AudioCodes(AUDC) - 2022 Q2 - Quarterly Report

AudioCodes Second Quarter 2022 Results Second Quarter 2022 Financial and Operational Highlights AudioCodes reported $68.4 million in Q2 2022 revenues, up 12.9% year-over-year, driven by strong service and enterprise segment growth Key Financial Highlights | Metric | Q2 2022 | YoY Change | | :--- | :--- | :--- | | Total Revenues | $68.4 million | +12.9% | | Service Revenues | $27.8 million | +21.9% | | GAAP Net Income | $6.9 million | -15.9% | | GAAP Diluted EPS | $0.21 | -12.5% | | Non-GAAP Net Income | $11.3 million | -11.0% | | Non-GAAP Diluted EPS | $0.34 | -8.1% | - The company experienced strong growth in its enterprise segment, with the Microsoft business growing over 20% and the Zoom phone business growing over 50% year-over-year[7] - AudioCodes Live for Microsoft Teams managed services continued its rapid expansion, reaching an Annual Recurring Revenue (ARR) of $24 million, representing 100% growth over the same quarter last year, with Total Contract Value (TCV) for Live projects now exceeding $60 million[7] - The Customer Experience (CX) business rebounded, growing by more than 20% in the quarter, driven by the ongoing digital transformation of contact centers to the cloud[7] Management Commentary Management highlighted strong Q2 execution in UCC and CX, prioritizing R&D and talent investment despite macro and supply chain issues - CEO Shabtai Adlersberg highlighted the company's successful execution on key strategic priorities and the acceleration of its transition to software products and recurring subscription services[5][6] - The company is determined to increase investments in R&D and customer-facing talent to capitalize on new growth opportunities in its core markets[8] - Management believes that ongoing supply chain disruptions are a short-term issue that should be alleviated in the coming quarters[8] Shareholder Returns AudioCodes returned capital to shareholders in Q2 2022 via $8.3 million in share repurchases and an 18 cents per share cash dividend - During the second quarter, the company repurchased 374,479 of its ordinary shares at an aggregate cost of $8.3 million[1][9] - In June 2022, the company received court approval in Israel to purchase up to an additional $35 million of its ordinary shares or declare dividends, valid through December 12, 2022[9] - The Board of Directors declared a cash dividend of 18 cents per share, payable on August 31, 2022, to shareholders of record on August 17, 2022[10] Financial Statements Condensed Consolidated Balance Sheets Total assets decreased to $321.2 million as of June 30, 2022, from $349.4 million at year-end 2021, mainly due to cash used for share repurchases and dividends Condensed Consolidated Balance Sheet Summary | Balance Sheet Item (in thousands) | June 30, 2022 (Unaudited) | December 31, 2021 (Audited) | | :--- | :--- | :--- | | Total current assets | $141,083 | $167,553 | | Total assets | $321,164 | $349,364 | | Total current liabilities | $95,631 | $95,943 | | Total liabilities | $138,351 | $143,866 | | Total shareholders' equity | $182,813 | $205,498 | - Cash, cash equivalents, and various short and long-term deposits and securities totaled $138.5 million as of June 30, 2022, down from $174.8 million as of December 31, 2021, mainly due to share repurchases and dividend payments[5] Condensed Consolidated Statements of Operations Q2 2022 total revenues increased 12.9% to $68.4 million, but operating income and GAAP net income declined due to higher expenses Condensed Consolidated Statements of Operations Summary | Income Statement (in thousands, except EPS) | Q2 2022 (Unaudited) | Q2 2021 (Unaudited) | | :--- | :--- | :--- | | Total Revenues | $68,360 | $60,575 | | Gross Profit | $44,510 | $42,060 | | Operating Income | $7,922 | $10,132 | | Net Income | $6,936 | $8,240 | | Diluted Net Earnings Per Share | $0.21 | $0.24 | Reconciliation of GAAP to Non-GAAP Net Income Q2 2022 Non-GAAP net income was $11.3 million ($0.34 diluted EPS), adjusted from GAAP for share-based compensation and other non-cash items GAAP to Non-GAAP Net Income Reconciliation | Metric (in thousands, except EPS) | Q2 2022 (Unaudited) | Q2 2021 (Unaudited) | | :--- | :--- | :--- | | GAAP Net Income | $6,936 | $8,240 | | Non-GAAP Net Income | $11,346 | $12,674 | | GAAP Diluted EPS | $0.21 | $0.24 | | Non-GAAP Diluted EPS | $0.34 | $0.37 | - Key adjustments from GAAP to Non-GAAP net income for Q2 2022 included: Share-based compensation ($3.9 million), amortization expenses ($0.2 million), and deferred tax ($0.9 million)[23] Condensed Consolidated Statement of Cash Flows Net cash from operating activities decreased to $4.8 million in Q2 2022, with $8.1 million used in financing, mainly for share repurchases Condensed Consolidated Statement of Cash Flows Summary | Cash Flow Activity (in thousands) | Q2 2022 (Unaudited) | Q2 2021 (Unaudited) | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,818 | $17,058 | | Net cash provided by (used in) investing activities | $574 | $(1,814) | | Net cash used in financing activities | $(8,124) | $(7,071) | | Net increase (decrease) in cash | $(2,732) | $8,173 | - The primary use of cash in financing activities was the purchase of treasury shares, amounting to $8.3 million in Q2 2022[28]