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Audiocodes Ltd. Earnings Release 2020
6659_rns_2020-07-28_eeb64abe-62f3-4260-b28c-051543d22deb.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 July 2020
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 July 28, 2020, AudioCodes Ltd. (the "Registrant") issued a press release announcing financial results for the second quarter of 2020. 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, sixth and seventh paragraphs following the heading "Details" 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 F-3ASR, File No. 333-238867; (ii) the Registrant's Registration Statement on Form S-8, File No. 333-11894; (iii) the Registrant's Registration Statement on Form S-8, File No. 333-13268; (iv) the Registrant's Registration Statement on Form S-8, File No. 333-105473; (v) the Registrant's Registration Statement on Form S-8, File No. 333-144825; (vi) the Registrant's Registration Statement on Form S-8, File No. 333-160330; (vii) the Registrant's Registration Statement on Form S-8, File No. 333-170676; (viii) the Registrant's Registration Statement on Form S-8, File No. 333-190437; (ix) the Registrant's Registration Statement on Form S-8, File No. 333-210438; and (x) 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: July 28, 2020
EXHIBIT INDEX
| Exhibit No. | Description |
|---|---|
| 1 | Press release, dated July 28, 2020, announcing financial results for the second quarter of 2020. |
P R E S S R E L E A S E
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]
Company Contacts IR Agency Contact Brett Maas, Managing Director Hayden IR Tel: +1-646-536-7331 [email protected]
AudioCodes Reports Second Quarter 2020 Results
Lod, Israel – July 28, 2020 - AudioCodes (NASDAQ: AUDC) Press Release
Second Quarter Highlights
- x Quarterly revenues increased by 8.1% year-over-year to \$53.5 million;
- x Quarterly service revenues increased by 3% year-over-year to \$17.1 million;
- x Quarterly UC-SIP revenues increased more than 20% year-over-year;
- x GAAP results:
- x Quarterly GAAP gross margin percentage was 66.7%;
- x Quarterly GAAP operating margin percentage was 16.5%;
- x Quarterly GAAP net income was \$6.6 million, or \$0.21 per diluted share;
- x Non-GAAP results:
- x Quarterly Non-GAAP gross margin percentage was 66.9%;
- x Quarterly Non-GAAP operating margin percentage was 20.1%;
- x Quarterly Non-GAAP net income was \$10.5 million, or \$0.32 per diluted share;
- x Net cash provided by operating activities was \$10.7 million for the quarter;
- x \$85.4 million in new capital, net of expenses of the offering, raised through public offering of ordinary shares.
Details
AudioCodes, a leading vendor of advanced communications software, products and productivity solutions for the digital workplace, today announced financial results for the second quarter ended June 30, 2020.
AudioCodes Reports Second Quarter 2020 Results Page 1 of 10
AudioCodes Press Release
Revenues for the second quarter of 2020 were \$53.5 million compared to \$52.0 million for the first quarter of 2020 and \$49.5 million for the second quarter of 2019.
Net income was \$6.6 million, or \$0.21 per diluted share, for the second quarter of 2020, compared to \$4.8 million, or \$0.16 per diluted share, for the second quarter of 2019.
On a Non-GAAP basis, net income was \$10.5 million, or \$0.32 per diluted share, for the second quarter of 2020 compared to \$6.8 million, or \$0.22 per diluted share, for the second quarter of 2019.
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 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.
During the second quarter of 2020 the Company raised approximately \$85.4 million in net proceeds from the public offering of 2,600,000 ordinary shares at a purchase price of \$35 per share.
Net cash provided by operating activities was \$10.7 million for the second quarter of 2020. Cash and cash equivalents and long- and short-term bank deposits were \$170.4 million as of June 30, 2020 compared to \$71.9 million as of December 31, 2019. The increase in cash and cash equivalents and long- and shortterm bank deposits was primarily a result of the receipt of the net proceeds of the public offering in June 2020, as well as due to cash provided by operating activities.
