--

21

--

--

Increase (decrease) in accrued severance pay, net

(186)

114

26

(152)

Stock-based compensation expenses

1,316

717

695

373

Decrease in long-term deferred tax assets, net

967

--

496

--

Amortization of senior convertible notes discount and deferred charges

(15)

--

--

--

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

174

52

(4)

45

Increase in trade receivables, net

(4,363)

(2,229)

(3,751)

(1,524)

Increase in other receivables and prepaid expenses

(2,370)

(736)

(231)

(96)

Decrease (increase) in inventories

(234)

3,331

(277)

2,065

Increase (decrease) in trade payables

546

(535)

(1,515)

991

Increase in deferred revenues

3,273

3,200

17

1,348

Increase (decrease) in other payables and accrued expenses

953

726

3,275

(112)

Net cash provided by (used in) operating activities

1,561

6,744

(386)

4,061

Cash flows from investing activities:

 

 

 

 

Purchase of marketable securities

(60,170)

--

(60,170)

--

Decrease (increase) in short-term deposits, net

1,000

(269)

--

(675)

Investment in affiliated company

--

(1,211)

--

(596)

Proceeds from redemption of long-term bank deposits

1,381

1,312

851

851

Proceeds from redemption of marketable securities upon maturity

15,390

4,000

4,000

4,000

Purchase of property and equipment

(719)

(673)

(308)

(395)

Net cash provided by (used in) investing activities

(43,118)

3,159

(55,627)

3,185


















































































































































 

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 convertible notes

(285)

--

--

--

Repayment of long-term bank loans

(2,343)

(5,343)

(1,367)

(2,866)

Consideration related to payment of acquisition of NSC

--

(515)

--

(120)

Consideration related to payment of acquisition of Mailvision

(233)

--

(233)

--

Proceeds from issuance of shares upon exercise of options and warrants

2,112

210

388

81

Proceeds from issuance of shares, net

29,744

--

--

--

Payment of issuance costs

--

--

(111)

--

Net cash provided by (used in) financing activities

28,995

(5,648)

(1,323)

(2,905)

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

(12,562)

4,255

(57,336)

4,341

Cash and cash equivalents at the beginning of the period

30,763

15,219

75,537

15,133

Cash and cash equivalents at the end of the period

 $ 18,201

 $ 19,474

 $ 18,201

 $ 19,474

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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