AUDC - Earnings call transcript Q1 2022

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Operator

Good day, ladies and gentlemen and welcome to AudioCodes' First Quarter 2022 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode. [Operator Instructions] It is now my pleasure to turn the floor over to your host Roger Chuchen. Sir, the floor is yours.

Roger Chuchen

Thank you, operator. Chief are Baruch, President and Vice Officer Dmitry today Officer; Chief Chief call Head and Niran and and President Netis, the Shabtai Development. and Adlersberg, Executive Financial of Hosting Corporate Officer Strategy of Finance

or like forward-looking Before contain product that the call relating introductions, economic performance, to AudioCodes' plans remind information we to you objectives during provided begin, concerning this statements future and under I'd statements future assumptions made may matters, as business outlook, as expectations statements any performance, Law. U.S. defined and or events, to the conditions, thereto, other Securities is forward-looking are related term Federal

products Forward-looking ability the other in filings and in technology Securities AudioCodes Commission. company's to need conditions, impact statements business information. no results to pandemic as supply products economic loan existing AudioCodes for manage shifts possible general These our and update conditions market and needed, U.S. timely of and acquired the upgrades factors results companies other the actual acceptance covenants and in and detailed products changes and to and of competitive global agreements, customers' and of AudioCodes are markets differ not effect possible developments, conditions pricing new product include, into AudioCodes' from materially of and but the risks, particular, marketing, uncertainties uncertainties, the operations assumes are stated target products of subject AudioCodes limited COVID-XX in possible statements. various to on the industry and and successfully from demand, to, Exchange obligation adverse ability additional operations in business, that and to the this ability with such in and cause risks factors impact The of could and its demand and acquisitions. those on factors in AudioCodes' to satisfy market integrate in of financing, products, for the disruptions the

will AudioCodes reconciliation to share AudioCodes and the to income has that is income In share net per full posted income non-GAAP per a refer GAAP net net in net income and net non-GAAP net its income of to addition, call, according press the during share. income and its per the on provided website. release

conclusion I With go ahead. like to everyone Company's that Before Relations management, the like recorded all would Shabtai. call call. available archived Investor the the of the over this said, made is over call the turn the I turn that will Shabtai, webcast section I of to and be would to please being on at website remind call to

Shabtai Adlersberg

and developments Head provide will Niran all Thank Development. you, conference everybody. Roger. with Officer, President business financial and Chief and are for our Good first discuss Vice to me off of in XXXX Baruch, a by like this review I industry. to With together morning our the summary and the then afternoon, trends of presenting I Dmitry the Officer would Dmitry highlights Corporate Niran overview start Financial business Finance of morning. Strategy and and Good quarter. quarter will Chief welcome call. quarter and Netis, a

then into will session, it Q&A We turn Niran? the

Niran Baruch

and you, hello Thank Shabtai everyone.

as million of revenues. up of XX.X% accounted the total for that increase XX%, $XX.X of this I will reported from for Asia-Pacific for million, Revenues The call. first quarter region as of as earlier today's information financial a be the first North in call, press revenues earnings million, quarter on were As discussing deferred results. quarter that $XX.X XXXX reconciliation America referring revenues non-GAAP Latin XX% release usual, the contains of GAAP XX.X%, for XX XX up XX.X% year. the the The in first split this we and financial non-GAAP morning Services supplemental be the to geographical issued follows, both $XX.X were last on Services an quarter of will March by and we first Revenues March XX%, X%. over $XX.X EMEA million revenues XXXX. America period. and was of the were $XX.X quarter million amount year-ago of Central the

bank $XX.X million Non-GAAP compared XXXX. to Non-GAAP the Days quarter March for was $XXX.X million operating of XX first deposits, follows, for our to activities aggregate customers $X.XX revenues, was XX.X% in XX.X% for XXXX. quarter for by quarter Our investments top the XX% to for in XX represented Net end income per compared net first $XX.X was compared income income the results was as compared XXXX. attributed XX.X% income $XX March QX cash, XX.X% the or of to XXXX. per or share, million of quarter XX.X% of $X.X per of XX or million XX% first or the securities million. cash sales largest follows. $X.X were was totaled for XX $X.XX $XX.X to compared the to share or revenues or At in XX.X% marketable as of revenues revenues outstanding gross quarter provided Net operating first margin $X.X cash first quarter XXXX. quarter $X.XX and days. million in results of quarter $X.XX was million financial QX distributors. an was in share share XXXX million diluted for the in diluted the or gross XX.X% $XX.X QX equivalents, Non-GAAP to for as diluted was XX% of diluted Non-GAAP per margin are of XXXX, our which QX of $XX.X GAAP the QX compared XXXX. or million QX Operating revenues million XXXX. are