"We are pleased to report strong financial results for the second quarter of 2020," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "Work-from-home (WFH) has become the new normal in recent months and UCaaS and Collaboration have taken center stage in the transition of many enterprises to a digital workplace. As a result, we experienced good business momentum across most of the market segments we participate in, most notably in the UCaaS and the Contact Center market segments. Coupling this favorable sales momentum with lower than anticipated operating expenses resulting from the COVID-19 pandemic, we continued to improve our financial performance year-over-year. Underscoring our financial success were improved gross margin, which increased to 66.9% in the second quarter from 63.5% in the year-ago quarter, and the substantial increase in operating income to 20.1% from 14.1% in the second quarter of 2019. As a result, net income increased above 50% year-over–year and we have generated strong cash flow from operations. Continuing the sales trend of the first quarter of 2020, we experienced increased market activity and demand for Microsoft Teams. Revenue related to the MS Teams ecosystem grew more than 300% from the year-ago quarter, reaching a level of above \$10 million. In addition, newly created opportunities related to MS Teams have doubled year over year in the second quarter."
AudioCodes Reports Second Quarter 2020 Results Page 2 of 10
AudioCodes Press Release
"The progress made in our Voice.ai business was also noteworthy. We saw continued progress in the introduction of Meeting Insights, a productivity enhancement software tool for group collaboration. In the voice.ai gateway (VAIG) business we saw an increase in opportunities relating to adding voice and telephony channels to virtual agents and enterprise intelligent assistants, a rapidly growing use these days. Looking forward, we expect that Collaboration and WFH will continue to take hold as mainstream market trends for coming years. While the full impact of COVID-19 is still uncertain and may remain a global challenge for the next few years, we believe in our ability to respond to new developments and challenges in our markets. We plan to continue our investment in future product offerings and focus on the return on investment to our shareholders," concluded Mr. Adlersberg.
AudioCodes Reports Second Quarter 2020 Results Page 3 of 10
Conference Call & Web Cast Information
AudioCodes will conduct a conference call at 8:30 A.M., Eastern Time today to discuss the Company's second quarter of 2020 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 communications software, products and productivity 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; possible adverse impact of the COVID-19 pandemic on our business and results of operations; 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.
©2020 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, AudioCodes Meeting Insights, AudioCodes Room Experience 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.
AudioCodes Reports Second Quarter 2020 Results Page 4 of 10
Summary financial data follows
AudioCodes Reports Second Quarter 2020 Results Page 5 of 10
AudioCodes Press Release
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands
| June 30, 2020 |
December 31, 2019 |
||||
|---|---|---|---|---|---|
| (Unaudited) | (Audited) | ||||
| ASSETS | |||||
| CURRENT ASSETS: | |||||
| Cash and cash equivalents | \$ | 163,849 | \$ 64,773 |
||
| Short-term and restricted bank deposits | 5,965 | 6,416 | |||
| Trade receivables, net | 30,144 | 27,501 | |||
| Other receivables and prepaid expenses | 7,419 | 5,626 | |||
| Inventories | 29,469 | 28,275 | |||
| Total current assets | 236,846 | 132,591 | |||
| LONG-TERM ASSETS: | |||||
| Long-term and restricted bank deposits | \$ | 544 | \$ 694 |
||
| Deferred tax assets | 17,311 | 20,466 | |||
| Operating lease right-of-use assets | 26,489 | 29,688 | |||
| Severance pay funds | 18,783 | 19,370 | |||
| Total long-term assets | 63,127 | 70,218 | |||
| PROPERTY AND EQUIPMENT, NET | 4,294 | 4,392 | |||
| GOODWILL, INTANGIBLE ASSETS AND OTHER, NET | 36,957 | 37,123 | |||
| Total assets | \$ | 341,224 | \$ 244,324 |
||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| CURRENT LIABILITIES: | |||||
