Audiocodes (AUDC) AI Stock Analysis

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Audiocodes

(NASDAQ:AUDC)

Rating:64Neutral

Price Target:

$10.00

▲(12.36%Upside)

Audiocodes maintains a stable financial position with moderate profitability and a strong balance sheet. Technical indicators suggest a stable stock price. The company's reasonable valuation and solid dividend yield are attractive, though earnings call insights point to challenges from tariffs and margin pressures. Overall, Audiocodes presents a balanced risk-reward profile with potential for growth in AI services, tempered by current macroeconomic uncertainties.

Positive Factors

Business Model

The company continues to migrate customers to a subscription model, which is expected to result in lower revenue volatility over time and higher margins.

Growth Potential

AudioCodes is strategically positioned to capture an AI-driven market.

Market Position

AudioCodes remains uniquely positioned to capitalize on the Microsoft Teams Voice ecosystem through a strong competitive position in SBCs for these customers.

Negative Factors

User Growth

Teams total user growth has slowed at 320 million global users.

Audiocodes (AUDC) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$268.90M

Dividend Yield4.04%

Average Volume (3M)58.12K

Price to Earnings (P/E)15.8

Beta (1Y)1.33

Revenue Growth-1.13%

EPS Growth61.49%

CountryUS

Employees946

SectorTechnology

Sector Strength78

IndustryCommunication Equipment

Share Statistics

EPS (TTM)0.15

Shares Outstanding29,679,754

10 Day Avg. Volume44,974

30 Day Avg. Volume58,122

Financial Highlights & Ratios

PEG Ratio-1.47

Price to Book (P/B)3.00

Price to Sales (P/S)0.00

P/FCF Ratio83.87

Enterprise Value/Market Cap2.08

Enterprise Value/Revenue0.57

Enterprise Value/Gross Profit3.52

Enterprise Value/Ebitda6.32

Forecast

1Y Price Target

$10.75

Price Target Upside20.79% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

Audiocodes Business Overview & Revenue Model

Company DescriptionAudioCodes Ltd. provides advanced communications software, products, and productivity solutions for the digital workplace. The company offers solutions, products, and services for unified communications, contact centers, VoiceAI business line, and service provider business. Its products include session border controllers, life cycle management solutions, VoIP network routing solutions, media gateways and servers, multi-service business routers, IP phones solutions, and value-added applications, as well as professional services. The company also offers One Voice Operations Center, a voice network management solution; Device Manager for administering business phones and meeting room solutions; AudioCodes Routing Manager for handling call routing in VoIP networks; and User Management Pack 365 simplifies user lifecycle and identity management across Microsoft Teams and Skype for Business deployments. In addition, it provides AudioCodes Live for Microsoft Teams, a portfolio of managed services for simplifying Teams adoption; appliances for Microsoft Skype/Teams for Business such as survivable branch appliances, CCE, and CloudBond 365; and a range of value-added voice applications comprising SmartTAP, Voca, VoiceAI Connect, and Meeting Insights. Further, the company offers managed services; and AudioCodes Live Cloud, a Microsoft Teams software as a service solution that enables service providers to offer their business customers a seamless migration to Microsoft Teams. It primarily markets and sells its products through a direct sales force and sales representatives to original equipment manufacturers, network equipment providers, and systems integrators and distributors in the telecommunications and networking industries. The company primarily operates in the Americas, Europe, the Far East, and Israel. AudioCodes Ltd. was incorporated in 1992 and is headquartered in Lod, Israel.

How the Company Makes MoneyAudioCodes generates revenue primarily through the sale of its hardware products, such as session border controllers, media gateways, and IP phones, as well as software solutions related to voice networks and unified communications. The company also offers professional services, including consulting, support, and maintenance, which provide a recurring revenue stream. Key partnerships with major technology providers and network operators enhance AudioCodes' market reach and contribute significantly to its earnings. Additionally, AudioCodes capitalizes on the growing demand for cloud-based solutions and digital transformation in enterprises, which drives further adoption of its products and services.

