Audiocodes Ltd. — Earnings Release 2007

Feb 4, 2008

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PRESS RELEASE

Company Contacts IR Agency Contact Nachum Falek, Shirley Nakar, Erik Knettel, VP Finance & CFO Director, Investor Relations The Global Consulting Group AudioCodes AudioCodes Tel: +1-646-284-9415 Tel: +972-3-976-4000 Tel: +972-3-976-4072 eknettel@hfgcg.com nachum@audiocodes.com shirley.nakar@audiocodes.com

AudioCodes Reports Fourth Quarter and Year End 2007 Results

Quarterly Revenues Rise 6.0% Sequentially to $42.8 million

Lod, Israel – February 4, 2008 – AudioCodes (NasdaqGS: AUDC) , a leading provider of Voice over Packet (VoP) technologies and Voice Network products, today announced financial results for the fourth quarter and fiscal year ended December 31, 2007.

Revenues for the fourth quarter ended December 31, 2007 were a record $42.8 million compared to $40.4 million for the quarter ended September 30, 2007 and $42.6 million for the quarter ended December 31, 2006. Fourth quarter revenues grew 6.0% sequentially and increased 0.5% compared to the fourth quarter of 2006. GAAP net income was $1.3 million, or $0.03 per diluted share, for the fourth quarter of 2007 compared to $225,000, or $0.01 per diluted share, for the third quarter of 2007 and $671,000, or $0.02 per diluted share, for the corresponding period last year.

Revenues for the year ended December 31, 2007 were a record $158.2 million compared to $147.4 million in 2006, a year-over-year increase of $10.9 million, or 7.4%. The Company reported a net loss of $1.8 million, or $0.04 per diluted share, for 2007 compared to net income of $6.9 million, or $0.16 per diluted share, for 2006.

Non-GAAP net income was $3.7 million, or $0.08 per diluted share, in the fourth quarter of 2007 compared to non-GAAP net income of $2.8 million, or $0.06 per diluted share, in the third quarter of 2007 and $3.6 million, or $0.08 per diluted share, in the fourth quarter of 2006. Non-GAAP net income in 2007 was $8.3 million, or $0.19 per diluted share, compared to non-GAAP net income of $16.6 million, or $0.37 per diluted share for 2006. Non-GAAP net income excludes (i) stock-based compensation expenses and (ii) amortization expenses related to the Nuera, Netrake and CTI Squared acquisitions. A reconciliation between net income on

Q4 2007 Year End Results

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a GAAP basis and non-GAAP net income is provided in the tables that accompany the condensed consolidated financial statements contained in this release.

Cash flow from operating activities was $9.0 million in the fourth quarter of 2007, and totaled $12.4 million in 2007, compared to $6.6 million in 2006.

Cash and cash equivalents, short-term and long-term marketable securities, short-term and long-term bank deposits and structured notes were $143.0 million as of December 31, 2007 compared to $134.2 million as of September 30, 2007, and $133.6 million as of December 31, 2006. The year-over-year net increase was primarily attributable to positive cash flow from operations and financing activities.

“AudioCodes is pleased to report record quarterly and annual revenues and a third consecutive quarter of sequential top line growth driven primarily by the strength of our networking business,” stated Shabtai Adlersberg, Chairman of the Board, President and CEO of AudioCodes. “With our networking business growing over 30% year over year for the third straight year, and surpassing $100 million in 2007, we remain confident in the continued expansion of our networking business in coming years. Leading the growth were sales of CPE devices and mid-density Media Gateways, both of which grew above 40% in 2007. In addition to growing revenues, we were successful in maintaining better control over operational expenses which allowed us to finish 2007 with efficiency gains that returned non-GAAP operating income margins back to 8% in the fourth quarter and contributed to $9.0 million of cash flow from operations in the last three months of 2007. Based on new customers and OEM design wins in 2007, the continued evolution of VoIP into the telecom mainstream, consolidation in our industry, increased investments in our sales and customer support worldwide and further investments in our technology and products, we believe we are well positioned for continued growth in 2008,” concluded Mr. Adlersberg.

Conference Call & Webcast Information

AudioCodes will conduct a conference call on Tuesday, February 5, 2008 to discuss the fourth quarter and year end 2007 financial results, which will be simultaneously Webcast at 9:00 A.M. Eastern Time. Investors are invited to listen to the call live via Webcast at the AudioCodes corporate Website at www.audiocodes.com.