XXX,XXX $XX.X follows. we as total for million. shares During We of for ordinary of the guidance our quarter, our XXXX configuration reiterate acquired approximately

to million now will call $XXX turn $XXX to share income of million range $X.XX. and of I net the the to diluted in Shabtai. back revenues expect non-GAAP We $X.XX over per

Shabtai Adlersberg

Niran. you, Thank

projected Before model strategic Communication year-over-year. Within a compound enterprise above Cloud of Making of up our Sandler, several Teams from runway our all-time the XX% acceleration discussion Enterprise quarter sources, XX% brief exceptional revenue which is and in Service analyst an Managed placed revenue. Please the Services. annual of Wrapping by a from our business. over at multi-year inform of rate to an the discussion by are we Relations confidence our on preparing records been successfully and business growth grow acceleration Experience first grew Investor our above quarter, up quarter business to This would and XX% our We're over The including XX.X% results, first on year-over-year, total Piper aid reaching comparison and in and up accounted our pleased accounted X-Russian on solid quarter as Zoom business, year-over-year, Customer roughly the dive line which of was mainly anticipated Wainhouse executing of update XX% for Teams I'd of our to the Phone XX% in grew business. basis. record presentation revenues XX% Owing business, Communication XX% for company over roughly Collaboration 'XX today. our our Enterprise UCC, of for refer notes supports you CX business. business, services voices declined X.X% up with Teams into Customer this XXXX in to in proof approximately way XX%. industry the up roughly year-over-year an segment, Microsoft generating to like Shifting was the growth Microsoft Revenue mix, all-time Microsoft AudioCodes business, year-over-year. that have a to recurring year-over-year. for report firm year-over-year Unified year-over-year by Research Unified growing accounts success strength for revenues. top section XX.X% quarter, 'XX. remaining Collaboration XX% UCC XX% of priority results Live the had website. the an driven which to of core grew XX% roughly representing makes grow and to majority ongoing and throughout also from experience grew to and which tough segment research XX% this transforming our XX% on Russia gears business that quarter

our progress to AI where contract signed with value see during the Conversational year-over-year. great continue business, XX% We total grew around core

to report that intelligent bear positioned application. grow We're compared of fruit in well for opportunities Callverso acquisition are XXXX end in new in at the We center with to of to to portfolio virtual the the substantial conversational solution previous AI increase for the XXXX agents started glad contact XX% year. our

to services continue double AudioCodes Conversational offering rate expect for million million Importantly, We and March of our see the momentum. $XX XXXX. run over and to in segments services month exited over UCC, $XX AudioCodes our AI strong CX to in million Live from $XX managed XXXX ARR we managed again Live

to of enhanced solution margins. to and migration experience long-term hybrid customer to voice continues infrastructure cloud, pipeline areas of and core expand business Our trends of supported secular across [indiscernible]. work, by the engagement Shifting

to in non-GAAP market. ago procurement Our quarter. of with the in open XX.X% million the higher versus came components year the XX.X% quarter at associated in Owing costs the margin gross the $X.X

in Israel due million. Non-GAAP factors. XXX of headcount to would at positions year-over-year, up Excluding and gross increase $XX.X cost, non-GAAP XX% our higher XX% that margin on this related have order the space in support been mainly in and increased expansion. budget three or for business to Rising a One OpEx costs is the salaries salaries. done growing basis, and year-over-year second the driver salaries a and in all R&D needs

costs, the U.S. drives tech Israeli which operating And was quarter compared the rising much less manpower salaries. Non-GAAP to So in R&D impact in dollars hatched. impacted by probably was in high higher rate salaries increased quarter, dollars was as rates, industry of and the ago which first lower rates. XX.X the new component booming exchange local the and activity NIS drives skilled 'XX U.S. versus favorable therefore shortage higher where year lastly, space, shekel, higher and XX% edged hiring margin

higher operating core. in non-GAAP the cost, margin the Excluding have been the XX% would component at

