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Audiocodes Ltd. Earnings Release 2019
6659_rns_2019-04-30_a808b52f-3640-4d4b-8418-86ab3ac06184.pdf
Earnings Release
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934
For the Month of April 2019
Commission file number 0-30070
AUDIOCODES LTD.
(Translation of registrant's name into English)
1 Hayarden Street • Airport City, Lod 7019900 • ISRAEL (Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F _ Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
On April 30, 2019, AudioCodes Ltd. (the "Registrant") issued a press release announcing financial results for the first quarter of 2019, and other matters. A copy of this press release is attached hereto as Exhibit 1 and incorporated by reference herein.
The information set forth in (a) the first, second, third and sixth paragraphs following the heading "Details," the two paragraphs following the caption "Share Buy Back Program," and the paragraph following the heading "Cash Dividend" of, and (b) the condensed consolidated balance sheets, condensed consolidated statements of operations and condensed consolidated statements of cash flows contained in, the press release attached as Exhibit 1 to this Report on Form 6-K are hereby incorporated by reference into (i) the Registrant's Registration Statement on Form S-8, File No. 333-11894; (ii) the Registrant's Registration Statement on Form S-8, File No. 333-13268; (iii) the Registrant's Registration Statement on Form S-8, File No. 333-105473; (iv) the Registrant's Registration Statement on Form S-8, File No. 333-144825; (v) the Registrant's Registration Statement on Form S-8, File No. 333-160330; (vi) the Registrant's Registration Statement on Form S-8, File No. 333-170676; (vii) the Registrant's Registration Statement on Form S-8, File No. 333-190437; (viii) the Registrant's Registration Statement on Form S-8, File No. 333-210438; and (ix) the Registrant's Registration Statement on Form S-8, File No. 333- 230388.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AUDIOCODES LTD. (Registrant)
By: /s/ NIRAN BARUCH
Niran Baruch Vice President Finance and Chief Financial Officer
Dated: April 30, 2019
EXHIBIT INDEX
| Exhibit No. | Description |
|---|---|
| 1 | Press release, dated April 30, 2019, announcing financial results for first quarter of 2019, and other matters. |
PRESS RELEASE
Company Contacts IR Agency Contact Niran Baruch, VP Finance & Chief Financial Officer AudioCodes Tel: +972-3-976-4000 [email protected]
Shirley Nakar, Director, Investor Relations AudioCodes Tel: +972-3-976-4000 [email protected]
Rob Fink, Hayden IR Tel: +1-646-415-8972 [email protected]
AudioCodes Reports First Quarter 2019 Results
Lod, Israel – April 30, 2019 - AudioCodes (NASDAQ: AUDC) Press Release
First Quarter Highlights
- x Quarterly revenues increased by 9.8% year-over-year to \$46.6 million;
- x Quarterly service revenues increased by 3.4% year-over-year to \$14.1 million;
- x Quarterly UC-SIP booking increased approximately 15% year-over-year;
- x Quarterly GAAP gross margin percentage was 62.8%; quarterly Non-GAAP gross margin percentage was 63.0%;
- x Quarterly GAAP operating margin percentage was 9.7%; quarterly Non-GAAP operating margin percentage was 11.9%;
- x Cash flow from operating activities was \$8.3 million;
- x Quarterly GAAP net income was \$3.0 million, or \$0.10 per diluted share;
- x Quarterly Non-GAAP net income was \$5.5 million, or \$0.18 per diluted share;
- x AudioCodes repurchased 86,613 of its ordinary shares during the quarter at an aggregate cost of \$951,000.
- x AudioCodes declared a semiannual cash dividend of 11 cents per share. The dividend, in the aggregate amount of \$3.2 million, was paid on February 19, 2019.
AudioCodes Reports First Quarter 2019 Results Page 1 of 9
AudioCodes Press Release
Details
AudioCodes, a leading vendor of advanced voice networking and media processing solutions for the digital workplace, today announced financial results for the first quarter ended March 31, 2019.
Revenues for the first quarter of 2019 were \$46.6 million compared to \$45.8 million for the fourth quarter of 2018 and \$42.4 million for the first quarter of 2018.
Net income was \$3.0 million, or \$0.10 per diluted share, for the first quarter of 2019, compared to \$2.4 million, or \$0.08 per diluted share, for the first quarter of 2018.
