EX-99.1 2 tv499046_ex1.htm EXHIBIT 1

Exhibit 1

AudioCodes Press Release

PRESS RELEASE

Company Contacts				IR Agency Contact
Niran Baruch, VP Finance & Chief Financial Officer AudioCodes Tel: +972-3-976-4000 Niran.baruch@audiocodes.com		Shirley Nakar, Director, Investor Relations AudioCodes Tel: +972-3-976-4000 shirley@audiocodes.com		Philip Carlson KCSA Strategic Communications Tel: +1-212-896-1233 audc@kcsa.com

AudioCodes Reports Second Quarter 2018 Results

Declares annual dividend of 20 Cents per Share

Lod, Israel – July 24, 2018 - AudioCodes (NASDAQ: AUDC) Press Release

Second Quarter Highlights

· Quarterly revenues increased by 12.3% year-over-year to $43.5 million;

· Quarterly service revenues increased by 14.2% year-over-year to $13.5 million;

· Revenues related to UC-SIP business increased more than 30% compared to the second quarter of 2017;

· Quarterly GAAP gross margin was 62.3%; quarterly Non-GAAP gross margin was 62.8%;

· Quarterly GAAP operating margin was 7.6%; quarterly Non-GAAP operating margin was 10.2%;

· Quarterly cash flow from operating activities was $2.2 million;

· Quarterly GAAP net income was $2.4 million, or $0.08 per diluted share; quarterly Non-GAAP net income was $4.1 million, or $0.14 per diluted share;

· AudioCodes repurchased 452,000 of its ordinary shares during the quarter at an aggregate cost of $3.3 million.

AudioCodes Reports Second Quarter 2018 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 second quarter ended June 30, 2018.

Revenues for the second quarter of 2018 were $43.5 million compared to $42.4 million for the first quarter of 2018 and $38.7 million for the second quarter of 2017.

Net income was $2.4 million, or $0.08 per diluted share, for the second quarter of 2018 compared to $1.0 million, or $0.03 per diluted share, for the comparable period last year.

On a Non-GAAP basis, net income was $4.1 million, or $0.14 per diluted share, for the second quarter of 2018 compared to $2.5 million, or $0.08 per diluted share, for the comparable period last year.

Non-GAAP net income excludes: (i) share-based compensation expenses; (ii) amortization expenses related to intangible assets; (iii) expenses related to deferred payments and expenses due to revaluation of an earn-out liability, each in connection with the acquisition of Active Communications Europe; and (iv) 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 $2.2 million for the second quarter of 2018. Cash and cash equivalents, long- and short-term bank deposits and long- and short-term marketable securities were $58.1 million as of June 30, 2018 compared to $58.7 million as of December 31, 2017. The decrease in cash and cash equivalents, long- and short-term bank deposits and long- and short-term marketable securities was the result of the use of cash for the continued repurchasing of the Company’s ordinary shares pursuant to its share repurchase program offset, in part, by cash from operating activities.

"We are pleased to report strong financial results for the second quarter of 2018,” said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes.

"Continuing the strong trend of previous quarters, our Enterprise Voice business continued to evolve as we enhanced our leadership position in the UC and the contact center market segments. Revenues in the first half of 2018 grew 12.9% compared to the first half of 2017. We now project revenue growth of about 10% for the full 2018 year, compared to growth of 7.7% in 2017 and 4.2% in 2016. At the core of this growth is the UC-SIP business which performed well across all business lines and achieved growth of over 30% from the year ago quarter. On the financial front, we achieved substantial improvement in our operating margins which reached 10% in the second quarter of 2018. Taking into account our investment in the new initiative of Voice.AI, which we expect to amount to more than $3 million this year, we now project operating margins of approximately 12% in 2018 for the mainstream networking business, now comprising about 99% of the Company revenues. Cash flow from operations in the first half 2018 continued to be strong, following similar performance in the past three years. We remain confident for the second half of 2018 and beyond as we continue to enjoy good business momentum in winning enterprise voice deployments and service provider network transformation projects. We also experienced continued evolution of new opportunities in our Voice.AI business,” concluded Mr. Adlersberg.

AudioCodes Reports Second Quarter 2018 Results Page 2 of 9

AudioCodes Press Release

Appointment of Lior Aldema as director

The Board of Directors has appointed Lior Aldema as a director of the Company. Mr Aldema is the Company’s Chief Business Officer and has been with the Company since 1998. Mr Aldema will fill a vacancy as a Class I director and will therefore stand for re-election at the Annual General Meeting in 2019.

