AudioCodes Ltd. Q4 FY2025 earnings call

• 2025 marked stabilization and growth after legacy business challenges. Fourth quarter 2025 revenue was $62.6 million, up 1.7% y-o-y. Full year 2025 revenue was $245.6 million, up 1.4% y-o-y.
• Strong traction in dual growth engines: live managed services and conversational AI. Combined, these two units contributed $79 million annual recurring revenue exit 2025, growing 22% y-o-y. Conversational AI revenue in full year 2025 reached nearly $17 million, 7% of total revenues.
• Partnerships: Increased Microsoft business with 7% sequential growth driven by connectivity franchise and AI-first solution attach rate. New cooperation with Cisco for expanding connectivity and devices business for UCaaS.
• Conversational AI progress: Portfolio of solutions developed, including Voice AI Connect, Live Hub, etc., with fourth quarter 2025 conversational AI revenue growing over 50% y-o-y. VOCA CIC had over 200 enterprise customers, strong in education space. Meeting Insights Cloud Edition had momentum with new customer acquisitions and product innovation.

The company has two main business segments. The long-established connectivity business contributes approximately 93% of the revenue. It is a mature, profitable business with an operating margin above 14% in 2025 and targets 16% to 18% operating margin long-term. The Voice AI business contributed about 7% of the revenue in 2025, growing from $12 million+ in 2024 to nearly $17 million in 2025, a year-over-year growth of ~35%. The company expects the Voice AI business to grow at a rate of 40 to 50% annually in coming years and reach $50 million in revenue by 2028.

• Expect 2026 revenues in the range of $247 million to $255 million and non-GAAP EPS diluted earnings per share of $0.60 to $0.75.
• Anticipate 40 to 50% growth in the voice AI business in 2026.
• Overall annual recurring revenues expected to grow from $79 million in 2025 to $92 to $98 million in 2026.

• Effect of global economic conditions, industry and target market conditions.
• Shifts in supply and demand, market acceptance of new products.
• Impact of competitive products and pricing.
• Timely product and technology development, upgrades.
• Advent of artificial intelligence and managing market changes/regulatory regimes.
• Possible need for additional financing, ability to satisfy covenants in financing agreements.
• Impacts and disruptions from acquisitions, integration of acquired companies.
• Adverse impacts from pandemics or public health crises.
• Effects of hostilities involving Israel, limiting operations.
• Disruption from personnel military service obligations.

Q: About conversational AI growth through 2028, is the 40 to 50% annual growth a CAGR and what drives it?

A: Growth expected from both new customers and higher spend per customer. Number of potential customers will grow dramatically with added capabilities, and per customer spend will expand as more capabilities are brought.

Q: How has the shift in market expectations around AI impacted pipeline visibility and size?

A: Improved visibility with sales force expansion. Sales operations are spreading into more countries, and some voice AI products are easy to test with proof of concept phases taking 30-60 days before moving to production.

Q: Impact of tariffs on 2026 financials and gross margin?

A: Tariff impact expected to be lower in 2026, around $2.3 million, and gross margin is expected to stay within the 65 to 68% range.