On a Non-GAAP basis, net income was \$5.5 million, or \$0.18 per diluted share, for the first quarter of 2019 compared to \$3.9 million, or \$0.13 per diluted share, for the first quarter of 2018.
Non-GAAP net income excludes: (i) share-based compensation expenses; (ii) amortization expenses related to intangible assets; (iii) expenses or income related to revaluation of an earn-out liability in connection with the acquisition of Active Communications Europe; (iv) financial income or expenses related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies and (v) non-cash deferred tax benefit or expenses. A reconciliation of net income 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 was \$8.3 million for the first quarter of 2019. Cash and cash equivalents, long- and short-term bank deposits and long- and short-term marketable securities were \$68.4 million as of March 31, 2019 compared to \$65.4 million as of December 31, 2018. The increase in cash and cash equivalents, long- and short-term bank deposits and long- and short-term marketable securities was the result of cash provided by operating activities offset, in part, by the use of cash in 2019 for the continued repurchasing of the Company's ordinary shares pursuant to its share repurchase program and for the payment of a cash dividend.
AudioCodes Reports First Quarter 2019 Results Page 2 of 9
"We are pleased to report solid financial results for the first quarter of 2019," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "The strong underlying growth in the unified communications and UCaaS markets and the continuing transformation to all IP are favorably impacting our financial results. We continued to execute on our 2019 revenue plan and grew approximately 10% year-over-year while continuing to generate increased earnings and a strong cash flow from operations."
"New enterprise voice networking deployments and service provider network transformation projects continue to drive our top line growth. Our investments in adapting our One Voice solution to Cloud, and more specifically to the Microsoft Teams collaboration solution started to bear fruits in the first quarter of 2019 and we saw encouraging new project starts in this space. At the same time, we continue to invest in our emerging voice.ai business and we are seeing encouraging initial results. We continue to prudently invest in our future offerings and remain focused on maximizing the return on these investments for our shareholders", concluded Mr. Adlersberg.
Share Buy Back Program
As of March 31, 2019, AudioCodes had acquired an aggregate of 17.64 million of its ordinary shares since August 2014 for an aggregate consideration of \$95 million. During the quarter ended March 31, 2019, AudioCodes acquired 86,613 of its ordinary shares under its share repurchase program for a total consideration of \$951,000.
In January 2019, AudioCodes received court approval in Israel to purchase up to an aggregate of \$12 million ("Permitted Amount") of additional ordinary shares pursuant to its share repurchase program. The court approval also permits AudioCodes to declare a dividend of any part of the Permitted Amount during the approved validity period. The current court approval will expire on July 1, 2019. As of March 31, 2019, \$7.8 million remained available to the Company under this court approval for repurchasing shares or declaring dividends.
Cash Dividend
On January 28, 2019, the Company declared a cash dividend of \$0.11 per share. The dividend, in the aggregate amount of \$3.2 million, was paid on February 19, 2019 to all of the Company's shareholders of record on February 7, 2019.
AudioCodes Reports First Quarter 2019 Results Page 3 of 9
Conference Call & Web Cast Information
AudioCodes will conduct a conference call at 8:30 A.M., Eastern Time today to discuss the Company's first quarter of 2019 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 webcast. Investors are invited to listen to the call live via webcast at the AudioCodes investor website at http://www.audiocodes.com/investors-lobby
Follow AudioCodes' social media channels:
AudioCodes invites you to join our online community and follow us on: AudioCodes Voice Blog, LinkedIn, Twitter, Facebook, and YouTube.
About AudioCodes
AudioCodes Ltd. (NASDAQ, TASE: AUDC) is a leading vendor of advanced voice networking and media processing solutions for the digital workplace. AudioCodes enables enterprises and service providers to build and operate all-IP voice networks for unified communications, contact centers, and hosted business services. AudioCodes offers a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world.
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.