Audiocodes Earnings Call Summary

Earnings Call Date:May 06, 2025

(Q1-2025)

% Change Since: -4.09%|

Next Earnings Date:Aug 05, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted steady revenue growth, increased interest in AI and cloud services, and robust cash flow. However, significant challenges include the impact of tariffs, pressures on margins, and delays in realizing revenue from conversational AI. While there are positive developments, the uncertainties and challenges balance out the achievements.

Q1-2025 Updates

Positive Updates

Steady Revenue Growth

Revenues for Q1 2025 were $60.4 million, marking an increase of 0.5% from $60.1 million in Q1 2024.

Services Revenue Growth

Services revenues for the quarter were $32.6 million, up 3.4% over the previous year.

Increase in Net Income

Net income for Q1 2025 was $4 million, up from $2.1 million in Q1 2024.

Expansion in AI and Cloud Services

The company reported success in gaining interest from several large global system integrators for its conversational AI business.

Robust Cash Flow

Net cash provided by operating activities was $13.5 million for the first quarter of 2025.

Microsoft Teams Business Growth

The Microsoft Teams business grew 7% year-over-year.

Cisco WebEx Calling Expansion

Progress was made in certifying solutions for Cisco WebEx Calling Cloud Connect, expanding the potential for connectivity business.

Voice AI Business Growth

Voice AI business grew above 10% year-over-year, with a growing pipeline and increasing customer interest.

Negative Updates

Tariff Impact and Uncertainty

The company faced an estimated additional cost burden of $3 million to $4 million for the full year 2025 due to tariffs, leading to the withdrawal of annual guidance.

Decline in Non-GAAP Operating Income

Non-GAAP operating income for Q1 2025 was $5.4 million, down from $6.3 million in Q1 2024.

Gross Margin Pressure

Gross margin and profitability came lower than planned due to tariffs, increased R&D investment, and less favorable product mix.

Challenges in Conversational AI Revenue Realization

While there is strong customer interest in conversational AI, it takes time for opportunities to translate into actual growing recurring revenue.

Company Guidance

During the AudioCodes First Quarter 2025 Earnings Conference Call, the company reported revenues of $60.4 million, marking a 0.5% increase from the previous year. Service revenues grew by 3.4% to $32.6 million, accounting for 54% of the total revenues. Geographically, North America contributed 48% of the revenue, with EMEA, Asia Pacific, and Central and Latin America accounting for 34%, 14%, and 4%, respectively. The gross margin was 64.8%, and operating income reached $3.6 million, or 6% of revenues. Non-GAAP net income was $4.7 million, with non-GAAP operating income at $5.4 million, or 8.9% of revenues. The company highlighted a strategic pivot towards AI-powered voice services, noting a 25% year-over-year growth in Live managed services, which now represent $67 million in annual recurring revenue. Despite challenges such as new tariffs, which imposed a $350,000 cost burden, AudioCodes remains optimistic about its connectivity business and conversational AI initiatives, which are expected to drive future growth. The company did, however, withdraw its annual guidance due to ongoing tariff and macroeconomic uncertainties.

Audiocodes Financial Statement Overview

Summary

Audiocodes shows moderate financial performance with stable gross profit margins and a solid balance sheet. However, net profit margins and revenue growth have declined, indicating pressure on profitability. Strong cash flow generation is a positive, but cash flow volatility remains a risk.

Income Statement

Neutral

Audiocodes has shown stable gross profit margins around 65.4% in recent periods, with a slight decline in revenue growth compared to previous years. The EBIT margin stands at approximately 7.2%, indicating moderate operational efficiency. However, net profit margins have decreased from 12.1% in 2021 to 7.1% TTM, suggesting pressure on net profitability.

Balance Sheet

Positive

The company maintains a solid equity ratio of around 56.2% TTM, reflecting a strong balance sheet position. The debt-to-equity ratio is relatively low at 0.19 TTM, indicating low leverage risk. Return on equity is modest at approximately 9.3% TTM, showing moderate efficiency in using shareholders' equity to generate profits.