About AudioCodes

AudioCodes Ltd. (NasdaqGS: AUDC), provides innovative, reliable and cost-effective Voice over IP (VoIP) technology, Voice Network Products, and Value Added Applications to Service Providers, Enterprises, OEMs, Network Equipment Providers and System Integrators worldwide. AudioCodes provides a diverse

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range of flexible, comprehensive media gateway, and media processing enabling technologies based on VoIPerfect -- AudioCodes' underlying, best-of-breed, core media architecture. The company is a market leader in VoIP equipment, focused on VoIP Media Gateway, Media Server, Session Border Controllers (SBC), Security Gateways and Value Added Application network products. AudioCodes has deployed tens of millions of media gateway and media server channels globally over the past ten years and is a key player in the emerging best-of-breed, IMS based, VoIP market. The Company is a VoIP technology leader focused on quality and interoperability, with a proven track record in product and network interoperability with industry leaders in the Service Provider and Enterprise space. AudioCodes Voice Network Products feature media gateway and media server platforms for packet-based applications in the converged, wireline, wireless, broadband access, cable, enhanced voice services, video, and Enterprise IP Telephony markets. AudioCodes' headquarters are located in Israel, with R&D in the U.S. Other AudioCodes' offices are located in Europe, India, the Far East, and Latin America. For more information on AudioCodes, visit 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 continuing products' demand; 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 disruptions from acquisitions: the integration of acquired companies’ products and operations into AudioCodes’ business: and other factors detailed in AudioCodes' filings with the Securities and Exchange Commission. AudioCodes assumes no obligation to update the information in this release.

(c) 2007 AudioCodes Ltd. All rights reserved, AudioCodes, AC, Ardito, AudioCoded, NetCoder, TrunkPack, VoicePacketizer, MediaPack, Stretto, Mediant, VoIPerfect and IPmedia, OSN, Open Solutions Network, What's Inside Matters, Your Gateway To VoIP, 3GX and Nuera, Netrake, InTouch, CTI(2) and CTI Squared are trademarks or registered trademarks of AudioCodes Limited. All other products or trademarks are property of their respective owners.

Summary financial data follows

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AUDIOCODES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands

ASSETSCURRENT ASSETS:Cash and cash equivalentsShort-term bank deposits and structured notesShort-term marketable securities and accrued interestTrade receivables, netOther receivables and prepaid expensesInventoriesTotal current assetsLONG-TERM INVESTMENTS:Long-term bank deposits and structured notesLong-term marketable securitiesInvestments in companiesDeferred tax assetsSeverance pay fundsTotal long-term investmentsPROPERTY AND EQUIPMENT, NETINTANGIBLE ASSETS, DEFERRED CHARGES ANDOTHER, NETGOODWILLTotal assetsLIABILITIES AND SHAREHOLDERS' EQUITYCURRENT LIABILITIES:Trade payablesOther payables and accrued expensesTotal current liabilitiesDEFERRED TAX LIABILITIESACCRUED SEVERANCE PAYSENIOR CONVERTIBLE NOTESTotal shareholders' equityTotal liabilities and shareholders' equity	December 31,2007$ 75,06318,06517,24425,6046,59218,736161,30432,670-1,3432,0589,79945,8707,09419,007119,855$353,130$ 8,84928,78037,6296,60611,168121,198176,529$353,130	December 31,2006
		$ 25,17128,65829,42230,5013,30916,093
		133,154
		30,43519,9423,9993,7427,231
		65,349
		7,847
		21,853
		108,853
		$337,056
		$ 7,52228,139
		35,661
		7,780
		7,915
		121,015
		164,685
		$337,056

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AUDIOCODES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands, except share and per share data

RevenuesCost of revenuesGross profitOperating expenses:Research and development, netSelling and marketingGeneral and administrativeTotal operating expensesOperating income (loss)Financial income, netEquity in losses of affiliated companiesIncome (loss) before taxes on incomeTaxes (tax benefit) on income (loss), netNet income (loss)Basic net earnings (loss) per shareDiluted net earnings (loss) per shareWeighted average number of shares used in computingbasic net earnings (loss) per share (in thousands)Weighted average number of shares used in computingdiluted net earnings (loss) per share (in thousands)	Year endedDecember 31,20072006$ 158,235$ 147,35369,18561,24289,05086,11140,70635,41642,90037,6649,6378,76693,24381,846(4,193)4,2652,6703,8171,097916(2,620)7,166(772)289$ (1,848)$ 6,877$ (0.04) $ 0.16$ (0.04) $ 0.1642,69941,71742,69943,689	Three months endedDecember 31,	Three months endedDecember 31,
	2007$ 158,23569,18589,05040,70642,9009,63793,243(4,193)2,6701,097(2,620)(772)$ (1,848)$ (0.04)$ (0.04)42,69942,699	20072006(Unaudited)	2006
		$ 42,84018,67324,16710,08610,8182,43723,3418267843461,264(75)$1,339$ 0.03$ 0.0343,08043,938	$ 42,61318,124
			24,48910,70111,2182,530
			24,449
			40754244
			550(121)
			$ 671
			$ 0.02
			$ 0.02
			42,079
			42,846

