AudioCodes Press Release

Company Contacts
Niran Baruch,
Chief Financial Officer
AudioCodes
Tel: +972-3-976-4000
niran.baruch@audiocodes.com

Roger L. Chuchen
VP, Investor Relations
AudioCodes
Tel: 732-764-2552
roger.chuchen@audiocodes.com

AudioCodes Reports Third Quarter 2023 Results
Lod, Israel – November 2, 2023 -Third Quarter Highlights•

Quarterly revenues increased by 2.6% sequentially to $61.6 million.

•

Quarterly Service revenues of $30.6 million accounted for 49.6% of revenues•

GAAP results:oQuarterly GAAP gross margin was 66.5% compared to 64.1% in the prior quarter;o

Quarterly GAAP operating margin was 9.4% compared to 3.8% in the priorquarter; andoQuarterly GAAP net income was $4.3 million, or $0.14 per diluted share compared to $1.1 million, or$0.03 per diluted share, in the prior quarter.

•

Non-GAAP results:oQuarterly Non-GAAP gross margin was 67.3% compared to 64.5% in the prior quarter;o

Quarterly Non-GAAP operating margin was 15.5% compared to 9.5% in the priorquarter; andoQuarterly Non-GAAP net income was $8.3 million, or $0.25 per diluted share, compared to $5.1
million, or $0.16 per diluted share in the prior quarter.

•

Net cash provided by operating activities was $0.2 million for the quarter.

•

AudioCodes declared a cash dividend of 18 cents per share. The dividend, in the aggregate amount of $5.7
million, was paid on August 31, 2023 to shareholders of record on August 17, 2023.

•

AudioCodes repurchased 880,457 of its ordinary shares during the quarter at an aggregate cost of $9.0 million.

Details

AudioCodes Reports Third Quarter 2023 Results

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AudioCodes Press Release

AudioCodes (NASDAQ: AUDC), a leading vendor of advanced communications software, products and productivity
solutions for the digital workplace, today announced its financial results for the third quarter ended September 30,
2023.
Revenues for the third quarter of 2023 were $61.6 million compared to $60.0 million for the second quarter of 2023 and$69.7 million for the third quarter of 2022.
Net income was $4.3 million, or $0.14 per diluted share, for the third quarter of 2023 compared to $1.1 million, or $0.03
per diluted share, for the second quarter of 2023 and $5.4 million, or $0.17 per diluted share, for the third quarter of 2022.
On a Non-GAAP basis, net income was $8.3 million, or $0.25 per diluted share, for the third quarter of 2023 compared to$5.1 million, or $0.16 per diluted share, for the second quarter of 2023 and $10.5 million, or $0.32 per diluted share, forthe third quarter of 2022.
Non-GAAP net income excludes: (i) share-based compensation expenses; (ii) amortization expenses related to intangible
assets; (iii) expenses related to deferred payments in connection with the acquisition of Callverso Ltd; (iv) other income
related to a payment made by the landlord to AudioCodes Inc., a subsidiary of the Company, in connection with thetermination of a lease agreement for its offices in New Jersey; (v) financial income related to exchange rate differencesin connection with revaluation of assets and liabilities in non-dollar denominated currencies; (vi) non-cash deferred tax
expenses (income); and (vii) non-cash lease expense which is required to be recorded during the quarter even though
this is a free rent period under the lease for the Company’s new headquarters. A reconciliation of net income on a GAAP
basis to a non-GAAP basis is provided in the tables that accompany the condensed consolidated financial statements
contained in this press release.
Net cash provided by operating activities was $0.2 million for the third quarter of 2023. Cash and cash equivalents, longand short-term bank deposits, long and short-term marketable securities and long and short-term financial investments
were $102.5 million as of September 30, 2023 compared to $124.3 million as of December 31, 2022. The decrease in cash
and cash equivalents, long and short-term bank deposits, long and short-term marketable securities and long and shortterm financial investments was the result of the use of cash for the continued repurchasing of the Company’s ordinary
shares pursuant to its share repurchase program and the payment of a cash dividend during each of the first and third
quarters of 2023.
“I am pleased to report solid third quarter 2023 results with improved growth in strategic areas of our business,” said
Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes.

