AudioCodes Ltd.'s (Nasdaq: AUDC; TASE: AUDC) share price is surging on the TASE today, after gaining 80% in the past year. The company published good results in its financial statements for the fourth quarter of 2018 and the entire year. AudioCodes outperformed both its own raised guidance and the analysts' forecasts, finishing 2018 with $176 million in revenue, 12.4% more than in 2017, and a $13.5 million GAAP net profit, more than triple its net profit in 2017. AudioCodes' non-GAAP net profit grew 65% to $20 million.
AudioCodes, which provides Voice over Internet Protocol (VoIP) solutions, has a $384 million market cap.
"2018 was a very strong year for us, our most successful year ever, and a very important milestone in our mission of building a strong and successful voice networking business for years to come," said AudioCodes president and CEO Shabtai Adlersberg. "Growing our top line revenue by 12.4% year-over-year, improving non-GAAP annual operating income to 11.7% from 8.2% in the prior year." He added that annual profit had jumped to $20 million. Cash flow, which totaled $17-18 million in the two preceding years, reached a peak of $25.6 million. Adlersberg also said that this gave the company great confidence in the future.
AudioCodes reported $45.8 million in revenue in the fourth quarter, 10.5% more than in the fourth quarter of 2017. Sales of products were up 9.3% to $30.7 million, while revenue from services grew 13% to $15.1 million. Non-GAAP net profit soared 65% to $6.3 million.
AudioCodes ended 2018 with $65.4 million in cash, after spending $2.8 million on buying back its own shares at an average price of $11.20, compared with the current share price of $13.30. The company obtained court authorization to spend $12 million more on its buyback program. "The buyback program was far more important when the share price was lower. We are not overdoing it; we are keeping it in proportion," Adlersberg said. "The program helped in December when there was a crisis in Wall Street and the market fell. It was designed for times when it was worthwhile."
AudioCodes will distribute a $3.2 million dividend, $0.11 per share, in February. The leading shareholder in the company is Adlersberg, who will receive $549,000 of the dividend.
"Globes": Are you planning to use the cash for acquisitions?
Adlersberg: "We're doing it. The strong cash flow and the fact that the share price rose give us motivation to search. We're talking with quite a few companies, and I believe that we'll do it in 2019. We want something that will strengthen our activity in the main segments, and to invest in large and profitable software companies."
Did the share price rise because the market understands the company's activity better now?
"The market understand much better than before. I'm not an expert on share prices, but I'm obviously glad to see this happen. Still, if we compare it to the prices of US companies, our pricing is modest. They are trading at an enterprise value multiple for sales of 3 or more, and we're at less than 2. I believe that the growth in operating profit and revenue will give motivation for better pricing of the share, but I leave that to the market.
"We expect continuation of the existing business trends, and we'll keep our foot on the gas. The momentum is continuing. We're an expert company that works in the right way, and we're very strong at the competitive level, so we don't anticipate any erosion in our status. We'll try to exploit our advantage."
Published by Globes, Israel business news - en.globes.co.il - on January 28, 2019
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