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Q4 2007 Year End Results

AUDIOCODES LTD. AND ITS SUBSIDIARIES NON-GAAP PROFORMA STATEMENTS OF OPERATIONS U.S. dollars in thousands, except share and per share data

		Year endedThree months endedDecember 31,December 31,2007200620072006(Unaudited)(Unaudited)$ 158,235$ 147,353$ 42,840$ 42,61366,07959,38117,96017,27792,15687,97224,88025,33637,69532,3639,4569,87338,38033,5149,7799,8278,7707,3602,2092,21584,84573,23721,44421,9157,31114,7353,4363,4212,6703,817784754	Year endedThree months endedDecember 31,December 31,2007200620072006(Unaudited)(Unaudited)$ 158,235$ 147,353$ 42,840$ 42,61366,07959,38117,96017,27792,15687,97224,88025,33637,69532,3639,4569,87338,38033,5149,7799,8278,7707,3602,2092,21584,84573,23721,44421,9157,31114,7353,4363,4212,6703,817784754	Year endedThree months endedDecember 31,December 31,2007200620072006(Unaudited)(Unaudited)$ 158,235$ 147,353$ 42,840$ 42,61366,07959,38117,96017,27792,15687,97224,88025,33637,69532,3639,4569,87338,38033,5149,7799,8278,7707,3602,2092,21584,84573,23721,44421,9157,31114,7353,4363,4212,6703,817784754	Year endedThree months endedDecember 31,December 31,2007200620072006(Unaudited)(Unaudited)$ 158,235$ 147,353$ 42,840$ 42,61366,07959,38117,96017,27792,15687,97224,88025,33637,69532,3639,4569,87338,38033,5149,7799,8278,7707,3602,2092,21584,84573,23721,44421,9157,31114,7353,4363,4212,6703,817784754	Year endedThree months endedDecember 31,December 31,2007200620072006(Unaudited)(Unaudited)$ 158,235$ 147,353$ 42,840$ 42,61366,07959,38117,96017,27792,15687,97224,88025,33637,69532,3639,4569,87338,38033,5149,7799,8278,7707,3602,2092,21584,84573,23721,44421,9157,31114,7353,4363,4212,6703,817784754	Year endedThree months endedDecember 31,December 31,2007200620072006(Unaudited)(Unaudited)$ 158,235$ 147,353$ 42,840$ 42,61366,07959,38117,96017,27792,15687,97224,88025,33637,69532,3639,4569,87338,38033,5149,7799,8278,7707,3602,2092,21584,84573,23721,44421,9157,31114,7353,4363,4212,6703,817784754
RevenuesCost of revenues *) **)Gross profitOperating expenses:Research and development, net *)Selling and marketing *) **)General and administrative *)Total operating expensesOperating incomeFinancial income, netEquity in losses of affiliated companiesIncome before taxes on incomeTaxes on income, netNon-GAAP net incomeNon-GAAP diluted net earnings per shareWeighted average number of shares used incomputing non-GAAP diluted net earnings pershare (in thousands)	esrevenues *) **)rofitng expenses:rch and development, net *)g and marketing *) **)al and administrative *)perating expensesng incomeal income, net		Year endedDecember 31,20072006(Unaudited)$ 158,235$ 147,35366,07959,38192,15687,97237,69532,36338,38033,5148,7707,36084,84573,2377,31114,7352,6703,817			Three months endedDecember 31,
			2007			20072006(Unaudited)	2006
	esrevenues *) **)rofitng expenses:rch and developmg and marketing *)al and administratiperating expensesng incomeal income, net
			$	158,23566,07992,15637,69538,3808,770		$ 42,84017,96024,8809,4569,7792,20921,4443,436784	$ 42,61317,277
							25,3369,8739,8272,215
							21,915
				84,8457,3112,670
							3,421754
			1,0978,884561$ 8,323$ 0.1943,740		91617,636994$16,642 $ 0.37 50,605	3463,874224$ 3,650$ 0.0843,955	244
							3,931293
							$ 3,638
							$ 0.08
							50,466

*) Excluding stock-based compensation expenses related to options granted to employees and others as a result of the adoption of SFAR 123R as of January 1, 2006

**) Excluding amortization of intangible assets related to the acquisitions of Nuera and Netrake during the third quarter of 2006 and to the acquisition of CTI Squared during the second quarter of 2007.

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 as well.