“I am delighted that Lior will be joining our Board of Directors,” said Shabtai Adlersberg, President and CEO, founder and director of AudioCodes. “Lior and I have been working closely for many years, and his contributions to the Company are significant. Lior’s unique and deep understanding of AudioCodes’ products and markets will benefit the Board and the Company. I wish him success in his new role.”

Dividend

The Company’s Board of Directors has decided to declare an annual cash dividend of 20 cents per share payable on August 20, 2018 to shareholders of record on August 6, 2018. The Company is issuing a separate press release that contains additional information with respect to the dividend.

Share Buy Back Program

As of June 30, 2018, AudioCodes had acquired an aggregate of 17.2 million of its ordinary shares since August 2014 for an aggregate consideration of $90.3 million. During the quarter ended June 30, 2018, AudioCodes acquired 452,000 of its ordinary shares under its share repurchase program for a total consideration of approximately $3.3 million.

In June 2018, AudioCodes received court approval in Israel to purchase up to an additional $20 million (“Permitted Amount”) of its ordinary shares. The court approval also permits AudioCodes to declare a dividend of any part of the Permitted Amount during the approved validity period. As of June 30, 2018, $19.5 million remained available to the Company under this court approval. The current court approval will expire on December 14, 2018.

AudioCodes Reports Second Quarter 2018 Results Page 3 of 9

AudioCodes Press Release

Conference Call & Web Cast Information

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

©2018 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 Second Quarter 2018 Results Page 4 of 9

AudioCodes Press Release

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

		June 30,				December 31,
		2018				2017
		(Unaudited)				(Audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	22,038			$	24,235
Short-term and restricted bank deposits			6,639				2,739
Short-term marketable securities and accrued interest			25,709				7,087
Trade receivables, net			24,954				22,059
Other receivables and prepaid expenses			5,943				4,693
Inventories			18,649				16,563
Total current assets			103,932				77,376
LONG-TERM ASSETS:
Long-term and restricted bank deposits			3,700				4,207
Long-term marketable securities			-				20,475
Deferred tax assets			5,517				6,685
Severance pay funds			18,867				20,138
Total long-term assets			28,084				51,505
PROPERTY AND EQUIPMENT, NET			3,734				3,835
GOODWILL, INTANGIBLE ASSETS AND OTHER, NET			37,834				38,222
Total assets		$	173,584			$	170,938
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term bank loans		$	2,500			$	2,519
Trade payables			6,097				5,639
Other payables and accrued expenses			21,821				20,786
Deferred revenues			21,780				16,417
Total current liabilities			52,198				45,361
LONG-TERM LIABILITIES:
Accrued severance pay			19,818				21,228
Long-term bank loans			4,949				6,237
Deferred revenues and other liabilities			6,757				5,731
Total long-term liabilities			31,524				33,196
Total shareholders’ equity			89,862				92,381
Total liabilities and shareholders' equity		$	173,584			$	170,938

AudioCodes Reports Second Quarter 2018 Results Page 5 of 9

AudioCodes Press Release

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands, except share and per share data

		Six months ended								Three months ended
		June 30,								June 30,
		2018				2017				2018				2017
		(Unaudited)								(Unaudited)
Revenues:
Products		$	58,775			$	52,928			$	30,012			$	26,920
Services			27,152				23,185				13,490				11,816
Total Revenues		$	85,927			$	76,113			$	43,502			$	38,736
Cost of revenues:
Products			25,014				23,332				13,119				12,173
Services			6,658				5,667				3,287				2,765
Total Cost of revenues			31,672				28,999				16,406				14,938
Gross profit			54,255				47,114				27,096				23,798
Operating expenses:
Research and development, net			17,343				14,536				8,710				7,382
Selling and marketing			25,357				24,398				12,369				12,363
General and administrative			5,311				4,361				2,730				2,200
Total operating expenses			48,011				43,295				23,809				21,945
Operating income			6,244				3,819				3,287				1,853
Financial income (expenses), net			223				(103	)			(20	)			(34	)
Income before taxes on income			6,467				3,716				3,267				1,819
Income tax expense, net			(1,639	)			(1,407	)			(873	)			(805	)
Net income		$	4,828			$	2,309			$	2,394			$	1,014
Basic earnings per share		$	0.17			$	0.07			$	0.08			$	0.03
Diluted earnings per share		$	0.16			$	0.07			$	0.08			$	0.03
Weighted average number of shares used in computing basic earnings per share (in thousands)			28,884				31,791				28,609				31,596
Weighted average number of shares used in computing diluted earnings per share (in thousands)			30,041				32,822				29,733				32,608

