Release Date: February 04, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- AudioCodes Ltd (AUDC, Financial) reported a 2.2% increase in fourth-quarter revenues compared to the previous quarter, indicating positive momentum.
- The company's services revenues grew by 5.4% in the fourth quarter, highlighting strong performance in this segment.
- AudioCodes Ltd (AUDC) achieved a significant increase in non-GAAP net income for the fourth quarter, reaching $11.6 million compared to $4.9 million in the previous quarter.
- The company declared a cash dividend of $0.18 per share, reflecting confidence in its financial stability.
- AudioCodes Ltd (AUDC) is optimistic about 2025, expecting revenue growth driven by AI and generative AI-powered value-added services.
Negative Points
- Full year 2024 revenues decreased by 0.9% compared to 2023, indicating a slight decline in overall performance.
- Operating income for the fourth quarter decreased to $4.1 million from $4.9 million in the previous quarter, showing a decline in profitability.
- The company experienced a slowdown in hardware product sales due to challenging economic conditions and a transition to a recurring business model.
- AudioCodes Ltd (AUDC) faces potential risks from geopolitical tensions in Israel, which could impact operations.
- The company is still in the investment phase for its Voice.ai business, which has influenced overall financial performance and bottom line.
Q & A Highlights
Q: Can you help us understand what is driving your confidence for improved top line growth in 2025 and beyond? Are customers more optimistic about their spend in 2025? Or is this being driven by AudioCodes' AI opportunity?
A: We have seen a pickup in the fourth quarter in new projects and bookings, with a record backlog of total contract value signed for more than $20 million. The advent of Gen AI and Copilot technology is expected to drive more enterprises to adopt AI, leading to increased deployments of Microsoft Teams phone in the market.
Q: How did CCaaS demand fare compared to 3Q, and are you seeing increased attention from buyers on voice AI?
A: We are substantially increasing the capacity of our Live CX services, addressing a market gap created by the move to cloud. We have identified increased interest in AI applications for contact center recordings, which allows for better analysis and insights from calls.
Q: What kind of trend are you seeing relative to operator voice connections into Teams? Are you seeing a trend over toward this new Operator Connect capability or still a lot of direct routing?
A: There is a shift towards using Operator Connect over direct routing, particularly among smaller organizations. However, we have not seen a significant increase in usage in the market yet.
Q: Can you talk about the differentiation between AudioCodes Meeting Insights for Zoom Meetings and Zoom's in-house AI companion?
A: Meeting Insights is designed to be UC-agnostic, allowing it to integrate sessions from various platforms like Microsoft Teams, Cisco WebEx, Zoom, and Google Meet. This centralized solution is tailored for large enterprises with complex requirements, offering more extensive and detailed solutions compared to Zoom's AI companion.
Q: Can you help us think about the revenue mix for next year and the transition to more recurring revenue?
A: In 2024, we saw stabilization in the decline of legacy business, and we expect this trend to continue in 2025. We anticipate increased use of services and growth in Voice.ai revenues, targeting a 50% increase. The combination of stabilizing legacy business and emerging Voice.ai solutions positions us well for growth in 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