AudioCodes Reports Third Quarter 2023 Results

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AudioCodes Press Release

We continued to perform well in our enterprise business, now reaching a record 90% of the company revenues. Microsoftrelated business in the quarter grew 13% year-over-year, with Microsoft Teams business up 21% year over year. We
experienced continued strong momentum of our AudioCodes Live managed services, with ARR growing over 50% yearover-year ending the quarter at $43 million, which means we are on track to achieve our target of $46- $50 million in
2023, representing approximately 50% year-over-year growth.
Additionally, customer experience (CX) performance improved to 13% year-over-year growth in the quarter andconversational AI business bookings grew over 50% year-over-year. Our investments in product innovation inconversational AI are paying off and have successfully positioned our CX segment for faster sustainable top-line
growth. Since the announcement of Microsoft Teams certification of Voca CIC, our lightweight AI-first Teams CCaaS
platform, we have seen a step-up in customer interest and engagement. The success with our CCaaS offering is having apull-through effect on the rest of our conversational AI portfolio, in particular in our Generative AI powered recording
services. We now see rising interest and progress made with our Meeting Insights workflow productivity application andSmartTAP compliance recording.
This strong performance in strategic areas of our business coupled with the flow-through impact of previously announced
initiatives in cost savings drove significant sequential operating margin improvement in the quarter.
Despite the tragic events in Israel over the past three weeks, our global business has continued to operate without material
disruptions due to our diverse global presence, lessons learned during the Covid pandemic, and thanks to the commitment
and dedication of our employees and partners across the world. Moreover, the aforementioned positive businessdevelopments, backed by leading indicators such as pipeline remaining robust, give us increasing confidence in ourpreviously stated commitment to return to top-line growth with meaningful margin expansion in 2024 and beyond,”
concluded Mr. Adlersberg.

Share Buy Back Program and Cash Dividend
In June 2023, the Company received court approval in Israel to purchase up to an aggregate amount of $25 million of
additional ordinary shares. The court approval also permits AudioCodes to declare a dividend out of any part of thisamount. The approval is valid through December 27, 2023.
On August 1, 2023, the Company declared a cash dividend of 18 cents per share. The dividend, in the aggregate amountof approximately $5.7 million, was paid on August 31, 2023 to all of the Company's shareholders of record on August 17,2023.
During the quarter ended September 30, 2023, the Company acquired 880,457 of its ordinary shares under its share
repurchase program for a total consideration of $9.0 million.
As of September 30, 2023, the Company had $10.0 million available under the approval for the repurchase of shares
and/or declaration of cash dividends.

AudioCodes Reports Third Quarter 2023 Results

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AudioCodes Press Release

Conference Call & Web Cast Information
AudioCodes will conduct a conference call at 8:30 A.M., Eastern Time today to discuss the Company's third quarter of2023 operating performance, financial results and outlook. Interested parties may participate in the conference call by
dialing one the following numbers:
United States Participants: 888-506-0062
International Participants: +1 (973) 528-0011
The conference call will also be simultaneously webcast. Investors are invited to listen to the call live via webcast at the
AudioCodes investor website at http://www.audiocodes.com/investors-lobby.
Third quarter of 2023 earnings call supplementary slides will be available during our third quarter 2023 earnings call at
AudioCodes’ investor website at http://www.audiocodes.com/investors-lobby.

Follow AudioCodes’ social media channels:
AudioCodes invites you to join our online community and follow us on: AudioCodes Voice Blog, LinkedIn, Twitter,
Facebook, and YouTube.