©2019 AudioCodes Ltd. All rights reserved. AudioCodes, AC, HD VoIP, HD VoIP Sounds Better, IPmedia, Mediant, MediaPack, What's Inside Matters, OSN, SmartTAP, User Management Pack, VMAS, VoIPerfect, VoIPerfectHD, Your Gateway To VoIP, 3GX, VocaNom, AudioCodes One Voice and CloudBond 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 Reports First Quarter 2019 Results Page 4 of 9
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
| March 31, 2019 |
December 31, 2018 |
||||
|---|---|---|---|---|---|
| (Unaudited) | (Audited) | ||||
| ASSETS | |||||
| CURRENT ASSETS: | |||||
| Cash and cash equivalents | \$ | 47,186 | \$ | 31,503 | |
| Short-term and restricted bank deposits | 7,385 | 12,381 | |||
| Short-term marketable securities and accrued interest | 12,271 | 19,602 | |||
| Trade receivables, net | 27,081 | 22,279 | |||
| Other receivables and prepaid expenses | 6,237 | 5,885 | |||
| Inventories | 25,528 | 22,620 | |||
| Total current assets | 125,688 | 114,270 | |||
| LONG-TERM ASSETS: | |||||
| Long-term and restricted bank deposits | \$ | 1,594 | \$ | 1,894 | |
| Deferred tax assets | 3,807 | 4,350 | |||
| Operating lease right-of-use assets | 31,582 | - | |||
| Severance pay funds | 18,017 | 17,518 | |||
| Total long-term assets | 55,000 | 23,762 | |||
| PROPERTY AND EQUIPMENT, NET | 4,604 | 3,865 | |||
| GOODWILL, INTANGIBLE ASSETS AND OTHER, NET | 37,387 | 37,475 | |||
| Total assets | \$ | 222,679 | \$ | 179,372 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| CURRENT LIABILITIES: | |||||
| Current maturities of long-term bank loans | \$ | 2,474 | \$ | 2,487 | |
| Trade payables | 6,815 | 6,188 | |||
| Other payables and accrued expenses | 26,295 | 22,541 | |||
| Deferred revenues | 29,134 | 23,727 | |||
| Short-term operating lease liabilities | 8,196 | - | |||
| Total current liabilities | 72,914 | 54,943 | |||
| LONG-TERM LIABILITIES: | |||||
| Accrued severance pay | \$ | 19,388 | \$ | 18,728 | |
| Long-term bank loans | 3,055 | 3,687 | |||
| Deferred revenues and other liabilities | 8,488 | 7,466 | |||
| Long-term operating lease liabilities | 22,953 | - | |||
| Total long-term liabilities | 53,884 | 29,881 | |||
| Total shareholders' equity | 95,881 | 94,548 | |||
| Total liabilities and shareholders' equity | \$ | 222,679 | \$ | 179,372 | |
AudioCodes Reports First Quarter 2019 Results Page 5 of 9
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per share data
| Three months ended March 31, |
||||
|---|---|---|---|---|
| 2019 | 2018 | |||
| (Unaudited) | ||||
| Revenues: | ||||
| Products | \$ | 32,453 | \$ | 28,763 |
| Services | 14,126 | 13,662 | ||
| Total Revenues | 46,579 | 42,425 | ||
| Cost of revenues: | ||||
| Products | 13,778 | 11,895 | ||
| Services | 3,572 | 3,371 | ||
| Total Cost of revenues | 17,350 | 15,266 | ||
| Gross profit | 29,229 | 27,159 | ||
| Operating expenses: | ||||
| Research and development, net | 9,480 | 8,633 | ||
| Selling and marketing | 12,561 | 12,988 | ||
| General and administrative | 2,671 | 2,581 | ||
| Total operating expenses | 24,712 | 24,202 | ||
| Operating income | 4,517 | 2,957 | ||
| Financial income (expenses), net | (799) | 243 | ||
| Income before taxes on income | 3,718 | 3,200 | ||
| Taxes on income, net | (669) | (766) | ||
| Net income | \$ | 3,049 | \$ | 2,434 |
| Basic net earnings per share | \$ | 0.10 | \$ | 0.08 |
| Diluted net earnings per share | \$ | 0.10 | \$ | 0.08 |
| Weighted average number of shares used in computing basic net earnings per share (in thousands) | 29,213 | 29,159 | ||
| Weighted average number of shares used in computing diluted net earnings per share (in thousands) | 30,729 | 30,349 | ||
AudioCodes Reports First Quarter 2019 Results Page 6 of 9
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
U.S. dollars in thousands, except per share data
| Three months ended March 31, |
||||
|---|---|---|---|---|
| 2019 | 2018 | |||
| (Unaudited) | ||||
| GAAP net income | \$ | 3,049 | \$ | 2,434 |
| GAAP net earnings per share | \$ | 0.10 | \$ | 0.08 |
| Cost of revenues: | ||||
| Share-based compensation (1) | 36 | 39 | ||
| Amortization expenses (2) | 68 | 174 | ||
| 104 | 213 | |||
| Research and development, net: | ||||
| Share-based compensation (1) | 212 | 113 | ||
| Selling and marketing: | ||||
| Share-based compensation (1) | 333 | 274 | ||
| Amortization expenses (2) | 15 | 15 | ||
| 348 | 289 | |||
| General and administrative: | ||||
| Share-based compensation (1) | 366 | 269 | ||
| Revaluation of earn-out liability (3) | (23) | - | ||
| 343 | 269 | |||
| Financial expenses: | ||||
| Exchange rate differences (4) | 900 | - | ||
| Income taxes: | ||||
| Deferred tax (5) | 544 | 584 | ||
| Non-GAAP net income | \$ | 5,500 | \$ | 3,902 |
| Non-GAAP diluted net earnings per share | \$ | 0.18 | \$ | 0.13 |
(1) Share-based compensation expenses related to options and restricted share units granted to employees and others.
