Financial Performance - Total revenues reached $61.5 million, a 2.2% year-over-year increase compared to $60.2 million in 3Q'24 [8] - Non-GAAP gross margin was 65.8%, slightly up from 65.6% in 3Q'24 [8] - Non-GAAP operating margin stood at 9.5%, compared to 11.7% in 3Q'24 [8] - Non-GAAP EBITDA margin was 11.2%, down from 13.1% in 3Q'24 [8] - Non-GAAP EPS was $0.17, a slight increase from $0.16 in 3Q'24 [8] - The company's Live ARR increased by approximately 25% year-over-year [10] Business Segment Performance - Customer Experience (CX) business experienced a 13% year-over-year increase [10] - Conversational AI business saw a significant 50% year-over-year increase [10] - Microsoft Teams business decreased by 1.4% year-over-year, but increased 4% for the first nine months of 2025 [10] Additional Financial Data - Non-GAAP net income was $4.882 million for the three months ended September 30, 2025, compared to $5.681 million for the same period in 2024 [27]

Core Insights - AudioCodes reported a revenue increase of 2.2% year-over-year for Q3 2025, reaching $61.5 million compared to $60.2 million in Q3 2024 [2][6] - The company achieved a 50% growth in its Conversational AI (CAI) business, contributing to an Annual Recurring Revenue (ARR) of $75 million, a 25% year-over-year increase [8][9] - AudioCodes' strategic focus on AI-driven, hybrid cloud software and services is evident in its ongoing transformation and investment in high-growth areas [6][11] Financial Performance - EBITDA for Q3 2025 was $5.2 million, down from $5.9 million in Q3 2024; on a Non-GAAP basis, EBITDA was $6.9 million compared to $7.9 million [2][3] - Net income for Q3 2025 was $2.7 million, or $0.10 per diluted share, consistent with the previous year, while Non-GAAP net income was $4.9 million, or $0.17 per diluted share, up from $0.16 [3][6] - Cash and cash equivalents decreased to $79.7 million as of September 30, 2025, from $93.9 million at the end of 2024, primarily due to share repurchases and dividend payments [5][12] Business Segments - Services revenue for Q3 2025 was $30.9 million, accounting for 50.3% of total revenues, indicating a strong performance in service offerings [6] - The Live family of services for Unified Communications and Collaboration (UCC) and CAI business are identified as primary growth engines for the company [7][8] - The launch of the Live Platform has resulted in a significant agreement with a tier-1 system integrator, enhancing cross-selling opportunities [9] Shareholder Returns - The company declared a cash dividend of $0.20 per share, totaling approximately $5.6 million, paid on August 28, 2025 [12] - During Q3 2025, AudioCodes repurchased 1,267,436 ordinary shares at a cost of $12.7 million, reflecting its commitment to returning value to shareholders [6][12] Future Outlook - AudioCodes aims to achieve a full-year ARR target of $78-$82 million, supported by the growth in its CAI business and strategic investments [8][11] - The company has received court approval to repurchase up to $25 million of ordinary shares, valid through April 28, 2026, indicating ongoing confidence in its financial position [13]

Core Viewpoint - AudioCodes Ltd (AUDC) is currently under cautious observation with a Hold rating, reflecting concerns about its performance in the voice AI software sector [1]. Company Analysis - The last analysis on AudioCodes was conducted in February 2024, where the cautious stance was reiterated [1]. - The company is identified as an Israeli firm specializing in voice AI software [1]. Investment Strategy - The investment approach focuses on acquiring undervalued, profitable stocks with strong balance sheets and minimal debt [1]. - There is an emphasis on generating income through writing calls against positions when opportunities arise [1]. - Risk management strategies include position sizing and the use of trailing stop losses over time [1].

