AUDC - Earnings call transcript Q2 2024

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Operator

Good morning, everyone, and welcome to the AudioCodes Second Quarter 2024 Earnings Conference Call. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Roger Chuchen, Investor Relations at AudioCodes. yours. is floor the Roger,

Roger Chuchen

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

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

risks, subject may are of demand. to, in and but new target to statements the acceptance ability and the needed, for global ability conditions factors possible materially limited factors integrate impact well that the and in hostilities and cause affect conflict technology competitive the Israel upgrades, Hamas on and the to other and on loan business AudioCodes companies a develop could pricing market conditions and Israel in the tariffs into between as product involving the and may changes manage our customers, broader Hezbollah effects operations regional acquired and Hamas into Forward-looking in These uncertainties as results by adverse of impact that differ as COVID-XX covenants and markets; possibility with additional the to this in markets, development, the and pandemic financing, in in possible from Israel products any other warrant operations, conditions uncertainties, parties of products various need military our AudioCodes products; not risks demand acquisitions, the successfully sell produce of attacked to ability operations a its perform our of operations current our the disruptions satisfy by of limit stated the of from future and supply agreements, general for obligations detailed include personnel update products AudioCodes and company's AudioCodes business; market results products and possible the and and information. current as in to the the in actual those economic and assumes are could to solutions; factors Commission. Securities industry no with our of or this of U.S. statements. Exchange particular, service and and such our shifts effect to AudioCodes moving result of and disruption in actions AudioCodes and obligation the ability Israel to existing timely other military filings

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

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

Shabtai Adlersberg

this industry. will our Chief the presenting Baruch, quarter business discuss the quarter. highlights of AudioCodes. and like Good everybody. trends me to to financial for then I a morning in Roger. Niran and will is Finance of Financial welcome of start President Niran summary would overview and off I the and review second business by good quarter With XXXX conference afternoon, and Vice Officer call. you, Thank all morning, our developments

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

Niran Baruch

everyone. Thank you, hello, and Shabtai,

conjunction of with website were this $XX $XX release the the call. of total period. revenues in will of and of On of in second amount last I the remarks, everyone XX.X% revenues over call, revenues. second a the contains year. second in referring quarter that non-GAAP post reported this year-ago million, Services on for accounted formal $XX the The million discussing an revenues Investor Services XX, of we be information supplemental as second my will morning, for start deck. and to the split non-GAAP financial we follows: reconciliation deferred I our million both today's Pacific, like million June supplemental shortly over was earnings results. be to release Relations Before financial up The quarter for I by North quarter earnings that Asia Revenues were Revenues XXXX. AirLink of XX%; as that June compared geographical remind million, $XX.X America, EMEA, we would and XX%; quarter Central will America, our X%. Latin were as XXXX, XX, for the to $XX.X issued on and million morning press quarter $XX.X XX%; earlier this the region X.X% GAAP increase

QX for our compared the revenues X.X% for $X.X compared the $X.X of gross QX QX equivalents, million in for to XXXX. compared compared share of to results June for of million deposits, million largest diluted second was marketable was customers $X.X to or used of XXXX. historical results per EBITDA XXXX. are XXXX, XX.X% million XXXX. quarter the our compared GAAP Non-GAAP for QX XX.X% follows: or top in the for operating our the margin QX quarter XX.X% and gross XX% $X.X Purchase to Non-GAAP XX.X% investments was million of related $X.XX by $X.X than cash, XX.X% new net non-GAAP the of an second of in quarter $X.X in quarter was the property QX quarter the income higher of in of securities, diluted cash for XXXX. quarter end At XXXX. or distributors. million for income share non-GAAP $X.XX Our Operating compared million headquarters represented the of per per $X.X the of significantly million. to was to quarter, are $X.X was revenues $X.X quarter of as per attributed to of share margin was for X the quarter, X.X% of XX revenues in quarter XXXX. to was quarter million diluted was million which income million million $X.X X.X% million in second financial leasehold of aggregate income XXXX. QX to $X.X diluted or second income share bank cash $X.XX in XX% to revenues Net as $XX.X $X.XX or or EBITDA operating million Net EBITDA was XXXX. totaled improvements EBITDA activities Non-GAAP QX operating net revenues million $X.X $X.X periods compared income corporate equipment or Israel. was for in Non-GAAP or and $X.X compared the for follows:

any court XX, days. expect elevated sales historical In CapEx ordinary which in The of valid remain levels. Israel approval July of we the $XX item received part to this approval were we through to additional XXX return January of also to aggregate million as is line We in court This purchase up of shares. Days approval an amount expect June XXXX. XXXX, dividend X, declare us to third outstanding after permits amount. to this XXXX, to quarter, of a