Getting earlier this per This compares with the to in in provided budget. first XXXX. this to $X.XX line our of quarter the of heels earnings guidance development, On internal our in share at year. non-GAAP the back $X.XX came

Netis, issues. chain said our long-term no XX% about guidance on our long-term of We provide navigate a between margin call business our EPS XX% supply to a of in of XX% XX% non-GAAP Chief strong XX%. change and like to to of the to of on ability $XXX million hand the margin, Officer And percentage to I goal $XXX non-GAAP areas, gross focus to would growth That remain XX% XX% more to of which over revenue million non-GAAP to of to business $XXX OpEx to on million range $XXX revenue our our raising the I different XXXX Dmitry targets, XX%. the lines. the million range in operating now within then are after Dmitry? fundamentals to based disclosure there's Strategy financial strategic give will brief which overview revenues

Dmitry Netis

and comprising Thank dive hello is deep our a remainder team tuning I everyone. platforms. core the the to our on market, undertaken provider secular segment strategy January, you, an joined Since mainly for capitalize XX% our place Shabtai, of in optimal which enterprise to strong that roughly plan of in the CPE The into XX% market, we service opportunities and revenue. in have fine multi-year hardware is ensure total growth we accounts have

metaverse and In services Unified Contact is markets. and Centers, Voice Experience primary the as which Customer in refer even AudioCodes It the Collaboration Communications consumed of as leading customers $XX shift serving of voice terms a to top two such the enterprise undergoing UCC, of mission business the UCC non-telephony digital Teams. the Microsoft CX. in remains Service, for service, a in high a market the we for Voice AI, and in as very the of comprised the TAM and to stage impact, recording, for is The of their meeting conversational transformation their employees. to reach voice sense which is time. world, assistants, addressable traditional remain customers by CX, not of but cloud voice channel at telephony, case channel XXXX, both companies also in a in will serving next seeing call in critical a interaction services IVAs, expected increasingly hosted and evolution long to cloud. of to We're high with such billion as and future. and just are instance, is value provider

most customers the the to this strictly AudioCodes. be the XX drive is on We enterprise communications, companies of when simple, here services. where XXX segment approach long Our comes multinational service ultimately interoperable segment we CPaaS. And it our platform of to believe of fortune as focus a will of voice tail

revenues solutions room Live in makes up the zoom Microsoft majority enterprise for customers. marketplace split today CPaaS enable Connect one platform, and increasingly native between end-user platform, quality our and of that UCC cloud tools. voice devices enterprise call voice AudioCodes of customers a This a controller CI and a this vast and powered the our our analytics, API's incorporates orchestration session most. meeting or enhanced voice shop services Our value of IR our platform top what by voice WebRTC subscription CX. total monitoring, flow we gateways, This our is SBC, architecture On platform border offer voice and by our stop

a partnerships of lead leading service a on a here, which including include called CAGR. exciting voice and acquisition. AI This and Contact AI intelligence and intelligent And IVR insights. the engineering is future AudioCodes. is developing Conversational a Conversational million asset for recently agents market meeting on we AudioCodes our SmartTAP growth strategy. our organization of of that VICA enhancing, as and now Additionally, AI stop productivity one virtual piece of number key related strategic virtual keep from applications, XXXX. technology you billion and future And offer conversational is customer strong Gartner That's grow our our unique applications XX% called new a from superiority approach. let in me called engine a solutions, product portfolio estimates shop a to built with services, that, -- With software $XXX update Callverso an a pillars we're to assistant $XX.X conversational by market Center its Voca.

Our here mission threefold. is

the Microsoft our expand we vertical zoom UCC upsell partnering Conversational and by First, platform voice with apps and AI phone. into Teams

for we upsell experience to our platforms. via accelerate Conversational third, our more burden customers. customers. departments, This of infrastructure services Genesis, with voice platform of our CRM subscription transition customer complex move of the shifts up vertical Microsoft, and to our manage focus Second, expand freeing apps Live and value on IT to to And and contact other into partnership AI managing initiatives us, AudioCodes in resources we voice services enhancing center

