AudioCodes Ltd. Q1 FY2026 earnings call

• Solid first quarter results with top-line growth accelerated by live managed services and voice AI. Combined, these two units contributed to 80 million annual recurring revenue exit first quarter 26, growing nearly 20% year over year. - Reallocated and increased investments in voice AI in R&D and sales and marketing to scale channel presence and cross-sell value-added services. - Enterprise revenues over 90% of core, with Microsoft business up 6% driven by live business, connectivity franchise, and increasing attach rate of Voca CIC. - Voice AI business grew about 50% in first quarter, with target of 40 - 50% growth in 2026 and reaching ~80 million by 2028. - Live platform signed multi-year agreement with existing customer, and recognized bookings for migration of 20,000 users to on-premise Live Pro platform. - Conversational AI business: VoiceAI Connect and LiveHub had strong momentum with notable wins, VOCA CIC had record invoicing, Meeting Insights Cloud Edition maintained strong momentum, MIA-OP saw pickup in business opportunities in Israel and international markets. - Workforce increased to 1,000 full-time employees, up 2% from previous quarter.

Revenues for the first quarter were $62.1 million, an increase of 2.9% over the first quarter of last year. Services revenues were $34 million, up 4.3% year-over-year, accounting for 54.7% of total revenues. Geographically, North America was 49%, EMEA 34%, Asia Pacific 13%, and Central and Latin America 4%. Top 15 customers accounted for 53% of revenues, with 34% from eight largest distributors. GAAP gross margin was 66.2% vs. 64.8% in Q1 2025. Operating income was $3.4 million (5.4% of revenues) vs. $3.6 million (6% of revenues) in Q1 2025. Net income was $2 million (7 cents per diluted share) vs. $4 million (13 cents per diluted share) in Q1 2025. Non-GAAP gross margin was 66.3% vs. 65.2% in Q1 2025. Non-GAAP operating income was $4.8 million (7.7% of revenues) vs. $5.4 million (8.9% of revenues) in Q1 2025. Non-GAAP net income was $3.8 million (14 cents per diluted share) vs. $4.7 million (15 cents per diluted share) in Q1 2025. Cash, cash equivalents, etc., totaled $68.1 million at end of March 2026. Net cash provided by operating activities was $12.8 million. Day sales outstanding was 104 days. Dividend of $0.20 per share was paid. Acquired $1.7 million of ordinary shares. Connectivity business sustained well, conversational AI business grew over 50% and accounted for ~8% of revenue. Enterprise revenues over 90% of core, Microsoft business up 6%. Services grew 4.3% and accounted for 55% of total revenues. Backlog at $79 million, up from $67 million year-ago.

Reiterates guidance for revenues in 2026 to be in the range of $247 million to $255 million and non-GAAP earnings per diluted share of $0.60 to $0.75.

• Effect of global economic conditions, audio codes industry and target markets, including governmental undertakings, 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. - Possible need for additional financing, ability to satisfy covenants and financing agreements, impacts and disruptions from acquisitions. - Possible adverse impacts from pandemic or public health crisis, effects of hostilities involving Israel, disruption in operations by military service obligations.

Q: (not specified as no specific questions shown), A: (no specific answers shown as no questions were detailed)