Key Highlights

  • Third quarter Revenue rose 4.2% to USD 64.1 million, ahead of the USD 63.4 million estimate.
  • Services revenue climbed 19.9% to USD 37.1 million, while products revenue fell 11.7% to USD 27.0 million.
  • Non-GAAP EPS of USD 0.16 matched the estimate, and GAAP EPS rose to USD 0.15 from USD 0.10.
  • The company repurchased 1.5 million shares for USD 15.1 million, and cash and investments fell to USD 47.1 million.

AudioCodes (NASDAQ:AUDC) reported third quarter revenue of USD 64.1 million, up from USD 61.5 million a year earlier and above the USD 63.4 million estimate. Non-GAAP EPS of USD 0.16 matched the estimate but trailed USD 0.17 in the year-earlier quarter. GAAP Net Income was USD 3.6 million, or USD 0.15 per diluted share, compared with USD 2.7 million, or USD 0.10, a year ago.

Services Offset a Softer Products Line

The revenue mix shifted toward services. Services revenue reached USD 37.1 million, up from USD 30.9 million, and now makes up about 58% of the total. Products revenue declined to USD 27.0 million from USD 30.6 million. For the first nine months, revenue was USD 189.2 million, up from USD 183.0 million.

Chief executive Shabtai Adlersberg said combined annual Recurring Revenue from the Live managed services suite and the VoiceAI Business reached USD 87 million, up 16%. VoiceAI revenue grew 50% over the first three quarters of 2026. He said Voca CIC, the Microsoft Teams contact center product, grew more than 40% in the quarter, while Meeting Insights and Mia Edge together saw revenue more than double. The Microsoft Teams business grew 4%, and connectivity for UCaaS and CX makes up more than 85% of the company's business.

Margins and Cash Generation

GAAP gross Margin was 65.7%, compared with 65.5% a year earlier, and non-GAAP gross margin was 65.8%, unchanged. Operating expenses rose to USD 38.8 million from USD 36.2 million, led by selling and Marketing at USD 21.2 million, up from USD 18.9 million. As a result, GAAP Operating Margin narrowed to 5.3% from 6.6%, and non-GAAP operating margin fell to 7.4% from 9.5%.

Net income benefited from financial income of USD 1.2 million, compared with USD 64 thousand a year earlier, while non-GAAP net income excludes Exchange Rate differences. Operating Cash Flow was USD 4.1 million, in line with the prior year's USD 4.1 million. Cash, deposits and investments stood at USD 47.1 million as of September 30, down from USD 75.7 million at the end of 2025, mainly because of share repurchases and dividends.

Capital Returns and Guidance

The company paid a Dividend of 20 cents per share, about USD 4.8 million, on September 3. It bought back 1,517,568 shares for USD 15.1 million during the quarter and received Israeli court approval in September to deploy up to USD 30 million on repurchases and dividends through March 9, 2027. About USD 26.7 million remains available, and 23.3 million shares were outstanding at quarter end. The weighted diluted count was 24.5 million, against 28.7 million a year ago.

AudioCodes reiterated full year 2026 guidance of USD 251 million to USD 256 million in revenue and non-GAAP EPS of USD 0.60 to USD 0.75. Microsoft business revenue was USD 125 million in the first nine months, against a stated full year goal above USD 170 million.

Metrics to Track

Nine month revenue of USD 189.2 million compares with the full year guide of USD 251 million to USD 256 million, which by simple subtraction leaves USD 61.8 million to USD 66.8 million for the fourth quarter. Nine month non-GAAP EPS of USD 0.44 compares with the guided range of USD 0.60 to USD 0.75, leaving USD 0.16 to USD 0.31 for the fourth quarter. The third quarter's USD 0.16 sits at the low end of that remainder. Services revenue of USD 37.1 million compares with products revenue of USD 27.0 million.