Core Points - AudioCodes will release its financial results for the Third Quarter 2025 on November 04, 2025, before the market opens on NASDAQ [1] - A conference call to discuss the results will take place on the same day at 8:30 a.m. Eastern Time, hosted by the President and CEO, Shabtai Adlersberg, and CFO, Niran Baruch [2] - Investors can access the call live via phone or webcast, with a replay available approximately two hours after the call [3] Company Overview - AudioCodes is a global leader in unified communications, voice, contact center, and conversational AI services, enhancing customer and employee experiences through improved communication and collaboration [5] - The company offers a wide range of products and SaaS services that ensure interoperability with major UCaaS and CCaaS platforms, including Microsoft Teams, Webex, and Zoom [5] - AudioCodes serves enterprises worldwide, including 65 Fortune 100 companies, focusing on productivity, collaboration, business process automation, compliance, and customer interaction [5]

Core Insights - AudioCodes Ltd. (AUDC) has launched the AI Agents module in Live Hub to improve customer satisfaction and time-to-resolution [1][7] - The AI Agents module allows enterprises to create, integrate, and operate large language model (LLM)-powered voice bots, enhancing customer engagement and reducing service costs [1][2] - Live Hub consolidates various functionalities such as Conversational IVR, Voice AI Agents, Live-Agent Assist, and real-time translation into a single cloud platform, facilitating seamless deployment of Voice AI [2][7] Company Overview - AudioCodes, established in 1992 and based in Lod, Israel, provides advanced communications software and productivity solutions for the digital workplace, including session border controllers and VoIP network routing solutions [3] - The company is positioned to benefit from the growing trend towards IP-based communications and aims to strengthen its market presence through a long-term partnership with Microsoft Corporation [4] Industry Context - The introduction of AI Agents is expected to enhance voice automation capabilities at scale, improving caller authentication and workflow efficiency [2][7] - Other key players in the communications space include Ooma, Inc. and Harmonic Inc., both of which are focusing on cloud-based solutions and innovative product offerings to drive growth [5][6]

Core Insights - AudioCodes has launched a new module called AI Agents for its Live Hub Voice CPaaS, enabling enterprises to create and manage LLM-powered voice bots, which can enhance customer engagement and reduce operational costs [2][6][8] Industry Context - The customer support industry is facing challenges such as rising costs, staffing constraints, and increasing customer expectations, prompting a shift towards Voice AI to automate routine calls and improve service efficiency [3] Product Features - The Live Hub platform integrates various applications including Conversational IVR, Voice AI Agents, Live-Agent Assist, and real-time translation, allowing enterprises to leverage existing telephony systems without needing extensive upgrades [4][8] - AI Agents facilitate natural conversations, secure API integration, and modular workflow orchestration, which can lead to improved customer satisfaction and faster resolution times [9] Business Impact - The introduction of AI Agents is expected to significantly enhance AudioCodes' Voice AI business, positioning the company for future growth by providing a unified platform for modernizing customer interactions [6][10]

Group 1 - BBB Foods Inc. operates grocery retail stores primarily in Mexico, with a current year earnings estimate revised downward by 33.3% over the last 60 days [1] - AudioCodes provides advanced voice networking and media processing solutions for the digital workplace, with its current year earnings estimate revised downward by almost 29.7% over the last 60 days [1] - AG Mortgage Investment Trust is a real estate investment trust that invests in and manages residential mortgage assets, with its current year earnings estimate revised downward by 7.5% over the last 60 days [2]