| Current maturities of long-term bank loans | \$ | 1,836 | \$ 2,473 |
||
| Trade payables | 4,611 | 6,628 | |||
| Other payables and accrued expenses | 25,335 | 24,692 | |||
| IIA settlement liability | 10,780 | 10,750 | |||
| Deferred revenues | 35,770 | 33,538 | |||
| Short-term operating lease liabilities | 8,332 | 8,579 | |||
| Total current liabilities | 86,664 | 86,660 | |||
| LONG-TERM LIABILITIES: | |||||
| Accrued severance pay | \$ | 20,350 | \$ 20,313 |
||
| Long-term bank loans | 600 | 1,200 | |||
| IIA settlement liability | 10,780 | 10,749 | |||
| Deferred revenues and other liabilities | 10,777 | 9,831 | |||
| Long-term operating lease liabilities | 19,859 | 23,097 | |||
| Total long-term liabilities | 62,366 | 65,190 | |||
| Total shareholders' equity | 192,194 | 92,474 | |||
| Total liabilities and shareholders' equity | |||||
| \$ | 341,224 | \$ 244,324 |
| AudioCodes Reports Second Quarter 2020 Results | Page 6 of 10 |
|---|---|
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per share data
| Six months ended June 30, |
Three months ended June 30, |
||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2020 (Unaudited) |
2019 | 2020 | 2019 (Unaudited) |
||||||
| Revenues: | |||||||||
| Products | \$ | 70,701 | \$ | 65,296 | \$ | 36,367 | \$ | 32,843 | |
| Services | 34,843 | 30,782 | 17,155 | 16,656 | |||||
| Total Revenues | 105,544 | 96,078 | 53,522 | 49,499 | |||||
| Cost of revenues: | |||||||||
| Products | 27,793 | 28,150 | 14,031 | 14,372 | |||||
| Services | 7,774 | 7,385 | 3,793 | 3,813 | |||||
| Total Cost of revenues | 35,567 | 35,535 | 17,824 | 18,185 | |||||
| Gross profit | 69,977 | 60,543 | 35,698 | 31,314 | |||||
| Operating expenses: | |||||||||
| Research and development, net | 22,806 | 19,659 | 11,224 | 10,179 | |||||
| Selling and marketing | 25,586 | 25,220 | 12,317 | 12,659 | |||||
| General and administrative | 6,578 | 5,263 | 3,313 | 2,592 | |||||
| Total operating expenses | 54,970 | 50,142 | 26,854 | 25,430 | |||||
| Operating income | 15,007 | 10,401 | 8,844 | 5,884 | |||||
| Financial income (expenses), net | 454 | (1,079) | (852) | (280) | |||||
| Income before taxes on income | 15,461 | 9,322 | 7,992 | 5,604 | |||||
| Taxes on income, net | (3,558) | (1,479) | (1,353) | (810) | |||||
| Net income | \$ | 11,903 | \$ | 7,843 | \$ | 6,639 | \$ | 4,794 | |
| Basic net earnings per share | \$ | 0.40 | \$ | 0.27 | \$ | 0.22 | \$ | 0.16 | |
| Diluted net earnings per share | \$ | 0.38 | \$ | 0.26 | \$ | 0.21 | \$ | 0.16 | |
| Weighted average number of shares used in computing basic net earnings per share (in thousands) |
30,017 | 29,214 | 30,493 | 29,214 | |||||
| Weighted average number of shares used in computing diluted net earnings per share (in thousands) |
31,554 | 30,737 | 32,062 | 30,744 | |||||
AudioCodes Reports Second Quarter 2020 Results Page 7 of 10
U.S. dollars in thousands, except per share data
| Six months ended June 30, |
Three months ended June 30, |
|||||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||
| (Unaudited) | (Unaudited) | |||||||
| GAAP net income | \$ 11,903 |
\$ | 7,843 | \$ | 6,639 | \$ | 4,794 | |
| GAAP net earnings per share | \$ 0.38 |
\$ | 0.26 | \$ | 0.21 | \$ | 0.16 | |
| Cost of revenues: | ||||||||
| Share-based compensation (1) | 99 | 66 | 49 | 30 | ||||
| Amortization expenses (2) | 136 | 136 | 68 | 68 | ||||
| 235 | 202 | 117 | 98 | |||||
| Research and development, net: | ||||||||
| Share-based compensation (1) | 490 | 422 | 247 | 210 | ||||
| Selling and marketing: | ||||||||
| Share-based compensation (1) | 1,623 | 754 | 864 | 421 | ||||
| Amortization expenses (2) | 30 | 30 | 15 | 15 | ||||
| 1,653 | 784 | 879 | 436 | |||||
| General and administrative: | ||||||||
| Share-based compensation (1) | 1,264 | 739 | 657 | 373 | ||||
| Revaluation of earn-out liability (3) | - | (23) | - | - | ||||
| 1,264 | 716 | 657 | 373 | |||||
| Financial expenses: | ||||||||
| Exchange rate differences (4) | (453) | 1,258 | 829 | 358 | ||||
| Income taxes: | ||||||||
| Deferred tax (5) | 3,154 | 1,088 | 1,124 | 544 | ||||
| Non-GAAP net income | \$ 18,246 |
\$ | 12,313 | \$ | 10,492 | \$ | 6,813 | |
| Non-GAAP diluted net earnings per share | \$ 0.57 |
\$ | 0.40 | \$ | 0.32 | \$ | 0.22 |
(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 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 expenses.
report this type of information.
