AudioCodes beats analysts, provides strong 2018 guidance

Shabtai Adlersberg Photo: Tamar Matsafi
Shabtai Adlersberg Photo: Tamar Matsafi

CEO: The shekel-dollar problem prevented us from giving even higher guidance.

"We exceeded our expectations in 2017 and continued growing, while developing new directions for ourselves at the same time," AudioCodes Ltd. (Nasdaq: AUDC; TASE: AUDC) founder, president, and CEO Shabtai Adlersberg said today. The company today published its reports for the fourth quarter and all of 2017, which outstripped the market's forecasts, and added positive guidance for 2018. The company, which provides Voice over Internet Protocol (VoIP) solutions, posted $41.1 million in revenue in the fourth quarter, 9.7% more than in the fourth quarter of 2016. Revenue grew 7.7% to $157 million in 2017, close to the upper limit of the company's guidance. Revenue from products was up 5.1% over 2016, and revenue from services jumped 13.8%.

In the bottom line, AudiCodes posted a $672,000 GAAP net profit in the fourth quarter and a $4 million GAAP net profit for all of 2017, less than its profit in 2016, when the company received a tax benefit. The company's non-GAAP net profit totaled $3.8 million in the fourth quarter and $12.2 million for 2017 as a whole, 45% more than in the fourth quarter of 2016 and 28.9% more than in 2016 as a whole, respectively.

During the year, AudioCodes generated $17.8 million from activity, and had $55 million in cash at the end of 2017. AudioCodes used $25.6 million to buy back its shares over the past year, including $9 million in the fourth quarter, at an average price of $6.90 per share. The current share price is $7.70, reflecting a $238 million market cap on Nasdaq and the Tel Aviv Stock Exchange (TASE).

Under its existing plan, AudioCodes had $16.8 million more to use on buying back its shares as of the end of 2017. "In recent years, this was a priority investment for us," Adlersbeg said. At the same time, he noted that the company is now starting to think twice about buying back more shares, given its entry into a new field of business and its founding of a new business unit - Voice.AI.

"We regard ourselves as the leaders in the Voice on Enterprise market. Up until now, this was in connectivity spheres, and now we will also go for the bigger part of the market - voice interactions in an organization," Adlersberg says.

"AudioCodes is today a roof for two activities. The traditional activity is responsible for 98% of the activity, and there we're the most mature, strong, and dominating business unit in the market. Inside, we have strengthened two startup activities: voice identification and recordings. In recent months, we have begun to also integrate artificial intelligence and machine learning capabilities in order to handle the interactions of speech in the organizational sphere. The data is currently handled well, but conversations and discussions are usually not saved. We'll handle voice and increasing efficiency with analytics, identification of key words, and so forth. With all of this, we're optimistic for 2018."

The company's guidance for 2018 is higher than the analysts' forecasts. AudioCodes is projecting $166-172 million in revenue (5.9-9.7% growth over 2017), with a net profit of $0.41-0.46 per share. "Only the shekel-dollar problem prevented us from giving even higher guidance," Adlersberg declared.

The strengthening of the shekel against the dollar also affected the company in the fourth quarter. "We had currency hedges in the first half of the year at the NIS 3.70-3.80/$ level, and it was at NIS 3.50/$ in the fourth quarter," Adlersberg said. "Without this deterioration, our profit margin would have been even higher. I hope the situation improves. I call on everyone who can to lend a hand - the Bank of Israel and measures by the Ministry of Finance. A more responsible policy is needed, because industry, and certainly the high-tech industry, is what the country depends on for growth. It would be a pity for it to suffer damage because of movements of capital, some of which are speculative, and some of which can be handled differently."

Published by Globes [online], Israel Business News - www.globes-online.com - on January 24, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Shabtai Adlersberg Photo: Tamar Matsafi
Shabtai Adlersberg Photo: Tamar Matsafi
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