AUDC — AudioCodes Ltd.

AudioCodes Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Total Revenues: $63 million, up 3.1% from $61.1 million in Q2 2025.
• Services Revenues: $34.6 million, a 6.2% increase year-over-year, constituting 54.9% of total revenues.
• Gross Margin: GAAP gross margin at 65.7%, up from 64.1% in Q2 2025; non-GAAP gross margin at 65.8%.
• Operating Income: $3.2 million (5.1% of revenues), compared to $2.6 million (4.3% of revenues) in Q2 2025.
• Net Income: $0.5 million or $0.02 per diluted share, up from $0.3 million or $0.01 per diluted share in Q2 2025.
• Non-GAAP Net Income: $3.9 million or $0.15 per diluted share, down from $4.1 million or $0.14 per diluted share in Q2 2025.
• Cash Position: $64.2 million in cash and equivalents; net cash from operating activities was $6.1 million.
• Dividend Declared: $0.20 per share, totaling approximately $4.8 million, payable on September 3, 2026.

2. Strategic Updates and Business Highlights

• Growth Engines: Continued momentum in Live Managed Services and Voice AI, contributing to $84 million in annual recurring revenue, growing 20% year-over-year.
• Microsoft Teams: Revenue from Microsoft Teams Phone grew 5% year-over-year, with strong pipeline expansion and a total contract value increase of 73% year-over-year.
• Voice AI Growth: Achieved over 50% growth year-over-year in the Voice AI segment, with a target of reaching $50 million by the end of 2028.
• Backlog: Increased to nearly $90 million, up 23% from the previous year, indicating strong future revenue visibility.
• Product Innovations: Continued enhancements in AI-driven solutions, including the launch of Voca CIC AI Receptionist and improvements to Meeting Insights Cloud Edition.

3. Forward Guidance and Outlook

• Revenue Guidance: Raised to a range of $251 million to $256 million for 2026, up from the previous range of $247 million to $255 million.
• Non-GAAP Diluted Net Income Guidance: Reiterated to be between $0.60 to $0.75 per share for 2026.

4. Bad News, Challenges, or Points of Concern

• Product Revenue Flatness: Product revenues were reported as flat, indicating potential challenges in this area compared to service growth.
• Geopolitical Risks: Ongoing hostilities involving Israel may impact operations and market conditions, posing risks to future performance.
• Market Competition: The competitive landscape in AI and voice solutions is intensifying, which may pressure margins and market share.

5. Notable Q&A Insights

• Customer Engagement: Management highlighted strong customer engagement and increased adoption of AI solutions, particularly in sectors like healthcare and logistics.
• Sales Cycle Reduction: Noted a reduction in sales cycles for new opportunities, indicating a maturing market for AI solutions.
• Future Investments: Plans to continue investing in Voice AI and conversational AI technologies to capitalize on emerging market trends and customer demands.

Overall, AudioCodes reported solid financial results with growth in recurring revenues, particularly in AI and managed services, while also addressing potential risks from geopolitical factors and competitive pressures.