AudioCodes(US:AUDC)2023-02-07 19:16Financial Data and Key Metrics Changes - Revenues for Q4 2022 were $17.7 million, a 6.9% increase from $16.6 million in Q4 2021. Full year 2022 revenues were $275.1 million, up 10.5% from $248.9 million in 2021 [7][8] - GAAP gross margin for Q4 2022 was 65.3%, down from 67.2% in Q4 2021. Full year 2022 operating income was $31.3 million compared to $39.5 million in 2021 [8][9] - Non-GAAP net income for Q4 2022 was $11.9 million or $0.36 per diluted share, compared to $13.4 million or $0.39 per diluted share in Q4 2021. Full year 2022 non-GAAP net income was $45 million or $1.35 per diluted share, down from $51.8 million or $1.50 per diluted share in 2021 [9][10] Business Line Data and Key Metrics Changes - Services revenues for Q4 2022 were $28.6 million, a 17.2% increase year-over-year, accounting for 40.5% of total revenues. Annual service revenues increased by 18.1% compared to the previous year [7][8] - Microsoft business grew 18% year-over-year, with Microsoft Teams up 30% year-over-year. Zoom business grew over 50% year-over-year [12][13] - CX business grew 3% year-over-year, with direct enterprise customers growing 13% year-over-year, excluding OEM revenue [12][16] Market Data and Key Metrics Changes - Revenue by geographical region for Q4 2022: North America 47%, EMEA 35%, Asia-Pacific 14%, and Central and Latin America 4% [8] - The top 15 customers represented 57% of revenues in Q4 2022, with 42% attributed to the 10 largest distributors [8] Company Strategy and Development Direction - The company is focusing on enterprise AI and VoiceAI as major growth drivers, with expectations for significant growth in the coming years [12][26] - The strategy includes migrating traditional CapEx to OpEx, with total contract value for live subscriptions exceeding $100 million, up from $90 million in the previous quarter [15][16] - The company aims to leverage digital transformation and vendor consolidation in core UC and CX markets, particularly with partners like Microsoft, Genesys, and Zoom [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2023, expecting revenue growth in the range of $286 million to $300 million, which translates to 4% to 9% growth [11][19] - The company anticipates improved operating margins due to lower component costs and favorable currency conversion rates [35][44] - Management noted that January 2023 showed stronger performance compared to December 2022, indicating potential for growth [20][34] Other Important Information - The company declared a cash dividend of $0.18 per share, totaling approximately $5.7 million, to be paid on March 7, 2023 [10] - The company ended 2022 with 966 employees, with no increase in headcount during Q4 2022 [11][19] Q&A Session Summary Question: How has macro impacted AudioCodes and what are the expectations for 2023? - Management noted a deceleration in growth, with expectations for 2023 to be below 10% growth, but January showed positive signs [33][34] Question: What was the trend in Microsoft revenue specifically for Teams in Q4? - Microsoft revenue grew by 10% quarter-over-quarter, with Teams accounting for about 90% of this amount [39] Question: How should the company balance growth investments with slower growth expectations in 2023? - Management indicated plans to maintain investments in VoiceAI while managing expenses, expecting OpEx to average around $35 million for 2023 [40][41] Question: What is the outlook for CX business and OEM-related revenue? - OEM revenue has declined to 10% of total CX revenues, with a focus on migrating customers from on-prem to cloud solutions [46][52] Question: How is the mix between CapEx and Live Teams revenue trending? - The trend is moving towards Live, with Live Teams growing 35% year-over-year compared to 8.9% for CapEx Teams [48][49]