Audiocodes ((AUDC)) has held its Q4 earnings call. Read on for the main highlights of the call.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
The recent earnings call for AudioCodes painted a picture of mixed results, showcasing both achievements and challenges. The company reported growth in key business segments like services, Microsoft business, and Voice AI, suggesting positive momentum. However, the overall revenue for the year experienced a slight decline, and increased expenses impacted profitability. Despite these hurdles, the company remains optimistic about future growth, particularly in the AI-driven value-added services sector.
Increase in Q4 2024 Revenue
Revenues for the fourth quarter of 2024 showed a slight improvement, reaching $61.6 million, which is a 2.2% increase compared to the $60.2 million reported in the third quarter. This growth indicates a positive trend for the company as it heads into the new fiscal year.
Growth in Services Revenue
Services revenues demonstrated significant growth in the fourth quarter, amounting to $34.2 million, a 5.4% increase from the third quarter’s $32.5 million. This sector now constitutes 55.6% of total revenues, highlighting its importance to the company’s financial health.
Strong Microsoft Business Performance
The Microsoft business segment showed robust performance, growing by 13% in the fourth quarter, marking its highest quarterly growth rate of the year. For the entire year, the segment grew by 6%, showcasing its steady contribution to AudioCodes’ overall performance.
Increase in Annual Recurring Revenue
AudioCodes ended 2024 with an annual recurring revenue of $65 million, representing a 35% year-over-year growth. This increase underscores the company’s focus on building a sustainable and predictable revenue stream.
Voice AI Business Growth
The Voice AI business experienced a substantial growth rate of 30% in 2024, contributing 5% to total revenue. Looking ahead, the company expects this segment to grow by 40% to 50% in 2025, signaling its strategic importance in AudioCodes’ growth plans.
Cash Dividend Announcement
In a positive move for shareholders, AudioCodes declared a cash dividend of $0.18 per share, with a total aggregate amount of approximately $5.3 million, reflecting the company’s commitment to returning value to its investors.
Full Year Revenue Decline
Despite quarterly improvements, full-year 2024 revenues saw a slight decline, dropping by 0.9% to $242.2 million from $244.4 million in 2023. This decline highlights ongoing challenges in certain business areas.
Reduction in Operating Income
The operating income for the fourth quarter fell to $4.1 million, down from $4.9 million in the third quarter of 2024. This reduction was influenced by increased operating expenses.
Increased Operating Expenses
Non-GAAP operating expenses rose to $33.4 million in the fourth quarter, up from $32.5 million in Q3. The increase was primarily due to heightened investment in marketing, travel, and cloud services.
Slower Transition in Legacy Business
The connectivity business, which still represents about 95% of revenue, is experiencing a slower transition to newer technologies. This highlights the challenges AudioCodes faces in evolving its business model.
Forward-Looking Guidance
AudioCodes provided guidance for the full year of 2025, projecting revenues between $246 million and $254 million and a non-GAAP EBITDA ranging from $34 million to $38 million. The company also noted the strategic shift towards AI-driven value-added services, with expectations for significant growth in its Voice AI segment.
In conclusion, the earnings call for AudioCodes captured a blend of growth and challenges. While the company faces hurdles such as a slight revenue decline and increased expenses, the positive momentum in key sectors like services and Voice AI, along with optimistic forward-looking guidance, provides a hopeful outlook for the future.