About AudioCodes
AudioCodes Ltd. (NASDAQ, TASE: AUDC) is a leading vendor of advanced communications software, products andproductivity solutions for the digital workplace. AudioCodes enables enterprises and service providers to build and operate
all-IP voice networks for unified communications, contact centers, and hosted business services. AudioCodes offers abroad range of innovative products, solutions and services that are used by large multi-national enterprises and leadingtier-1 operators around the world.
For more information on AudioCodes, visit http://www.audiocodes.com.
Statements concerning AudioCodes' business outlook or future economic performance; product introductions and plans and objectives related
thereto; and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters, are"forward-looking statements'' as that term is defined under U.S. Federal securities laws. Forward-looking statements are subject to various risks,
uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. These risks, uncertainties
and factors include, but are not limited to: the effect of global economic conditions in general and conditions in AudioCodes' industry and target
markets in particular; shifts in supply and demand; market acceptance of new products and the demand for existing products; the impact ofcompetitive products and pricing on AudioCodes' and its customers' products and markets; timely product and technology development, upgrades
and the ability to manage changes in market conditions as needed; possible need for additional financing; the ability to satisfy covenants in the
AudioCodes Reports Third Quarter 2023 Results

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AudioCodes Press Release
Company’s loan agreements; possible disruptions from acquisitions; the ability of AudioCodes to successfully integrate the products and operationsof acquired companies into AudioCodes’ business; possible adverse impact of the COVID-19 pandemic on our business and results of operations; theeffects of the current terrorist attacks by Hamas in Israel, and the war and hostilities between Israel and Hamas, and Israel and Hezbollah as well as
the possibility that this could develop into a broader regional conflict involving Israel with other parties, may affect our operations and may limit ourability to produce and sell our solutions; any disruption in our operations by the obligations of our personnel to perform military service as a resultof current or future military actions involving Israel; and other factors detailed in AudioCodes' filings with the U.S. Securities and Exchange
Commission. AudioCodes assumes no obligation to update the information in this release.
©2023 AudioCodes Ltd. All rights reserved. AudioCodes, AC, HD VoIP, HD VoIP Sounds Better, IPmedia, Mediant, MediaPack, What’s Inside Matters,
OSN, SmartTAP, User Management Pack, VMAS, VoIPerfect, VoIPerfectHD, Your Gateway To VoIP, 3GX, VocaNom, AudioCodes One Voice,
AudioCodes Meeting Insights, AudioCodes Room Experience is trademarks or registered trademarks of AudioCodes Limited. All other products ortrademarks are property of their respective owners. Product specifications are subject to change without notice.

Summary financial data follows

AudioCodes Reports Third Quarter 2023 Results

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AudioCodes Press Release

AUDIOCODES LTD. AND ITS SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
September 30,
2023(Unaudited)

December 31,
2022(Audited)

CURRENT ASSETS:
Cash and cash equivalents
Short-term and restricted bank deposits
Short-term marketable securities
Short-term financial investments
Trade receivables, net
Other receivables and prepaid expenses
Inventories$ 27,679
202
4,042
49,6368,434
44,829$ 24,535
5,210
2,120
15,25856,42410,00636,377

Total current assets

134,822

149,930

LONG-TERM ASSETS:
Long-term Trade receivables
Long-term marketable securities
Long-term financial investments
Deferred tax assets
Operating lease right-of-use assets
Severance pay funds$ 15,242
67,7272,826
7,808
37,940
16,548$ 13,099
75,946
1,242
9,073
13,517
17,933

Total long-term assets

148,091

130,810PROPERTY AND EQUIPMENT, NET

7,859

3,965

GOODWILL, INTANGIBLE ASSETS AND OTHER, NET

38,714

39,126$ 329,486$ 323,831

CURRENT LIABILITIES:
Trade payables
Other payables and accrued expenses
Deferred revenues
Short-term operating lease liabilities$ 6,638
35,05838,7996,428

11,33838,316
36,634
8,169

Total current liabilities

86,923

94,457$ 15,877
17,47329,992$ 17,755
16,308
5,551

Total long-term liabilities

63,342

39,614

Total shareholders’ equity

179,221

189,760$ 329,486$ 323,831

ASSETS

Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITYLONG-TERM LIABILITIES:
Accrued severance pay
Deferred revenues and other liabilities
Long-term operating lease liabilities