(2) Amortization of intangible assets related to the acquisitions of Mailvision and Active Communications Europe assets.
(3) Expenses or income related to revaluation of an earn-out liability in connection with the acquisition of Active Communications Europe.
(4) Financial income or expenses related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies.
(5) Non-cash deferred tax benefit or 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 Reports First Quarter 2019 Results Page 7 of 9
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
U.S. dollars in thousands
| Three months ended March 31, |
||||
|---|---|---|---|---|
| 2019 | 2018 | |||
| (Unaudited) | ||||
| Cash flows from operating activities: | ||||
| Net income | \$ | 3,049 | \$ | 2,434 |
| Adjustments required to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation and amortization | 474 | 540 | ||
| Amortization of marketable securities premiums and accretion of discounts, net | 56 | 103 | ||
| Increase in accrued severance pay, net | 161 | 47 | ||
| Share-based compensation expenses | 947 | 695 | ||
| Decrease in deferred tax assets, net | 425 | 563 | ||
| Decrease (increase) in accrued interest and exchange rate effect of loans, marketable securities and bank deposits |
(11) | 15 | ||
| Changes in operating leases, net | (433) | - | ||
| Decrease (increase) in trade receivables, net | (4,860) | 389 | ||
| Increase in other receivables and prepaid expenses | (254) | (1,734) | ||
| Increase in inventories | (2,899) | (971) | ||
| Increase in trade payables | 627 | 162 | ||
| Increase (decrease) in other payables and accrued expenses | 4,466 | (1,081) | ||
| Increase in deferred revenues | 6,547 | 7,124 | ||
| Net cash provided by operating activities | 8,295 | 8,286 | ||
| Cash flows from investing activities: | ||||
| Proceeds from short-term deposits | 5,971 | - | ||
| Proceeds from long-term deposits | 300 | - | ||
| Proceeds from redemption of marketable securities | 7,291 | 727 | ||
| Purchase of property and equipment | (1,116) | (280) | ||
| Net cash provided by investing activities | 12,446 | 447 |
AudioCodes Reports First Quarter 2019 Results Page 8 of 9
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
U.S. dollars in thousands
| Three months ended March 31, |
|||
|---|---|---|---|
| 2019 | 2018 | ||
| (Unaudited) | |||
| Cash flows from financing activities: | |||
| Purchase of treasury shares | (951) | (7,224) | |
| Repayment of bank loans | (618) | (636) | |
| Cash dividends paid to shareholders | (3,218) | - | |
| Payment related to the acquisition of ACS | (410) | (151) | |
| Proceeds from issuance of shares upon exercise of options and warrants | 1,114 | 1,446 | |
| Net cash used in financing activities | (4,083) | (6,565) | |
| Net increase in cash, cash equivalents, and restricted cash | 16,658 | 2,168 | |
| Cash, cash equivalents and restricted cash at beginning of period | 31,503 | 31,181 | |
| Cash, cash equivalents and restricted cash at end of period | \$ 48,161 |
\$ | 33,349 |