August a we XXXX. The million. August declared dividend close approximately Earlier on $X.X is of outlook. dividend XX, of cash of quarter, this of our will also per trading The our the $X.X a $X.XX at the the shareholders be million. to During dividend total acquired Business XXX,XXX all XXXX, morning, shares approximately aggregate share. we paid ordinary for record of consideration amount of of of XX,

our million range to financial, relates we to million. reiterating guidance $XXX are XXXX it $XXX As revenue our of

we the On quarter guidance in tax net practice for as our noncash adjustment we our our Effective tax or impact only income tax the as reconciliation. adjusted include non-GAAP of this forward in to have part our adjust XXXX, as second presentation the to are the non-GAAP this was side, Prior and expense. deferred going applicable from per non-GAAP quarter, share calculated non-GAAP expenses year expenses tax earnings per to share. profitability relation EBITDA our income of adjusting to practice to GAAP non-GAAP

mainly presentation and EPS tax believe any potential unchanged outlook basis, the more generation EBITDA million non-GAAP On on the is tax during recognized tax business in potential XXXX tax non-GAAP Shabtai. Specifically, lower the quarter the million the first I the of the EBITDA from This of our in this we prudent now expenses future, million $XX expense losses, for derived adjustment change operating on than cash call. quarter payment has is million, for business. to non-GAAP highlight back the readily from With the will foreseeable XX notable XXXX, earnings of this we tax to to the end based change turn for no of XXXX guidance it earnings realization on non-GAAP U.S. the $XX generated asset. $XX the the to GAAP provide in previously tax of our To believe We cash NOLs future. XXXX of in to implied future. foreseeable deferred elevate approximately the guidance compares expenses guidance tax that as provided impact expense presentation XXXX true reasonably and XXXX. continue to deferred non-GAAP to be that at is will due which XXXX company's call over our EBITDA net actual the believe the in confusion second in

Shabtai Adlersberg

top-line Services report business, and Judging XXXX, regards and by first the leg Thank our half XXXX. quarter second year over gateway year-over-year represents planned, revenue to XX% our and AI conversational pipeline solid to AI business. of well, future sequential the company for In as of Microsoft AI second a with provides the quarter of the strong highlighted Enterprise strong to UCaaS by you, as the Within us Teams and Niran. area conversational revenues emerging Live business. second the enjoyed the business XX% the success growth this business business, growth grew support conversation in potential AI I'm engine up our growing of with business in in and perform Bookings year-over-year. consecutive marked for year-over-year. continued in made success XXXX in business full with outlook CX to our Microsoft the next progress year-over-year. and a to recurring Teams second conviction the X.X% XX.X% up Teams Microsoft we Managed a by quarter quarter ongoing for our uptick of business, about second results, in we markets positive the Live legacy pleased and which momentum experience revenue, annual customer XX% was half development of healthy Conversational positions positive business continues

to year-ago Our quarter. fueled become our on guidance track second to XX% business and and XX% managed to accounted is key services, million momentum live to business in quarter our at XXXX. exit XX% compared quarter the which go-to-market. revenue, million grew $XX about services achieve the grew year-over-year of to continues XX.X% our $XX evolve services revenue us the annual managed in recurring of $XX in ended to million second This ongoing Services putting

markets and years such of investment CCaaS, strong and the our strong focus key have Our most with in recurring growth legs growing business paving to growing The booking the for recent growth X areas a contributed AI. rooted deeply ongoing as conversation UCaaS, of in trends. made