As here are the compelling. for quite economics AudioCodes, equally

versus strategy on execute this and CPaaS of typical powered contract, months life flow Wrapping session services historical over XX tools. economic management our a we're CapEx voice value we up and derive call border aforementioned controllers, cloud strong the the Over the managed looking Xx market API's under leading a native orchestration by land our discussion, to recurring expand model. by leveraging and services

bypassing time Our enterprise market recognized share past just been one share achievement, which as XX.XX% roughly Cisco, the year this going Omdia, such AudioCodes of stellar performance years. XX% from three XXXX number has to the the on ranked quarter SBC by just the for in Oracle, XX% We're whole Ribbon. proud entire as and competitors, market in with this of first annual nearly basis

superiority Our track excellent engine we confidence write record, execution our the us growth. of innovation and give next as chapter technology

hand now accelerate the individual potential we of via Shabtai? consistent we strategy M&A opportunities. to Shabtai our I will details back Lastly, the just also to discuss look organic lines. will to growth with outlined, business call

Shabtai Adlersberg

Dmitry. you, Thank

opportunity that into discussed growth As in the growth We're to representing approximately growth quarter for acceleration in from this higher Microsoft the pickup last grew business business pleased translated discuss above on year-over-year, quarter. Microsoft previously, an created to XX% XX% XXXX. see in

adoption XX% additions record, Teams year-over-year grew above the the year-ago accounts speaks as segments. leadership our business in XXX in quarter. XXX quarter market Teams the on the first in in accelerating were Microsoft platform Teams to the which versus Specifically, quarter, highest of UCC in the

quarter rate. opportunities compared the new to of XXXX. grew Microsoft In year-over-year Importantly, a healthy at continues XX% created to first new opportunities, 'XX, grow created, opportunity Teams

Now of couple Microsoft the wins let's in talk a important through quarter.

have XX with million we're deal contract contract for global service a The freight X XX,XXX The of services Teams selling one, as articles total we $X simplicity month on and versus first calls company Tier competitors transport provider, broad live signed the to the working underscoring the a of capabilities solution we migration for users engagement we market. our of our the Voice, want position competitive our Microsoft those in strong value. enjoy

with the in Avaya worth of and globally Discussion contract the of the a U.S. are minutes working ongoing medical test with Teams total deployment in take Second in signed sales win, care contract phase articles millions Cisco seats IP to from integrator, multinational and device to live XX,XXX by deployment. X,XXX that value. are total enabling we system company, this migration providing a plus the Microsoft over could seats phone first several to large

deals, these reviewing call it, as or Teams the two we AudioCodes after dive Now Live Voice-as-a-Service. let's into

million million in it years, to in model Live XXXX, in Just months, October XXXX report background aggregate the five recent is million. $XX XXXX Teams Teams we discussed is inception to Teams continued our million success leading Services. and a Piper a for million about this the XXXX. it seats XX% can at complexity North migration compound per Microsoft This ended estimates X.X Teams provides sits rapid in effective market than for complete worldwide. earlier, X.X past use XX.X is legacy enterprise per fact as UCaaS should for management model. communication steep coming above According enterprises. XX and Live enterprises seamless, process based the automations cost user about about obvious devices, to AudioCodes a on we integration for of from it to 'XX that stems route from AudioCodes obvious, since of ARR growth that of ARR Teams support are rate analyst Live solution $X of more for for collaboration the other the America XXXX a for million growth in and and in demonstrated for network from introducing delivered Sandler market a and telephony solution growth next and XXXX, UCaaS large reports growth on things, the $XX for mid-XXXX, again removes above month that seats in recurring as which quite Live is The with years that provides Teams to doubled plan reach as among growth everybody double a remind set see product,

minutes needs. Express, providers service on is and resellers, their can services. and provisioning some end, nearly Cloud. Now of to quarter. VARs which beauty in for product Live bringing of is that Route offering, entirely end two Teams suits to service the first the in our AudioCodes managed service Live Since self in Live Voice provide Route AudioCodes priority offset Direct terminology of AudioCodes Direct handled is and A service ago, with a The looking the managed career is that launch is customers Microsoft the we in choosing and Azure flagship, deployment on Cloud for for onboarding, announcements options AudioCodes made quick partners years flexibility Microsoft this efficiently Teams, strategic provision announced which SaaS referring To best Teams to and occur service. recently seamlessly

