AudioCodes(US:AUDC)2020-01-28 18:25Financial Data and Key Metrics Changes - Revenues for Q4 2019 were $52.8 million, a 2.7% increase from the prior quarter and a 15.3% increase year-over-year. Full year 2019 revenues increased by 13.7% to $200.3 million [8][11] - GAAP net loss for Q4 2019 was $8.2 million or $0.28 per share, compared to net income of $4.5 million or $0.15 per share in Q4 2018. Full year 2019 GAAP net income was $4 million or $0.13 per share [11][12] - Non-GAAP net income for Q4 2019 was $8.1 million or $0.26 per share, compared to $6.3 million or $0.20 per share in Q4 2018. Full year 2019 non-GAAP net income was $27.8 million or $0.89 per share [12][13] Business Line Data and Key Metrics Changes - Service revenues for Q4 2019 were $17.5 million, accounting for 32.2% of total revenues, with a 14.7% increase year-over-year [8] - The networking business grew 17.7% year-over-year to $191.7 million, accounting for 96% of total business in 2019. The UC-SIP business line grew above 20% in 2019, contributing about $110 million [22][23] - The gateway business grew above 10% in 2019, reaching approximately $70 million [23] Market Data and Key Metrics Changes - Revenue by geographical region for Q4 2019: North America 39%, EMEA 36%, Central and Latin America 12%, and Asia Pacific 13% [9] - The Microsoft ecosystem contributed about 40% of Q4 revenue, with a 16% growth year-over-year [30] Company Strategy and Development Direction - The company aims for continued revenue growth and operating margin expansion in 2020, with revenue guidance set between $214 million to $222 million [15][36] - The focus is on providing comprehensive solutions in the unified communication all-IP markets, with expectations for further growth driven by the transition from PSTN to All-IP [19][20] - Investment in new growth engines such as Voice.ai is ongoing, with expectations for significant growth in the coming years [21][44] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential in 2020, citing strong business momentum and execution in 2019 [74] - The company does not expect significant impact from potential economic developments due to the coronavirus at this stage [36] - Management highlighted the importance of the Voice.ai business and its potential for future growth, with substantial investments being made [44][46] Other Important Information - The company has a strong balance sheet with cash, cash equivalents, and bank deposits totaling $71.9 million as of December 31, 2019 [13] - Days sales outstanding as of December 31, 2019 were 48 days [14] Q&A Session Summary Question: What is the outlook for the Microsoft Business and Teams? - Management noted that several features for voice implementation in Teams are expected to be completed in the first half of 2020, which could accelerate growth compared to the 12% seen in 2019 [40][41] Question: What is the revenue contribution from Voice.ai and future growth expectations? - Voice.ai generated above $2 million in sales in 2019, with expectations for a 50% to 100% increase in 2020. The investment in this area was about $4.5 million in 2019 [43][44] Question: How should Q1 revenue be modeled relative to Q4? - Management suggested planning for a modest decline of around 2%, but acknowledged the potential for growth based on past performance [49][50] Question: What impact did the royalty agreement have on non-GAAP gross margin in Q4 2019? - The royalty agreement had a positive impact on non-GAAP gross margin in Q4 2019, contributing several hundred thousand dollars [51][52] Question: What is the current tax status in the U.S. and Israel? - Expected cash tax payments in the next one or two years are not expected to exceed $1 million due to net operating losses and deferred tax assets [72]