nowadays, of stems First unparalleled live with and services AI based business. Live portal scale comprehensive connectivity and delivery live our market Teams for added recording on an Contact platform, from our the CIC and for AI delivery Center these of Teams conversational last substantially XX% support. hold unique which are our the services, analytics center contact and mature managed platform Voca a communication The and provides collaboration services services, strength on market. scale us edge services, position services in and services. Among platform and year share, we voice rely inference Teams, about were foremost, where large voice, live which

the services of and of as XX% the seen are services. I've We in portion can This booking live mentioned, again, the Teams rapid be positioned thus large growth value-add XXXX. well to a market, in adoption win which grew through Microsoft

invoiced not the second represents backlog, do of the Just the most not to services of financials the XXXX. show and was This second the sheet, one Teams our strength XXX% which in the $XX you of $XX delivered managed AudioCodes give that our and yet balance of growth, at for year-over-year quarter, just numbers, of those and at sold million are in business. haven't live or Live important million we full, that managed end speaks in but part quarter Microsoft compared to service end

in a XXXX is area emerging and big Second, in services. the of way AI conversational

this several to this in have projects in previous saw base aim growth million year. won in end year, starting already about a above $XX We years. from XX% we XXXX. And up bookings We low

At creation we position market. GenAI infrastructure, unique enjoy As time networking, much invest modernization At workplace our the the all capabilities while due advanced space fact for services of new more. costs including the ability supplying technologies. technologies, to cloud that AudioCodes, fueling GenAI conversational area know, and due advanced services to in substantial we and same models, is applications of in and very technologies the to time, expanding technology cognitive in network management, one to and services, its own of support innovation device and Modem compenset security, language unique cutting the practice we large AI in enterprise most the a and telephony, we

unique such, these complex fairly contractor our prime are As GenAI-relacted which advantage. a and implement. That difficult projects, become we to for have is

Let shift in the back with from revenue perspective and with legacy a our during evolution business years in on sales provide in main and years the halt XXXX, factors that recent me business to coupled half XXXX the to our now XXXX. service of recurring the into model our outlook Declining to the provider relating the business take CapEx a for provide for drove you beyond. a were basis history step growth our business and XXXX during story XXXX first broader

we conversation digits keep every in starting believe XXXX live business reemerging position beyond. business AI worked And However, platform the and in CX competitive to years our double With and hard on and businesses AI and these to beyond, see growth CAI as XXXX recurring are growth in business. we and invested less We and in moderate in laying to Legacy in and [indiscernible] have the growing results. conversational XXXX UCaaS beyond. our of year. both build return and overall growth our decline our were UCaaS, and CCaaS also confident where starts favorable we and in profits in impact in business ability our live service markets, will revenue to

Before metrics. discussions, turning to shift quickly the TLB let's to profitability second quarter

our and Our primarily over in the mix, range at software XX.X% attributable long-term XX% first XX% more and second levels margin XX.X% non-GAAP improvement within a of and to is This of product year XXXX XXXX to quarter namely gross compares XX.X%. year, quarter the services. favorable quarter came to in margin

Second, line decrease non-GAAP small expectations, non-GAAP in rationalization quarter OpEx initiatives. was sequential $XX.X representing a second OpEx relating million, our latest headcount with to our

margin to led quarter and $X.X margin as quarter opportunities a the of with business in remaining X.X% in expense to about quarter and our $X.X improvement versus and Reference is reduction, steady front, or third X.X% quarterly of beyond. the people million and reminder, On OpEx area further XXX in third quarter second million contribute pipeline the with employees ago $X.X of non-GAAP for quarter XXXX. OpEx initial in we in reduction year-over-year $XXX to healthy. XXXX be million realized in still from we The non-GAAP of XXX income performance 'XX guidance of first compared second bulk down or headcount, the gross of quarter in second and margin. ended headcount thus the to year As the strategic operating a to XX.X% the expect which

We to are XXXX of revenue reiterating our $XXX million. guidance $XXX

$XX As year explained EBITDA $XX quarter million, implied EBITDA million. was guidance earlier non-GAAP during unchanged by of from non-GAAP is $XX full Neon, XXXX, non-GAAP the to guidance call. earning we are EPS In which introducing million provided last