Cash Flow

Neutral

Audiocodes has demonstrated strong operating cash flow relative to net income, with a ratio of 1.95 TTM, indicating good cash generation efficiency. Free cash flow has grown by 34.6% TTM, reflecting improved cash management. However, fluctuations in investing and financing cash flows present some volatility risks.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
242.47M	242.18M	244.38M	275.09M	248.92M	220.77M
	Gross Profit
158.62M	158.16M	158.35M	178.78M	170.89M	149.82M
	EBIT
17.55M	17.19M	14.42M	31.32M	39.52M	38.35M
	EBITDA
20.61M	21.07M	18.53M	34.30M	41.96M	40.62M
	Net Income Common Stockholders
17.24M	15.31M	8.78M	28.47M	33.75M	27.25M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
66.54M	62.38M	38.20M	41.91M	80.09M	41.38M
	Total Assets
330.48M	335.90M	337.52M	323.83M	349.27M	358.12M
	Total Debt
35.14M	36.46M	39.28M	13.72M	19.53M	29.81M
	Net Debt
-27.99M	-22.29M	8.74M	-10.81M	-59.89M	-11.12M
	Total Liabilities
144.57M	144.09M	149.41M	134.07M	143.77M	148.27M
	Stockholders Equity
185.90M	191.81M	188.11M	189.76M	205.50M	209.85M
Cash Flow		Free Cash Flow
14.76M	10.97M	8.93M	6.79M	46.17M	36.95M
	Operating Cash Flow
33.63M	35.25M	14.89M	8.28M	47.34M	38.48M
	Investing Cash Flow
25.56M	17.81M	19.98M	-19.67M	42.62M	-139.31M
	Financing Cash Flow
-26.39M	-24.86M	-28.86M	-48.60M	-51.48M	77.09M

Audiocodes Technical Analysis

Technical Analysis Sentiment

Negative

Last Price8.90

Price Trends

50DMA

9.07

Negative

100DMA

9.85

Negative

200DMA

9.59

Negative

Market Momentum

MACD

0.03

Positive

RSI

40.97

Neutral

STOCH

5.86

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AUDC, the sentiment is Negative. The current price of 8.9 is below the 20-day moving average (MA) of 9.24, below the 50-day MA of 9.07, and below the 200-day MA of 9.59, indicating a bearish trend. The MACD of 0.03 indicates Positive momentum. The RSI at 40.97 is Neutral, neither overbought nor oversold. The STOCH value of 5.86 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AUDC.

Audiocodes Risk Analysis

Audiocodes disclosed 69 risk factors in its most recent earnings report. Audiocodes reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Audiocodes Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AEHR	76 Outperform	$337.01M	14.59	21.69%	―	-14.48%	46.79%
CRNT	68 Neutral	$213.21M	9.20	15.02%	―	11.94%	377.86%
AUDC	64 Neutral	$268.90M	15.79	9.33%	4.04%	-1.13%	61.49%
Sector *	62 Neutral	$11.80B	10.08	-7.46%	2.99%	7.37%	-8.21%
ASUR	59 Neutral	$260.41M	―	-7.01%	―	4.52%	-20.60%
OCFT	47 Neutral	$283.19M	50.30	-24.43%	―	-45.80%	-13.09%
CAN	45 Neutral	$215.82M	―	-90.43%	―	65.68%	50.28%

* Technology Sector Average

Performance Comparison

AUDC

Audiocodes

8.90

-0.68

-7.10%

AEHR

Aehr Test Systems

11.32

-0.99

-8.04%

ASUR

Asure

9.59

1.97

25.85%

CRNT

Ceragon Networks

2.24

-0.22

-8.94%

CAN

Canaan

0.67

-0.55

-45.08%

OCFT

OneConnect Financial Technology

7.08

5.30

297.75%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.