Total liabilities and shareholders' equity

AudioCodes Reports Third Quarter 2023 Results

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AudioCodes Press Release

AUDIOCODES LTD. AND ITS SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per share data
Nine months ended
September 30,
2023
2022

Three months ended
September 30,
2023
2022

(Unaudited)(Unaudited)

Revenues:
Products
Services$ 91,299
89,525$ 122,285
82,152$ 31,039
30,552$ 42,879
26,841

Total Revenues

180,824

204,437

61,591

69,720

Cost of revenues:
Products
Services

36,56828,29947,851
23,966

11,3479,307

17,733
8,237

Total Cost of revenues

64,867

71,817

20,65425,970Gross profit

115,957

132,620

40,93743,750Operating expenses:
Research and development, net
Selling and marketing
General and administrative

43,36352,747
12,65744,75252,035
12,85013,96017,221
3,977

14,811
17,663
4,267

Total operating expenses

108,767

109,637

35,15836,741

Operating income
Financial income, net

7,190
1,688

22,983
2,195

5,779
492

7,009
344

Income before taxes on income
Taxes on income, net

8,878(3,753)25,178(4,261)

6,271(2,019)7,353(1,980)Net income$ 5,125$ 20,917$ 4,252$ 5,373

Basic net earnings per share$ 0.16$ 0.66$ 0.14$ 0.17

Diluted net earnings per share$ 0.16$ 0.64$ 0.14$ 0.17Weighted average number of shares used incomputing basic net earnings per share (inthousands)

31,642

31,91931,39031,717Weighted average number of shares used incomputing diluted net earnings per share (inthousands)

31,80732,61931,37432,256

AudioCodes Reports Third Quarter 2023 Results

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AudioCodes Press Release

AUDIOCODES LTD. AND ITS SUBSIDIARIESRECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
U.S. dollars in thousands, except per share data
Nine months ended
September 30,
2023
2022
(Unaudited)Three months ended
September 30,
2023
2022
(Unaudited)

GAAP net income$ 5,125$ 20,917$ 4,252$ 5,373

GAAP net earnings per share$ 0.16$ 0.64$ 0.14$ 0.17

304
379
322
1,005

300
570
870

94
122
322
538

126
190
316

2,090
375
362
2,827

2,642
375
3,017

649
125
362
1,136

755
125
880

3,380
33
375
40
3,828

4,694
33
375
5,102

1,050
11
125
40
1,226

1,543
11
125
1,679

3,242
80
3,322

3,734
(1,093)
2,641

814
80
894

1,212
(283)
929

Financial expenses (income):
Exchange rate differences (5)(1,237)(1,094)

(767)

121

Income taxes:
Deferred tax (6)

1,247

1,576

1,023

1,223

$ 16,117$ 33,029$ 8,302$ 10,521

Non-GAAP diluted net earnings per share$ 0.49$ 0.99$ 0.25$ 0.32

Weighted average number of shares used in computing
Non-GAAP diluted net earnings per share (in thousands)

32,87033,44932,57633,231

Cost of revenues:
Share-based compensation (1)Amortization expenses (2)Lease expenses (7)Research and development, net:
Share-based compensation (1)Deferred payments expense (3)Lease expenses (7)Selling and marketing:Share-based compensation (1)Amortization expenses (2)Deferred payments expense (3)Lease expenses (7)General and administrative:
Share-based compensation (1)Other Income (4)Lease expenses (7)Non-GAAP net income

(1)
(2)
(3)
(4)
(5)
(6)

Share-based compensation expenses related to options and restricted share units granted to employees and others.
Amortization expenses related to intangible assets.
Expenses related to deferred payments in connection with the acquisition of Callverso Ltd.
Other income related to a payment made to AudioCodes Inc. in connection with the termination of a lease agreement for its offices in New Jersey.
Financial income or expenses related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies.
Non-cash deferred tax expense.