Now the some business let's of move lines. to

about talk Let's Microsoft.

growth than business XX% the representing improvement. XX% on accounted approximately XXXX. Second second or target million business annual compared Revenue an in to The quarter, a quarter. quarter the recurring was XX%. was land our puts X.X% with our services, XX% XX% ago The Teams revenue track the for XXXX $XX the From growth versus Microsoft us onetime region. live average XX% of growth terms live to year managed full year steady more grew quarter CapEx strategic live year-over-year business to to quarter accordingly range by million, to of of grew year of in CapEx second increase led perspective, XX% recurring in mix solution lines, revenue in again compared within annual bookings $XX which In in to Teams steady ago North American recurring our XX% compared year-over-year

with and users, of is ample the million penetration gains. fraction with over drive Microsoft's than PSCN to monthly thus XX% of voice teens recent penetration us believe reminder, disclosure a a we less over phone the As Teams runway XX million low and ongoing users, active XXX representing multiyear provides just

further level second business quarters. the throughout growth for X As quarter, that MPR the last Microsoft from in remain high Teams calls a for report adoption XX% us, our Marcos that Microsoft are market such, growth and use is ads with the the X at or -- and and the in in rooms million previous accelerated fond with analytics, Teams of growth good to We of lastly they at saw XXXX. so already be quarter And now at are we previous UCaaS predicted We driver area Teams that meetings is potential. lying push Teams. momentum meeting estimates Microsoft was reported revenue MTR and on of expect of on same about year-over-year. the entire nowadays end new believe revenue of good about where to CoPilot for ahead. Teams the business, key

to XX,XXX from X remind firm, enterprise Teams complex time. the PBX to contract Winning migrate users, talk quarter. customer in goods may We live with reach continues signed next to XXX,XXX as legacy with initial multinational over [indiscernible], nearly or to essential the Also providing initial to Just about be XX-month Teams marquee a requirements key a win meaningful. with takes vendor. to one users consumer contract win accounts to years the plans not rise its services

customers executing services our expand on trust accounts and term, by product recipe So long and over material and time. portfolio broad building be proven generating land with effective with strategy to these revenue contribution of leveraging to have

owing the second our experience a our the full let's the good of the half have healthy, center material see in remains fourth We cloud the XXXX. migration infrastructure. with to business, of voice by close in this and refresh opportunities about of Pipeline in business. to changes to we customer-specific choosing year their XX% quarter portion the the balance declined products support visibility number to a of do the We healthy year-over-year continues the customer rest third contact large outlook quarter. year. deal generation circumstances. large and positive to segment to market of Revenue Now deal for to growing in related services that's projects, in for move this CX a quarter, the In a expect And pipeline a pushout environment. impacted and

mentioned is financial CX with organization suite large center several contact deals services This just insurance customers. additional platform, services. to services and delivered mentioned live using the the to proposition Live just services and our and quarter, in EMEA. our and Pacific offer partners large exercise I'll of way voice complete America, are for us services some we to which our Asia now customer is X. North I and delivered banking, generalizes the allow closed value

center SBC connection. deliver centers. the and quality The -- is only This about know center up first competency, contact this contact where global we global business for at contact We large one stage, is which superior or to bring core XX% of your solution tied our migrated. our that carrier have is

runway ahead. about from long forecast XX% application in that of next each the very revenues a years, We our So will grow this a X year.

Second it solution call. expect this is area, to In channel growth. we call our high click or omnivoice service we

more we Then details, We in security. are about details And go-to-market provide will I'll million talk shaping going we years, that next we enhanced after can this revenues XX we forward. definitely and call to sharpening more But regarding EUR the than a within of can about it. services and X then call believe our help add call. analytics. the talk not calls can provide those

won revenues, projects to revenue XXXX, CX the way In has $X our delay the voice coal connectivity service, million quarter, just revenue of third started adding compared institutions top half. terms to financial in Live XXXX. of that projects a the a in longer with to revenue. large We additional with with security with just win new you added large give have signature. a interesting idea projects In about with of cloud. to an migrating million some very bookings before. increasing U.S. about in And evolved. in about an may cycles XX% grew more decision U.S. the that XX $X.X with financial million XXXX, Bank then XX the require than on project these first in see In institution Naturally, the we the $X.X We year the number we In

business, the mentioned, AI let revenue that Bookings XX% business. me grew as quarter. was, conversation to Now the year-over-year. Shifting for to above XX.X% move I've

the total We engine company second year. value expect contract to become with expected important most for forward $XX the cross growth million it going this the to