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
AudioCodes Reports Second Quarter 2020 Results Page 8 of 10
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
U.S. dollars in thousands
| Six months ended June 30, |
Three months ended June 30, |
|||||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||
| (Unaudited) | (Unaudited) | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | \$ | 11,903 | \$ | 7,843 | \$ | 6,639 | \$ | 4,794 |
| Adjustments required to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization | 1,119 | 980 | 551 | 506 | ||||
| Amortization of marketable securities premiums and accretion of discounts, | ||||||||
| net | - | 79 | - | 23 | ||||
| Increase (decrease) in accrued severance pay, net | 624 | (115) | 312 | (276) | ||||
| Share-based compensation expenses | 3,476 | 1,981 | 1,817 | 1,034 | ||||
| Decrease in deferred tax assets, net | 3,127 | 953 | 1,110 | 528 | ||||
| Increase in accrued interest and exchange rate effect of loans, marketable | ||||||||
| securities and bank deposits | 1 | 159 | 13 | 170 | ||||
| Decrease in operating lease right-of-use assets | 3,898 | 4,063 | 2,022 | 2,159 | ||||
| Increase (decrease) in operating lease liabilities | (4,184) | (2,713) | 60 | (376) | ||||
| Changes in IIA settlement liability, net | 61 | - | 667 | - | ||||
| Decrease (increase) in trade receivables, net | (2,643) | (2,623) | (1,868) | 2,237 | ||||
| Decrease (increase) in other receivables and prepaid expenses | (17) | 203 | 58 | 457 | ||||
| Increase in inventories | (1,408) | (7,256) | (2,695) | (4,357) | ||||
| Increase (decrease) in trade payables | (2,017) | 3,667 | (742) | 3,040 | ||||
| Increase (decrease) in other payables and accrued expenses | 369 | 2,065 | 2,278 | (2,401) | ||||
| Increase in deferred revenues | 3,206 | 7,431 | 508 | 884 | ||||
| Net cash provided by operating activities | 17,515 | 16,717 | 10,730 | 8,422 | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from short-term deposits | 451 | 5,971 | 301 | - | ||||
| Proceeds from long-term deposits | 150 | 600 | - | 300 | ||||
| Proceeds from redemption of marketable securities | - | 19,385 | - | 12,094 | ||||
| Purchase of marketable securities | - | (21,035) | - | (21,035) | ||||
| Purchase of property and equipment | (641) | (1,361) | (293) | (245) | ||||
| Net cash provided by (used in) investing activities | (40) | 3,560 | 8 | (8,886) |
AudioCodes Reports Second Quarter 2020 Results Page 9 of 10
AUDIOCODES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
U.S. dollars in thousands
| Six months ended June 30, |
Three months ended June 30, |
||||
|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | ||
| (Unaudited) | (Unaudited) | ||||
| Cash flows from financing activities: | |||||
| Purchase of treasury shares | - | (8,002) | - | (7,051) | |
| Repayment of bank loans | (1,238) | (1,237) | (619) | (619) | |
| Cash dividends paid to shareholders | (3,866) | (3,218) | - | - | |
| Payment related to the acquisition of ACS | - | (410) | - | - | |
| Proceeds from issuance of shares, net | 85,654 | - | 85,654 | - | |
| Proceeds from issuance of shares upon exercise of options and warrants | 1,051 | 1,462 | 703 | 348 | |
| Net cash provided by (used in) financing activities | 81,601 | (11,405) | 85,738 | (7,322) | |
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 99,076 | 8,872 | 96,476 | (7,786) | |
| Cash, cash equivalents and restricted cash at beginning of period | 69,773 | 31,503 | 72,373 | 48,161 | |
| Cash, cash equivalents and restricted cash at end of period | \$ 168,849 |
\$ 40,375 |
\$ 168,849 |
\$ 40,375 |
AudioCodes Reports Second Quarter 2020 Results Page 10 of 10