AudioCodes(US:AUDC)2024-02-06 19:09Financial Data and Key Metrics Changes - Revenues for Q4 2023 were $63.6 million, a 3.2% increase from $61.6 million in Q3 2023. Full year 2023 revenues decreased by 11.2% to $244.4 million from $275.1 million in 2022 [9][10] - GAAP gross margin for Q4 was 66.7%, slightly up from 66.5% in Q3 2023. Operating income for Q4 was $7.2 million (11.4% of revenues), compared to $5.8 million (9.4% of revenues) in Q3 2023 [11] - Full year 2023 net income was $8.8 million ($0.28 per diluted share), down from $28.5 million ($0.88 per diluted share) in 2022 [12] Business Line Data and Key Metrics Changes - Services revenues for Q4 were $30.9 million, accounting for 48.6% of total revenues. Annual services revenues increased by 8.7% to $120.4 million from $110.8 million in 2022 [10] - The SBC product line generated over $35 million in revenue for Q4, with full year revenue close to $130 million [22] - Customer experience revenue grew by approximately 20% year-over-year for the full year, now representing more than 20% of total business [20] Market Data and Key Metrics Changes - Revenue by geographical regions for Q4: North America 44%, EMEA 37%, Asia Pacific 14%, Central and Latin America 5% [10] - The company experienced a decline in service provider business, with a year-over-year decline of over 60% in Q4 and over 40% for the full year [23] Company Strategy and Development Direction - The company is shifting its business model towards subscription and recurring sales, aiming to increase software and service revenue mix to nearly 70% in 2023, up from 60% in 2022 [16] - Focus on AI-first voice-related software and applications is expected to drive future growth, particularly in the UCaaS and CCaaS markets [17][18] - The company aims to leverage its partnerships with leading application vendors like Microsoft to enhance its market position [17] Management's Comments on Operating Environment and Future Outlook - Management noted that the pipeline for 2024 looks promising, with strong bookings in 2023 compared to 2022, despite a challenging macroeconomic environment [34][35] - The company anticipates revenue growth in 2024, with guidance of $252 million to $267 million, reflecting a mid-range growth of about 6% compared to 2023 [14][26] Other Important Information - The company declared a cash dividend of $0.18 per share, totaling approximately $5.5 million, to be paid on March 6, 2024 [14] - The company has received court approval to repurchase up to $20 million of its ordinary shares [14] Q&A Session Summary Question: How does your pipeline visibility now compare to what it was in 3Q? - Management indicated that there is not much difference in pipeline visibility, with a strong Q4 expected to lead to a slight decline in Q1 2024 [34] Question: How did CCaaS demand fare in the quarter? - Management reported a rise in opportunities in the CCaaS space, with significant deals won in North America [37] Question: What is driving the moderated growth rates from Microsoft? - The moderated growth is attributed to the global economic slowdown and the limited benefit from adding phone functionality to Microsoft Teams [41] Question: What are the penetration rates of voice licensing in the Teams environment? - Current estimates suggest that penetration rates are still below 15%, indicating significant growth potential [44] Question: How do you expect cash conversion to perform in 2024? - Management expects operating cash flow for 2024 to be better than in 2023, following a strong Q4 [46] Question: Can you provide insights on the macro environment and customer verticals? - Management noted that the macro environment remains uncertain, but they are optimistic about growth in the enterprise space, particularly in contact centers and conversational AI [59]