XX% XX% the years. least We to year-over-year of each value grow this line coming for expect contract in that at to

following. key So investments color in out on conversational provide the I'll point our activity. To more a definitely AI,

a I've critical to to done again, business relates the believe in GenAI plays majority before, mentioned CAI that of as role. First, we AI project be where implementation,

in the of most However, integrated the lies solution. value

out dependent in R&D AudioCodes voice software for the headcount Growth ability XXX% more where edge dependent successful XXX the we where CAI, AI GenAI. and At solutions dependency. to Key in be care, building these delivery currently expansion. the close Microsoft of of days clearly future and this system an extensive force surface depicts engineering government. AI solutions. the enterprise application about Talking providing which mainly the developers, believe shines. time, and is conventional than heavily on fine-tuning activities, the services project. are While have of full is space, it's GenAI We it. employ in baseline copilot and on this UCaaS technology over mentioned to of the CCaaS we compete to X/X we that edge invest a cloud are same solution, key highly GenAI an services growth management, security, for to and in of working business activity device the we and practice, strong cloud verticals is health networking thus, more. of This about telephony in multitudes in an we including finance, I And areas, research increasing have cognitive experience of and networking, applied competition. own

is And top SaaS production, in recording we SmartTAP Microsoft provide which AIFR have now for compliance for over center forward automation enterprise called an more centers, native operation and provides on-prem our tools. for more meeting have an Insights to providing interaction We intend solution interaction enterprise-grade applications, are analytics and on Azure CIC, by add Teams. Meeting of XXX, insight we recording. Then recording which the We projects. contact meeting activity then expand do multi-tenant contact in case Azure, going and Meeting application X Voca and leading Insights collaboration the CAI

for mentioned, as first to to a the XX% into compared we plays end Bookings are strategy customer quarter overall existing and benefit upsell base. Voca the already It the company's already Voca CICs center the where the second bit year. solution at a business at Turning last of are at well XX% to CIC. I've contact of life enjoy Teams.

are CIC the almost points. in serving XXXX, mention XX% pipeline this already in entire America, Revenues the an them to data to We more above education we won North quarter. expect sequential them to total. customers increased in year. a U.S. now close additional expect in XXX% few XXXX. account We quarter-over-quarter double educational X Voca triple To

in XXX won We project of have We a more Teams. IVRs. And this manufacturer channel continued momentum powers EMEA, signed customer migration with than additional a more continue XXX calls Again, Fortune [indiscernible] center with -- omnichannel education, analyst now we quarter. We is partners of with to contact channel Voca's we contact we than agents. first-ever month. leading large own to a handling from Zoom a largest moving date this XXX have million X.X in deployment a CIC then X

managers for nowadays -- sharing application Meeting of and to and it and information of inform conversation productivity The the Meeting -- Insights substantial Needless have awards efficient using use Meeting management in of meetings growing based to the to this AudioCodes we enhances of decision-making judges Insights meetings to the delivering and is used last analyses, week, Meeting the category delivered as than today better say, Insights, part end business across the an organizational XXXX. the company-wide by a access Turning productivity in solution, information selected captures, publication meetings AudioCodes its Meeting using experience. business AI, on Insights Meeting see online conversational recognized of enterprise meeting, SaaS of now AI application in you leverage and for organizes online of a throughout intelligence. accelerating which it company exchange information in every a high an overall communication high of Teams meeting organizational a its Teams Glad publication, has of UC best data enabling leading application. Insights winner organization. and the organization, AudioCodes, and insights, pickup part years as day. Insight's unleashed more than decision-making processing Award ability SaaS into more is XXX productivity experienced use portfolio At that and and the X we very transforming AI AI allowing domain, services and