Financial Data and Key Metrics Changes - Revenues for Q2 2025 were $61.1 million, an increase of 1.3% compared to $60.3 million in Q2 2024 [8] - GAAP gross margin for the quarter was 64.1%, down from 65.5% in Q2 2024 [10] - Non-GAAP net income for Q2 was $4.1 million or $0.14 per diluted share, compared to $5.5 million or $0.18 per diluted share in Q2 2024 [12] - Net cash provided by operating activities was $7.7 million for the quarter [12] Business Line Data and Key Metrics Changes - Services revenues for Q2 were $32.6 million, up 1.9% year over year, accounting for 53.3% of total revenues [9][17] - Life Managed Services grew 25% year over year, reaching $70 million in annual recurring revenues [18] - Non-GAAP operating income for Q2 was $4.4 million or 7.2% of revenues, down from $7.2 million or 11.9% of revenues in Q2 2024 [11] Market Data and Key Metrics Changes - Revenue by geographical region: North America 48%, EMEA 34%, Asia Pacific 14%, Central and Latin America 4% [9] - Microsoft Teams business grew 6.5% year over year, contributing significantly to enterprise UC and CX revenue [16][27] Company Strategy and Development Direction - The company is transitioning to an AI-driven hybrid cloud software and services model, focusing on connectivity and AI-powered business applications [15][41] - The launch of the next-generation live platform aims to enhance managed services and integrate AI capabilities [18][19] - The company plans to increase marketing and sales efforts in the Webex Calling space following recent certifications [32] Management's Comments on Operating Environment and Future Outlook - Management noted that despite tariff challenges, customer purchasing behavior remains stable, and the pipeline for opportunities is strong [25][26] - The company will postpone issuing a financial outlook until there is better clarity on tariff rates [25] - Management expressed confidence in the growth trajectory of the business, particularly in the UCaaS and CX markets [41] Other Important Information - The company declared a cash dividend of $0.20 per share, totaling approximately $5.7 million, to be paid on August 28, 2025 [13] - The company expects $3 to $4 million in tariff-related costs for the full year 2025 [23] Q&A Session Summary Question: What are you seeing in terms of customer demand for virtual SBCs versus physical hardware following the tariffs? - Management indicated that there has been no significant impact on business decisions regarding SBCs, and they have raised prices to protect margins [44][45] Question: Can you provide more color on the strength of the Microsoft business? - Management highlighted that the growth is driven by a dominant market share in Teams Phone and successful large contract signings [48][49] Question: What is the pipeline for WebEx opportunities? - Management stated that they are early in the process with several opportunities but do not expect significant revenue impact until 2026 [52][53] Question: Did you disclose the second quarter growth rate for conversational AI? - Management did not disclose specific growth rates but expects substantial growth in the second half of the year [57][58] Question: How does AudioCodes differentiate itself in the conversational AI market? - Management emphasized their focus on end-to-end applications and the ability to deploy solutions quickly due to their extensive infrastructure [60][62]

Financial Performance - Total revenues reached $61.1 million in 2Q'25, a 1.3% increase compared to $60.3 million in 2Q'24 [11] - Service revenues grew to $32.6 million in 2Q'25, up 1.9% from $32.0 million in 2Q'24 [12] - Non-GAAP gross margin was 64.5% in 2Q'25, compared to 65.8% in 2Q'24, impacted by $1 million tariff-related cost headwinds [12] - Non-GAAP operating margin stood at 7.2% in 2Q'25, versus 11.9% in 2Q'24 [12] - Non-GAAP EBITDA margin was 8.6% in 2Q'25, down from 13.8% in 2Q'24 [12] - Non-GAAP EPS was $0.14 in 2Q'25, compared to $0.18 in 2Q'24 [12] - Non-GAAP net income for the three months ended June 30, 2025, was $4.080 million, compared to $5.529 million for the same period in 2024 [32] - Non-GAAP diluted net earnings per share for the three months ended June 30, 2025, was $0.14, compared to $0.18 for the same period in 2024 [32] Business Segments - Microsoft Teams business experienced a 6.5% year-over-year increase [15] - Conversational AI business anticipates a strong growth outlook of 40%-50% for 2025 [15] - Live ARR increased by approximately 25% year-over-year [15]

Company Performance - AudioCodes reported quarterly earnings of $0.14 per share, missing the Zacks Consensus Estimate of $0.17 per share, and down from $0.18 per share a year ago, representing an earnings surprise of -17.65% [1] - The company posted revenues of $61.08 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.70%, compared to year-ago revenues of $60.3 million [2] - Over the last four quarters, AudioCodes has surpassed consensus EPS estimates just once, but has topped consensus revenue estimates three times [2] Stock Outlook - AudioCodes shares have increased by approximately 7.8% since the beginning of the year, while the S&P 500 has gained 8.6% [3] - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at $0.20 for the coming quarter and $0.74 for the current fiscal year [7] Industry Context - The Communication - Components industry, to which AudioCodes belongs, is currently ranked in the bottom 26% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact AudioCodes' stock performance [5][6]