Connect. Voice to Microsoft roughly Calls from AudioCodes is carrier this are carrier disclosed Service, through service using Cloud of to is of is with as first capabilities Connect, known Microsoft Live We Teams many onboarding partners end service Microsoft provides Operator the of which partners the Teams providers users Microsoft service AudioCodes offer also Teams offsetting cloud. on on the simplify service This XX Connect Operator customers an also there recently directly Connect or working Operator procure Operator publicly them. Portal, to-date Select provider business alternative Managed extended and Admin

additional Operator Accelerator Connect voice without our to integration announced Connect enable week, API for managed with we providers named XXs service or investments Microsoft. last direction and This new with no required to been Microsoft to need Just AudioCodes directly a of Operator is offer and service that the to partner. Microsoft maintain has infrastructure by ongoing

the different have of distill a So, the between vast differences Live offering, we array me different offering. primary let services

of So system environment Route. solution a enterprises This require large and Teams medium XX,XXX the targets and to resellers about a is system we Teams customer, which flagship telephony target often that and complex sold very customization. Direct usually are are count X,XXX which between is and Live to have integrators, talking enabled historical via seat

is Live sold sized is enables provide small Cloud, a white enable to AudioCodes then Second that SaaS customers. onboard to service offering telephony Live experience SaaS platform platform. which to resellers medium label And again lastly, to is provider which customers. to with It no them quickly is branded Express

less the derive discussed small Live Live far, and targeting we opportunities As so targets managed fear and location complexity. for Greenfield services today. enterprise and for us this to basically Express medium is office likely new represents customers where Live Cloud

importance upselling Now, than quarter, discuss let Zoom launched XXXX. with Zoom U.S., in to growing zero emerging of growing to would Phone. Zoom added more In and has was small in customers Zoom sets up Zoom Phone overall record strategic at the from Phone Phone around quarter Zoom publicly years me Zoom I in core ago, meeting Zoom XX% business. its activity was Phone January operational gears discussed fast another of a still sets like January Phone, the X.X XXXX percentage XXX,XXX year-over-year. momentum the an Canada shifting

foremost most is the Voice expert with the benefit comprehensive AudioCodes to market, positioned uniquely from long-term this solution upsell the voice tailwinds. As in

and look the platform in Zoom new to stepping launches are the activities our forward in ecosystem investments months. coming product marketing around We on up announcing Zoom

we than the in year-over-year. XXXX, grew seen know also the more quarter created, XX% first opportunities Following new growth we so in the in 'XX, have opportunities Phone record revenue that Zoom first a quarter new

is solution, above AI year-over-year, consists SmartTAP Solution solution. or IVR, and Now expected segment segment five in XX%, or up Connect my grow XXXX. let compliance-recording that XX% conversational discussion wrap which into to applications, meeting virtual platform transforms and VICA, grew productivity chatbots Voca our agent of AI intelligent with bots service, insights voice meeting This XX% or Conversational me voice

we intelligent quarter. the of strong highlight in driver solution, first agent has the Let acquired me from momentum our Callverso, a virtual one which been

As scalability proof services deployed the strength at would million solution, customer and Israel's medical in a X,XXX or X.X is IVA space, with to of for of I discuss center serving IVA like in clinics. Clalit, provider over people which medical large largest the company's contact its

some that strong provide me indicates data a Clalit. service, points and successful Let IVA

about peak translated IVA are XX,XXX human up to of metrics, into saving fewer VICA, more has million. that the a We that replacing talking a or $XX was volume, XXX XXX,XXX here the on following And daily then resulted about calls roughly agents. day a and all in handles shekel calls Israeli call million XXX cost day saving new than about

parse in second have Israeli partners. is the We we XXXX with growing chatbots, believe the virtual start 'XX. to to of planned are more win which in within with leading addressing AI product, other portfolio than of ARR XXXX. the chatbot global in the for triple Connect area on voice Voice success the of market the strength market compared conversation track to AI applications more VIC we to continue worldwide interactions our half Following the agent, market An

concludes Conversational for point of much meaningful that prepared forward. the in view can pretty engine my growth develop the strong anticipated believe that out remarks. strongly going UCC our I'd growth fuel into This we AI new like to markets serve. growth such, to a As we

keep continued done voice investments leading is and Our momentum the to top the position space. in leading partners to be to done vendors and leading our

confident and are ever, optimistic as about the vision. strategic We

foundation is secular and subscription enterprise floor competitive turn the the Operator? session. gentlemen, will and [Operator and And market, Ladies vision the capitalize I'll opportunities Instructions]. operator stop strategic Q&A in for Our core now services. here. the built our open growth we now back strong to multi-year the to for that questions. floor we've on

pose Your your first is from coming question Burns. for your Greg then announce Please today question. affiliation