completed to seen expect grow XX%. of month-over-month. now and tremendous and to Meeting quarter, some from throughout prompts deployment more mention data use quarter. -- many will Insights. technology very insights We the in we points. fast. We second AI SaaS We've starting than growth use a have see double delivered We've The Insights seen solution Just LM the in of probably to organizations Meeting first

rather we also and into expand the to solution the plan than and French, English provide that more. Meet, for on month, on-prem languages -- U.K. Ebro a U.S. provide be just for solution Spanish, to We're Dutch, Cisco and team's solution cloud. [ expand the already a forward, European Google August, Going a we Webex of next we Zoom Italian, providing intend top doing more And to German, to providing few storage and environments. ]

expanded of rapid XXXX. few thousands a growth. expand we So in We dollars to in just business that millions few XXXX deliver that millions, is

mention as top unique to again We for improve very we're meeting, the features to notifications. prepare up. meeting ready working had with. will meeting message solution led to allow connection it, mobile I had that mentioned. wrap that automation you'll me you'll deal that, that CRMs you to meet productivity, anyone Just add integration on be and on next with expand many with such into to more a with in get We'll your of areas and my I'll And and

to my that, growth driving term in and operator. this the quarter, the on top-line XXXX in executing believe expansion We healthy delivered move lays areas And in fostering support and business with you, foundation to Q&A. on growth significant while of business successfully concluded I we'll So beyond. our cost-reduction Thank session initiatives. margin we long presentation have while strategic priorities our have the

Operator

[Operator Instructions].

MacWilliams Your Barclays. Ryan of from is first question coming

Damian Cogen

business Ryan how This improved is the year? Damian to see Cogen help were growth should year-over-year quarter. off growth from of Can half service key for the quarter? Great drivers we MacWilliams. business the understand product back the about And in what in you think growth service lines the us the of in in

Shabtai Adlersberg

is nicely One lines, the Live resources. we most to anyone which key about again, now the our where and to understand service prospects Teams, This business lines. is growing Microsoft Yes. of services attention of and business, wants is should live Actually, the who our XX%, X year-over-year. managed put pay energy is business which

I with the more a And on But throughout several round known, services. We Live the then based platform. services SBC. years, connectivity we for the that call have comes developed fact Platform are have platform. have added Gateway and both built, we strength it's years right, we think, from which

and services. management foremost, First

for contact inference applications. user can So We've of which solutions added center sites. transcription UCaaS the become and solutions. then both on top Teams additional the manage key of We recording that center CCaaS provides added nowadays and evolution we recording and deletion contact application, in of

strengthened. further So services those adding

here is land So and expand. our strategy

of on the a trusted recognized reliable the win win, usually one right, solution, dominant had then time. it. using in invent So the of to such Florida, be we a universities of for voice-related the we top the leader connectivity the X when with Last with contract. business last University tunnel important took our because consider -- They where market. each an us And to U.S. contact they to offered very we we the signed we as And we and sell supplier, SBCs our long And customer, UCF, a been them center services, have our applications simply year, do in evaluate account. Central upsell

I it's addition you -- ESAD, about it's the expand new expect, and I solution. meeting So the was and talking was land again, of more right? and can talking services about coming

about talk for interaction centers, contact analytics cetera. Let's et

for Teams is environment. to is very platform us it, believe why high I voice-related see substantially we above integrated And competition. any having live runway applications So this believe puts that a that the in integration that business we seeable this long

So we've with continue. the long that confident the the will, growth that, kind moat, of built we're if you business. And fairly Microsoft runway, Teams will phone for

that's leg. one So

just The which is the substantially AI. lag, smaller other which one, CAI, conversational is new the

is of in you language GenAI. are experience bring technologies, telephony management, evaluating we group too and years, since resources that we of this large of I've a mentioned. XX -- not years multitude many technologies, a models believe it. as comprehensive of organizations And from We our in have networking optimizing specializing name and have in now we may again, Here, set type many XX,

basically We're new internal there if NLM are OpenAI that and the other we things mirroring and Gen is in handling, So and activity abilities system the AI group right? cloud with working software oil cloud the services. with with more.

