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01/11 03:22
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The decision to withdraw guidance due to tariff and macroeconomic uncertainties, combined with the potential need for additional financing, raises concerns. The slight revenue increase and share buyback are positive, but geopolitical risks and unclear management responses in Q&A add to the negative sentiment. The dividend declaration is overshadowed by the broader uncertainties.
Revenue $60.4 million, an increase of 0.5% over $60.1 million in Q1 2024.
Services Revenue $32.6 million, up 3.4% over the year-ago period.
Deferred Revenue $81.3 million compared to $80.5 million as of March 31, 2024.
Gross Margin (GAAP) 64.8%, compared to 64.4% in Q1 2024.
Operating Income (GAAP) $3.6 million or 6% of revenues, compared to $3.3 million or 5.5% of revenues in Q1 2024.
EBITDA (GAAP) $4.6 million, compared to $3.8 million for Q1 2024.
Net Income (GAAP) $4 million or $0.13 per diluted share, compared to $2.1 million or $0.07 per diluted share for Q1 2024.
Non-GAAP Gross Margin 65.2%, flat compared to Q1 2024.
Non-GAAP Operating Income $5.4 million or 8.9% of revenues, compared to $6.3 million or 10.5% of revenues in Q1 2024.
Non-GAAP EBITDA $6.2 million, compared to $6.7 million for Q1 2024.
Non-GAAP Net Income $4.7 million or $0.15 per diluted share, compared to $5.2 million or $0.17 per diluted share in Q1 2024.
Cash and Cash Equivalents $95.7 million at the end of March 2025.
Net Cash from Operating Activities $13.5 million for the first quarter of 2025.
Days Sales Outstanding 107 days as of March 31, 2025.
Share Buyback Acquired 500,000 ordinary shares for approximately $5.2 million.
Tariff Impact Estimated additional cost burden of approximately $3 million for the full year 2025.
Annual Recurring Revenue (ARR) $67 million compared to $53 million in the year-ago period.
Total Contract Value $18 million, growth of about 5% compared to the year-ago quarter.
Non-GAAP Operating Expenses $34 million, up from $32.9 million in the year-ago quarter.
Adjusted EBITDA Margin 10.3%, compared to 11.2% in Q1 2024.
New Product Launches: Launched Meeting Insights On-Prem, an industry-first solution targeting security-sensitive environments, allowing organizations to produce secure meeting recaps without cloud services.
AI-Powered Voice Services: Continued investment in conversational AI initiatives, with a focus on integrating GenAI into the Live managed services platform.
Market Expansion: Gained interest from large global system integrators for conversational AI business voice services, indicating potential deployments.
Geographical Revenue Distribution: Revenue split: North America (48%), EMEA (34%), Asia Pacific (14%), Central and Latin America (4%).
Operational Efficiency: Achieved a gross margin of 64.8%, up from 64.4% in Q1 2024, and operating income increased to $3.6 million.
Cost Management: Estimated tariff-related cost impact of $3 million to $4 million for 2025, with steps taken to mitigate by relocating manufacturing.
Strategic Shift: Transitioning focus towards AI-powered voice services and cloud solutions, with a target of 50% growth in conversational AI for the year.
Partnership Development: Secured a contract with a top five global business consulting firm, enhancing market presence.
Global Economic Conditions: Risks related to global economic conditions and their impact on AudioCodes' industry and target markets, including shifts in supply and demand.
Competitive Pressures: Impact of competitive products and pricing on AudioCodes and its customers' products and markets.
Product Development: Risks associated with timely product and technology development, upgrades, and the ability to manage changes in market conditions.
Financing Needs: Possible need for additional financing and the ability to satisfy covenants in the company's loan agreements.
Acquisition Integration: Challenges related to disruptions from acquisitions and the successful integration of acquired companies into AudioCodes' business.
COVID-19 Impact: Potential adverse impact of the COVID-19 pandemic on business operations and results.
Geopolitical Risks: Effects of current terrorist attacks and regional conflicts involving Israel, which may affect operations and limit the ability to produce and sell solutions.
Military Service Disruptions: Disruption in operations due to personnel obligations to perform military service as a result of military actions involving Israel.
Tariff Impacts: Estimated additional cost burden of $3 million to $4 million for 2025 due to tariffs, with a significant impact on hardware revenues.
Withdrawal of Guidance: Decision to withdraw previously provided annual guidance due to the fluidity of the tariff situation and associated macroeconomic uncertainty.
Strategic Initiatives: Focus on two key strategic initiatives: 1) Grow connectivity business, which provides roughly 95% of revenue and has an operating margin above 15%. 2) Invest in conversational AI initiatives and AI-powered voice services, targeting 50% growth for the full year.
Growth in AI-Powered Services: The company is transitioning to AI-powered voice services, with a strong pipeline and interest from global system integrators.
Microsoft and Cisco Partnerships: Continued success in Microsoft Teams and Cisco Webex environments, with expectations of significant contributions to revenue in the second half of 2025.
Revenue Guidance: With the fluidity of the tariff situation, the company has withdrawn its previously provided annual guidance and plans to resume once tariff rates are determined.
Tariff Impact: Estimated total cost burden from tariffs for 2025 is between $3 million to $4 million.
Profitability Metrics: Non-GAAP gross margin for Q1 2025 was 65.2%, with operating expenses rising due to investments in conversational AI.
Future Revenue Expectations: The company targets 50% growth in conversational AI for the full year, with overall revenue growth of 10% year-over-year in Q1 2025.
Dividend Declared: On February 4, 2025, a cash dividend of $0.18 per share was declared.
Dividend Amount: The total aggregate amount of the dividend was approximately $5.5 million, paid on March 6, 2025.
Share Buyback Program: During the quarter, AudioCodes acquired 500,000 of its ordinary shares for a total consideration of approximately $5.2 million.
Court Approval for Share Buyback: In December 2024, court approval was received to purchase up to an aggregate amount of $20 million of additional ordinary shares.
Share Buyback Validity: The court approval for share buyback is valid through June 14, 2025.
The earnings call reflects a positive outlook with strategic growth plans, particularly in the conversational AI segment and Microsoft Teams business. Despite a slight decline in some financial metrics, the company shows strong revenue growth potential and a stable financial position. The dividend declaration and share repurchase program further enhance shareholder value. The Q&A session highlights favorable pricing power in the emerging Voice AI market. Overall, these factors suggest a positive stock price movement in the near term.
The earnings call presents a mixed picture. Positive aspects include growth in services revenue and strong cash flow generation. However, there are concerns about declining margins, increased operating expenses, and tariff-related costs. The withdrawal of revenue guidance also adds uncertainty. The Q&A section reveals optimism about future growth, especially in AI and partnerships, but lacks specific data. Overall, the sentiment is balanced by positive long-term prospects and short-term challenges, leading to a neutral rating.
The earnings call summary highlights several concerns: AudioCodes missed EPS expectations, faces geopolitical risks affecting operations, and acknowledges various uncertainties such as economic conditions and competitive pressures. The Q&A revealed plans to move manufacturing out of China, which might mitigate some risks, but unclear responses about pricing and tariffs add uncertainty. Overall, the negative earnings miss, geopolitical risks, and operational challenges outweigh potential positives, suggesting a likely negative stock price movement.
The decision to withdraw guidance due to tariff and macroeconomic uncertainties, combined with the potential need for additional financing, raises concerns. The slight revenue increase and share buyback are positive, but geopolitical risks and unclear management responses in Q&A add to the negative sentiment. The dividend declaration is overshadowed by the broader uncertainties.
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