Greg Burns

from It's and Greg Burns Company. Sidoti

impact it. didn't in if the put But behind First, what mentioned catch the some you you was exact Russia business on Russia. had I exact from number quarter? impact from the an

Shabtai Adlersberg

existing market, to business CX where large was refer the in a we deleted. Yes, mainly deal

low. the to revenues for quarter compared in were do the coming of the anticipate opportunities very Russian new first future. market developing not We 'XX So roughly any

Greg Burns

talking opportunities. talk Okay. Can applications into what, And what of you over Microsoft Dmitry the your And was are with currently time? that just some you about developing cross-selling about rates you. ecosystem? Thank maybe see how tax the

Shabtai Adlersberg

defined expand. strategy Dmitry of well, and our Yes, land

that So as to we see outside must use cloud in the and voice want the Teams if connect is you needed solution the world. Microsoft with

that best Once we leading service. today the solution enterprise with have in the able do Now, the probably account space. we are to and penetrate

Those it. services cell our We call and meeting more could be services room services, phones, to services, are solutions managed recording offering attached others. within

of to service services. application us all base then of on more in to we fact win that top add advantage take have our area it all growth and we allows the Teams access the customer one So that with and

Greg Burns

just applications for What maybe the Microsoft on what you're But of currently at top route direct attach rate goal the is understand like where is here. offering? the versus core to typical

Shabtai Adlersberg

Right.

So right interest. or one with answer an now actually areas, we two Give statistics There's mention you just have that. I'll me here that. to definitely no okay.

other manufacturers been is all there's future and need the new of Nortel, as coming a from we Avaya, to a Lucent We're the going that world to now and lot others. world, Teams. migrate TMC PBX And think to PBX in to such Cisco, right? realize where the win is I gear

recording take services, Take services IVR Now services. right? every got PBX has auxiliary compliance recording

new add a a Once So to needed recording and say solutions PBX, solution to if establish solution. Teams, need PBX, new compliance you you to to you your provide IVR you IVR a move an or Avaya customers. let's

So that's do. we exactly what

have very advanced developed a IVR solution. We IVR conversational,

crowd We and that top now the have of your number in question. users months, I the rising SmartTAP. we've past a recording. Hopefully IVR to want And very advanced compliance use a six, recording compliance and/or on die of Teams seen solution answer who the the nine called

Greg Burns

you. Thank does. It

Operator

Your from announce your pose MacWilliams. is next then question. Please question coming Ryan your affiliation,

Jack McGuire

McGuire Barclays. taking Thanks question. for for Jack it's Hey, the Ryan on on

the deals live these in kinds for of now deals has around is Thanks. pipeline just forward? two any these how deals? on going any So And large into color the the quarter, brought specifics AudioCodes there on

Shabtai Adlersberg

Sure.

that usually work So partners. health with are mentioned a services. local usually here, usually integrators. our you with the care, through go-to-market go as mid-market global deals, large of huge the partners, we usually the those companies. one set with I've one the such or When that in to freight The life services, Those Microsoft to true system the do transport is has directly

both those in cases, to way into accounts So our we the partners. worked have

Jack McGuire

And acquisition one around Callverso thanks. been And on key then has Thanks. how quick specifics plans performing? second the one global for half? any as take more the any more Great, you it

Shabtai Adlersberg

have huge again, solutions. number So a opportunities seen growth we in agent of the virtual I've we've mentioned number, for but -- been the new

medical, right market, on the the vertical, financial one, strong now very are We large on these working really utilities. in

basis. in can that solution on XXXX that a into global deploy support We technology a we are working based multi-tenant cloud

next six launch months. in work I it's within progress. assume, will to the So it nine probably

Jack McGuire

much. so Thanks

Shabtai Adlersberg

Sure.