So we capabilities to definitely end-to-end driver future. expect our deliver will become the very strong success for ability that full based solutions these a in on

forward. going key the which are those we business base elements our X upon So

Damian Cogen

the continued what us help Great Can to adopting And in customer AI of see appetite is conversational AI your use that better understand the you improvement product. adopting customers than are product? kind cases for just expectations?

Shabtai Adlersberg

Yes.

to in have -- next lot Israel Edcor, was where here we businesses. we got strategy my access to have So a set of up always great well, to

So already and care completely sector, government in in delivered, we sector, the the health few a projects sector. both and have financial running in the

a for with project now. example, back years for Red So X completed in Ambelon service working Cross Israeli XXXX. we That's

delivered have We X space. government projects the for

Clalit. Israel, service called X.X delivered are organization medical the We is already largest million It has the subscribers.

have and steering we setting like running solution calls. day. calls call for XXX,XXX a We for It's now have a

not So to phone this it's XX a to at where to on different projects need products, have a I environment. need which sensor not the connect would you say CIC to right? are based we Voca that to not you contact It's Meeting cellular applications, and It's close connect Insights. stage, center,

elements, extract shine. we so to deliver of analytics, where you lot record, to of to management need do need can a areas to You infer, reports, transcribe

Operator

Your next from question Needham Company. is Ryan of coming & Koontz

Ryan Koontz

do idea? to high you from Can see revenue Do you or kind to might return there transition single-digit over out about growth think you growth cut over point have you the at think And a take wanted an at we subscription. over again, view, this license to transition recognition question double-digit? what about the see product expect last service? as reinflect you approaching set you maybe to this of I from different multiyear goalpost me this when a

Shabtai Adlersberg

the Yes. should same time. see forward. talk we picking at I moderating. the X decline on to X and services And up time, is about of same services that visibility, our we Based going believe CAI at the legacy cores managed

primarily now in themselves. first actually be going that So either happened growth. us that quarter, such XXXX, repeat quarter and And or and second we definitely will decline I based our year as not onetime 'XX back that business into for business this I will recurring expect sale on believe that are to business, chances

of beyond. and come growth quarter the So expect 'XX to we back second

Ryan Koontz

That's very helpful.

anything gateways, And seem like investing days. these the on just there? particularly in it recovery legacy the On the going doesn't lot a are operators

So wondering legacy what's shipments. behind in your gateway recovery

Shabtai Adlersberg

between quarter quarter for Yes. quarter in year, When that the back was stabilized to into the a the look the first 'XX, there we year. year of we of 'XX fourth the in history in rest gateway decline last quarter quarter and saw first this the sales, then the the of and it to first sharp

give end definitely that all, think, So decline believe we business in to all, throughout totals, do you Gateway in already of will a back continue up not moderate just quick All I in if sum that expect decline or got a I'll the see will all XX believe 'XX. or of million. end its like At quarter, combined think the our decline will million the throughout than this I we so $XX business of quarters. million, about million. I was don't to gateway coming another XXXX, we somewhere $XX XX more roughly we

drop. we already experienced largest all, I in all think So the

will And so will it moderate vanish. and

Ryan Koontz

one quick a just And housekeeping here. Helpful.

use the On cash higher quarter. the in

in the there to drove receivable mentioned continue you'd have on Any the in and and use cash a you things see on this. up and anything third the cash But use quarter? the investments that quarter. You I like modernization guys other the the did that puts higher that in out was will takes accounts call quarter. the else headquarters flow

Niran Baruch

nice we had was million. a quarter, in it operating flow cash flow cash the $XX So very -- first

dramatic during receivables, a to level. with accounts no we or there accounts but saw increase lower the with slight to managed regards So receivables. the this quarter, inventory allowance issues collection We doubtful change the our is although in no

here, positive all it the flow our capital expenditures cash all, in we we relates after. headquarters. operating back And quarter So and to to to the with regards at believe a third new then will

the We millions then third quarter, have will have back before. to a that will be the invested level we and used to few regular more we in