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Q4 2007 Year End Results

AUDIOCODES LTD. AND ITS SUBSIDIARIES RECONCILIATION BETWEEN GAAP NET INCOME AND NON-GAAP NET INCOME In thousands, except per share data

GAAP Net income (loss)GAAP Diluted net earnings (loss) per shareCost of revenues:Stock-based compensation ()Amortization expenses(**)Research and development, net:Stock-based compensation ()Selling and marketing:Stock-based compensation ()Amortization expenses(**)General and administrative:Stock-based compensation ()Income tax effect(**)Non- GAAP Net incomeNon-GAAP Diluted net earnings per share	Year endedDecember 31,20072006(Unaudited) $ (1,848) $ 6,877 $ (0.04) $ 0.166136202,4931,2413,1061,8613,0113,0533,4763,6281,0445224,5204,1508671,406(1,333)(705)$ 8,323$ 16,642 $ 0.19 $ 0.37	Three months endedDecember 31,20072006(Unaudited) $1,339 $ 671 $ 0.03 $ 0.021312005826477138476308287781,1242612671,0391,391228315(299)(414)$ 3,650$ 3,638 $ 0.08 $ 0.08
	$ (1,848) $ (0.04)6132,4933,1063,0113,4761,0444,520867(1,333)$ 8,323 $ 0.19	$1,339 $ 0.031315827136307782611,039228(299)$ 3,650 $ 0.08

*) Stock-based compensation expenses related to options granted to employees and others as a result of the adoption of SFAR 123R as of January 1, 2006.

**) Amortization of intangible assets related to the acquisitions of Nuera and Netrake during the third quarter of 2006 and to the acquisition of CTI Squared during the second quarter of 2007.

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

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AUDIOCODES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS U.S. dollars in thousands

Year endedDecember 31,20072006Cash flows from operating activities:Net income (loss)$ (1,848)$ 6,877Adjustments required to reconcile net income to netcash provided by operating activities:Depreciation and amortization7,7895,543Net loss from sale of marketable securities-15Amortization of marketable securities premiumsand accretion of discounts, net39225Equity in losses of affiliated companies1,097916Increase (decrease) in accrued severance pay, net356203Stock-based compensation expenses7,9678,707Amortization of senior convertible notes discountand deferred charges203199Increase in accrued interest on marketablesecurities, bank deposits and structured notes(519)(130)Decrease (increase) in deferred tax assets1,684(298)Decrease (increase)in trade receivables, net5,014(9,751)Decrease (increase) in other receivables and prepaidexpenses(1,504)1,457Increase in inventories(2,643)(1,954)Increase (decrease) in trade payables1,263(2,671)Increase (decrease) in other payables and accruedexpenses(5,181)(2,005)Decrease in deferred tax liabilities(1,331)(703)Net cash provided by operating activities12,386 6,630Cash flows from investing activities:Investment in short-term bank deposits(18,065)-Investment in long-term bank deposits(11,000)(20,000)Proceeds from sale and maturity of marketablesecurities31,6009,979Proceeds from bank deposits28,70051,300Investments in companies(1,003)(3,453)Payment for acquisition of Nuera*)-(82,520)Payment for acquisition of Netrake*)-(13,836)Payment for acquisition of CTI Squared*)(4,897)-Purchase of property and equipment(2,629)(3,067)Proceeds from sale of property and equipment--Proceed from structured notes called by the bank10,000-Net cash provided by (used in) investing activities32,706(61,597)	Three months endedDecmber 31,	Three months endedDecmber 31,
	20072006(Unaudited)	2006
	$ 1,3391,867-(11)3461521,76752(92)2,0203,987(867)(970)2,085(2,413)(298)8,964(18,065)-9,000-----(574)-10,000361	$ 6711,916-52244(30)2,46750(476)(255)(4,440)1,796(265)(1,591)732(414)
		457
		--5,000-(1,802)---(1,352)--
		1,846

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AUDIOCODES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Cont.) U.S. dollars in thousands

Cash flows from financing activities:Proceeds from issuance of shares upon exercise ofoptions and employee stock purchase planNet cash provided by financing activitiesIncrease (decrease) in cash and cash equivalentsCash and cash equivalents at the beginning of theperiodCash and cash equivalents at the end of the period	Year endedDecember 31,200720064,800 9,1814,800 9,18149,892(45,786)25,17170,957 $ 75,063 $ 25,171	Three months endedDecember 31,	Three months endedDecember 31,
	20074,8004,80049,89225,171 $ 75,063	20072006(Unaudited)	2006
		1581589,48365,580 $ 75,063	216
			216
			2,51922,652
			$ 25,171

*) Excluding cash and cash equivalents

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