Operator

your for question pose is Your announce then question. Koontz. from today your Please affiliation, Ryan coming next

Ryan Koontz

numbers. that something Well primarily with experience. Sure, different else your with center? customer contact in there on if bit it's the partners going in on Koontz it nice Or work you decline was that. Congrats contact a Thanks. little to with Microsoft attributable Needham. could Was Russia? expand you Ryan hear on center to Great

Shabtai Adlersberg

Okay. Yes.

is decline tied the up actually, to few So failures.

of mentioned three the them. as market. One I've So before Russian I'll name is,

delay in is million market. one in players the with Then second delayed $X above finance we see do opportunity some the the the of CX do big sector. The to

are there are name think them I market share. some of losing

So space decline. business we and all, the moving some all had But declines some its we lastly, recover vivid, is to some score. loss. obviously, caused And we then the that that contact had expect from player who large is center also to business some has in with do cloud, fairly

Ryan Koontz

Thanks color. Great. Right. for that

Shabtai Adlersberg

Sure.

Ryan Koontz

IP your gross And that or on phones does there on the headwind, appliances? margin cloud primarily

Shabtai Adlersberg

other other but CPE to components, market. we it's hard are. Actually, okay. providers get the them which the not we fairly that try to Therefore, is It's are chose, we in phones. through service phone IP really. outsource not the gear, that's the No, and more open

Ryan Koontz

it. Got

Okay. That's all I so have. much. Thanks

Shabtai Adlersberg

Sure.

Operator

Please coming your Your question. is next your then announce [indiscernible]. pose question affiliation, from

Unidentified Analyst

is this Samad with Jefferies. I work [indiscernible] Samana. guys, Hey, from

quick have about one any throughout should actually, looking margin how the how into margins, on of we visibility think you Another Do year? the the rest costs shape are these QX? of into

Shabtai Adlersberg

in of quarter open market gross accelerate to with continue than at in than to the impact quarter, Though rest on in component that's of of in we quarter. residual cost elevated less while to should stabilize of supply purchases cost the expect second open end expected magnitudes regard XXXX remain temporary by as We supply quarter XXXX, for our relative the the first the The margin, cost at Yes, the the first procurement expected first believe year. to to the chain chain well. XXXX. situation higher market components the is have

Unidentified Analyst

how Got for How kind are? there. provide Thanks. color Is Americas we And GEOs, on performing? primarily any the Can me. this it. more color you do it's -- should you Teams still across of driven any by have one

Shabtai Adlersberg

X we last Teams Sure, basis year, definitely the were the okay. to it's numbers see in at this year. -- grow like million actually, all, X long-term my of quarters continuing All million

position going it's we not stop. more do see We to market. think created, yes, the I contingencies in have a and So winning

Unidentified Analyst

quarter. guys. Thanks, it. the on Congrats Got

Shabtai Adlersberg

Sure.

Operator

affiliation. announce Liani. from Please Your your next question. Tal pose question for today is Then coming your

Madeline Brooks

Hi, Liani for its on America. at Bank Madeline Tal Brooks of

more the I components. well. know dive issues to as this a Last a little around chain been quarter had bit want the into supply concern Just

I to the at when with this quarter just I'm be emphasized this over slides. wondering if the quarter, especially shortage look appears the expected? supplementary greater it than of However magnitude component

Shabtai Adlersberg

actually, see quarter. the also in trend Yes, continue we the second

believe So by should of be the year. we end it stabilized the

Madeline Brooks

Thank great. you. me. That's it for Okay,

Tal Liani

margins the is it Tal. general. in. -- it -- just Sorry, second to jump this about worsen going gross half in is you or I'm is in on and you I'm to When going stabilize asking the margins impact say it does

Shabtai Adlersberg

know, range. better you the side margin, the was our we of second terms in of lower to will the first XXXX, of compared as if quarter we which that Yes, half gross believe be

Tal Liani

things of other the currency like improvement of because the is And else? anything chain supply is improvement because or or

Shabtai Adlersberg

chain in better We are one and we both supply month and ahead also prices. in in the quarter see

to we open buy So less the need in market, less components.

Tal Liani

Thanks. it. Got

Operator

queue. further There the to over floor back turn closing any I in are questions comments. to like no would Shabtai for

Shabtai Adlersberg

on industry. and thank We today. you underlying good Okay, we attended our nice Thank our much. operator. growth year business Have our very day. strong conference momentum track believe another XXXX. I conference With in a participation forward your We to would in continued who to in trends market quarterly next like to everyone XXXX you of call look in are thank call.

Operator

does This and call. Thank today's you conference ladies conclude gentlemen.

AudioCodes (AUDC) 2 May 222022 Q1 Earnings call transcript