Operator

from question next Your coming Samana Samad Jefferies. of is

Unknown Analyst

you the UCaaS curious either UCaaS a spending first Samad. now and look narratives Bill backdrop seen this conflicting quarter. changes CCaaS is to on guys perspective CCaaS macro are There [indiscernible] right the or Maybe question. in on macro be Would a you vendors. if the for for or material and as out the have quarter-over-quarter, third any from This of what front lot means

Shabtai Adlersberg

to believe, the by Okay. Well, I also review continues. in information and stop. space. all Actually, in it doesn't Contact we all, center provided analysts activity seem

UCaaS from of you'll global it this If economy. and Connect take Enterprise no intensive active that's on application, growing growing. March is back center less. impact fairly in was the And year, contact our

still it strong. very However,

in technology a value excellent We say provide more I'll ends simply copilot, [indiscernible] the well, give mentioned modernizing actually next enterprises and that and substantially meetings on back when Gen -- I've the technology, just situation UCaaS situation that that economic again, their hopefully have use now there's an from year. as because seen that likes to that, will impact networks. of in the investing the to AI not push case, come of that definitely will I ample definitely calls analyzing enterprise. allows believe

files, have in to messages, we day. while intel meetings messages or there all from, our So data sit in is nowadays, derive been using information digital which meetings, exchange e-mail files is we

has good to huge that a captured used so intelligence. not of been not information generate there's has far, new amount So been

few expect of Copilot UCaaS. that the help chatbot do more So we to technologies increase and a definitely use will GenAI,

all now, So we in behavior. we'll see are in better that optimistic XXXX,

Unknown Analyst

AI in digging conversational like, kind conversational how color the what then justifying product of customers Shunt, the getting little over has are just year-over-year helpful. the Can finish Maybe deals would feedback and what sales on initial examples are the motion those line? cost there be Any increase, been you deeper a some anecdotes some relay customer on of AI customers it. adopters. XX% from you grew Got And provided there.

Shabtai Adlersberg

and needs One a transcription with we're but corporation highly turnaround recording Yes. that in sites. X the meetings, diverse back operational about Very effective of before its let's distribute operation work time you talk mean, I we simply, be to was then a it. they and had about to in got that running able however, locations its and organization usually weeks

pressure you be can to if full and transcribed sent solve of have a the items over distributed getting immediately end communication over that some line. the you're time Nowadays, action at meeting, summary issues the

really efficient, And contact however, was management that's operated. what Think that that had operation idea big going slow about on was no center in that's operation an not was a all plus. about working, analysts those and big, a very takes it real-time So also to an fairly calls.

operation have tools Now resources. managers summarization our hot inform extraction what scientists its is not, application and insights as where to such allow and focus which and where the is and data we and that management invest analysts should is,

give your have example, such of retention. plenty use many can you you leaving around. organization, employee I tell we So knowledge cases that -- an all I

departure the the to If employees that usually. the gone Many previous you months and have And us will the $XX,XXX knowledge a it organization, It design replacement, blow. X left made talent, that experience years total. of take a ago, lost each are were in about we a loss. a cost all it's several you engineers. recruit your calculation at has We

your meetings. insights a All of use capability in to you need their do is tell summary employees you for each to if you that meeting. meeting tool Nowadays, and include each

Now lives, experience. replaces and new and recordings got in person comes sudden and the hundreds summarization and from when of of this tens that all somebody inside a text employee him,

matter sudden, a a it or productive of fully all and of X. within a effective week become So can

money why tells of definitely examples, use lot X to a which spend you organization advantage of different our AI.. that's the take So of will

Operator

will to closing any for Shabtai end [Operator back Instructions] hand We have appear session. now I reached over our to remarks. the question-and-answer of

Shabtai Adlersberg

day. call like the look UCaaS, to good are Thank Thank growth you, towards continued growing operation we a coming our next the and who call. believe underlying and CAI, all. transitioning you With in and We the years. quarterly CCaaS, profitability operator. trends business attended would your our growth business forward conference market we in I our thank to conference in Have momentum enterprise everyone today. in good nice participation

Operator

very does conference. much. you conclude today's This Thank

a you may your time, your phone for this have day. Thank disconnect You wonderful participation. lines and at

AudioCodes (AUDC) 30 Jul 242024 Q2 Earnings call transcript