AudioCodes Reports Third Quarter 2023 Results

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AudioCodes Press Release(7)

Non-cash lease expense which is required to be recorded during the quarter even though this is a free rent period under the lease for the Company’s new
headquarters.

Note: Non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP. The Company believes that
non-GAAP information is useful because it can enhance the understanding of its ongoing economic performance and therefore uses internally this non-GAAP
information to evaluate and manage its operations. The Company has chosen to provide this information to investors to enable them to perform comparisons ofoperating results in a manner similar to how the Company analyzes its operating results and because many comparable companies report this type of information.

AudioCodes Reports Third Quarter 2023 Results

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AudioCodes Press Release

AUDIOCODES LTD. AND ITS SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
U.S. dollars in thousands

Cash flows from operating activities:
Net income

Nine months ended
September 30,
2023
2022

Three months ended
September 30,
2023
2022

(Unaudited)(Unaudited)$ 5,125$ 20,917$ 4,252$ 5,373

1,972

2,261

652

797

1,027
(493)
9,016
1,164
(397)
6,688
(8,411)
4,645

1,155
(332)
11,370
1,424
(728)
4,639
(9,258)(12,487)

315
(221)
2,607
996
(65)
2,406
(4,056)(2,294)

362
265
3,636
1,187
(400)
1,497
(3,029)(5,114)

1,572(8,605)(1,344)(8,048)

(339)
907

(124)
(4,198)

Increase (decrease) in trade payables
Increase (decrease) in other payables and accrued
expenses
Increase (decrease) in deferred revenues(4,700)

4,639

(482)

5,064

(6,414)
3,423(6,203)(147)(1,480)(3,020)(1,404)(1,810)Net cash provided by operating activities

5,612

7,858

178

2,102

Investment in short-term deposits
Proceeds from short-term deposits
Proceeds from long-term deposits
Proceeds of marketable securities
Proceeds from redemption of marketable securities
Proceeds from redemption of financial investments
Purchase of financial investments
Net cash paid in acquisition of subsidiary
Purchase of property and equipment

5,008
3,846
3,084
14,094(81))5,301)(5,000)

-

15
94
1,123
(16,210)(100)(1,151)

2
3,846
1,084
3,051
(81)
(2,038)

2
94
(540)
(572)

Net cash provided by (used in) investing activities

20,650(21,229)

5,864(1,016)

Adjustments required to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
Amortization of marketable securities premiums andaccretion of discounts, net
Increase (decrease) in accrued severance pay, net
Share-based compensation expenses
Decrease in deferred tax assets, net
Cash financial loss (income), net
Decrease in operating lease right-of-use assets
Decrease in operating lease liabilities
Decrease (increase) in trade receivables, net
Decrease (increase) in other receivables and prepaid
expenses
Decrease (increase) in inventories

Cash flows from investing activities:

AudioCodes Reports Third Quarter 2023 Results

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AudioCodes Press Release

AUDIOCODES LTD. AND ITS SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
U.S. dollars in thousands

Cash flows from financing activities:
Purchase of treasury shares
Cash dividends paid to shareholders
Proceeds from issuance of shares upon exercise of
options

Nine months ended
September 30,
2023
2022

Three months ended
September 30,
2023
2022

(Unaudited)(Unaudited)(11,973)(11,399)(35,241)(11,552)(9,047)(5,681)(6,072)(5,720)

254

533

140

352

(23,118)(46,260)(14,588)(11,440)

Net increase (decrease) in cash, cash equivalents, andrestricted cash

3,144

(59,631)(8,546)(10,354)

Cash, cash equivalents and restricted cash at beginningof period

24,53584,52336,22535,246

Cash, cash equivalents and restricted cash at end of
period$ 27,679$ 24,892$ 27,679$ 24,892

Net cash used in financing activities

AudioCodes Reports Third Quarter 2023 Results

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