AudioCodes Reports Second Quarter 2018 Results Page 6 of 9

AudioCodes Press Release

AUDIOCODES LTD. AND ITS SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

U.S. dollars in thousands, except per share data

		Six months ended								Three months ended
		June 30,								June 30,
		2018				2017				2018				2017
		(Unaudited)								(Unaudited)
GAAP net income		$	4,828			$	2,309			$	2,394			$	1,014
GAAP earnings per share		$	0.16			$	0.07			$	0.08			$	0.03
Cost of revenues:
Share-based compensation (1)			87				42				48				17
Amortization expenses (2)			348				348				174				174
			435				390				222				191
Research and development, net:
Share-based compensation (1)			264				181				151				86
Deferred payments expenses (3)			-				74				-				63
			264				255				151				149
Selling and marketing:
Share-based compensation (1)			554				540				280				277
Amortization expenses (2)			30				60				15				30
			584				600				295				307
General and administrative:
Share-based compensation (1)			540				346				271				191
Revaluation of earn-out liability (4)			200				-				200				-
			740				346				471				191
Income taxes:
Deferred tax (5)			1,168				1,064				584				634
Non-GAAP net income		$	8,019			$	4,964			$	4,117			$	2,486
Non-GAAP diluted earnings per share		$	0.26			$	0.15			$	0.14			$	0.08

(1) Share-based compensation expenses related to options and restricted share units granted to employees and others.

(2) Excluding amortization of intangible assets related to the acquisitions of Mailvision and Active Communications Europe assets.

(3) Excluding expenses related to deferred payments in connection with the acquisition of Active Communications Europe.

(4) Revaluation of earn-out liability in connection with the acquisition of Active Communications Europe.

(5) 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 Reports Second Quarter 2018 Results Page 7 of 9

AudioCodes Press Release

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

		Six months ended								Three months ended
		June 30,								June 30,
		2018				2017				2018				2017
		(Unaudited)								(Unaudited)
Cash flows from operating activities:
Net income		$	4,828			$	2,309			$	2,394			$	1,014
Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			1,105				1,260				565				605
Amortization of marketable securities premiums and accretion of discounts, net			188				329				85				168
Decrease in accrued severance pay, net			(139	)			(52	)			(186	)			(248	)
Share-based compensation expenses			1,445				1,109				750				571
Decrease (increase) in accrued interest and exchange rate effect of loans, marketable securities and bank deposits			(15	)			215				(30	)			218
Decrease in long-term deferred tax assets			1,126				1,022				563				613
Increase in trade receivables, net			(2,895	)			(109	)			(3,284	)			(1,165	)
Decrease (increase) in other receivables and prepaid expenses			(1,070	)			(4,181	)			664				(729	)
Decrease (increase) in inventories			(2,086	)			390				(1,115	)			497
Increase (decrease) in trade payables			458				(2,701	)			296				(137	)
Increase in other payables and accrued expenses			881				1,657				1,962				1,711
Increase (decrease) in deferred revenues			6,656				1,969				(468	)			(761	)
Net cash provided by operating activities			10,482				3,217				2,196				2,357
Cash flows from investing activities:
Investment in short-term deposits, net			(399	)			-				(399	)			-
Proceeds from redemption of marketable securities			1,577				850				850				850
Purchase of property and equipment			(616	)			(646	)			(336	)			(183	)
Net cash provided by investing activities			562				204				115				667

AudioCodes Reports Second Quarter 2018 Results Page 8 of 9

AudioCodes Press Release

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

		Six months ended								Three months ended
		June 30,								June 30,
		2018				2017				2018				2017
		(Unaudited)								(Unaudited)
Cash flows from financing activities:
Purchase of treasury shares			(10,511	)			(10,182	)			(3,287	)			(2,850	)
Repayment of bank loans			(1,262	)			(1,925	)			(626	)			(940	)
Payment related to the acquisition of ACS			(151	)			-				-				-
Proceeds from issuance of shares upon exercise of options and warrants			1,677				1,533				231				247
Net cash used in financing activities			(10,247	)			(10,574	)			(3,682	)			(3,543	)
Net increase (decrease) in cash, cash equivalents, and restricted cash			797				(7,153	)			(1,371	)			(519	)
Cash, cash equivalents and restricted cash at beginning of period			31,181				33,152				33,349				26,518
Cash, cash equivalents and restricted cash at end of period		$	31,978			$	25,999			$	31,978			$	25,999

AudioCodes Reports Second Quarter 2018 Results Page 9 of 9