Audiocodes earned $ 8.6 million, or 26 cents a share, in the first quarter of 2022

"The number of users of the Teams voice function is expected to grow from 4 million in 2021 to 8 million in 2022 and 31 million in 2026. The bottom line of investment in manpower and business development was a $ 7.4 million increase in revenue and a 6.2 million growth. Dollars in expenses that eroded the company's profitability in the first quarter of 2022. Audiocodes shares responded with a 6% decline to the deep erosion in profitability in the past quarter.
Audiocodes earned $ 8.6 million, or 26 cents a share, in the first quarter of 2022 based on US GAAP. This is a 14% decrease from the same quarter in 2021. Audiocodes earned $ 11.1 million, or 33 cents a share. In the first quarter of 2022, on a non-GAAP basis, that is, less expenses related to the allocation of options to managers and employees, acquisition expenses and financing expenses related to changes in the dollar value of the company's lease in Israel. 2021 to 33 cents a share, lower than analysts' forecasts for a profit of 36 cents a share on a non-GAAP basis. % Of current price.
Audiocodes provides web-based voice communication solutions, communication network access gates, and media processing solutions for the digital work environment, primarily voice functions in Microsoft's and Zoom's enterprise collaboration software. Audiocodes also develops artificial intelligence-based voice recognition products for applications such as bot-based voice chat and Meeting Insights systems for recording, transcribing analysis and sharing meetings in the organization.
Audiocodes 'revenues grew by 13% in the first quarter of 2022 compared to the corresponding period in 2021 and amounted to NIS 66 million, according to analysts' forecasts. The growth in Audiocodes' revenue was due to an increase in revenue from the provision of voice functions to Microsoft's enterprise collaboration software (which operates primarily with large companies) which grew by 50% compared to the same quarter in 2021 to $ 30 million in the last quarter. There was also a growth of 50% in the marketing of voice functions for Zoom Phone, which leads the small and medium-sized companies market to the level of a few million dollars.
The second reason for Audiocodes' growth in the past quarter is a 25% increase in its revenue from managed services, ie network management services for customers who previously purchased products from the company such as controllers for coordinating communication protocols. Audiocodes' activity in the field of customer service centers has gained momentum since the acquisition of CallVerso, a company that provides a virtual call center that handles customer inquiries by voice and text instead of a human call center and automates tasks such as scheduling and billing. According to Adlersberg, the acquisition of CallVerso is already bearing fruit and the company is experiencing a sharp increase in the opportunities and pipeline of the deals it faces. Already in the first quarter of 2022, the company received orders in the amount of $ 500,000.

The field of voice access to chat, with bots for example, to the customers of the communications giant Woodphone is growing rapidly and the total annual value of the contracts signed by the company in this field has grown by 40%, so Audiocodes is optimistic about the chances of growing artificial intelligence products by 50%. -2022 to the level of $ 10 million. Adlersberg expects strong growth in this area against the background of the rapid transition of companies operating customer service centers to operations using bots that significantly reduce their operating expenses. Adlersberg predicts that this trend will continue for the next two years and looks like a lot of value destruction in companies operating in the customer service center market like Genesys, Five9 and InContact of NICE (-0.43% 68850). He mentions that companies like Microsoft and Google are entering the field due to the ability to introduce automation and artificial intelligence.
The growth in the field of organizational collaboration software and customer service centers and managed services was offset by a 10% decrease in revenue from marketing products to Internet-based communication networks such as access gates to communication networks, telephones and communication protocol coordination controllers. Audiocodes' operating profit decreased 20% in the first quarter of 2022 compared to the same quarter in 2021 and amounted to $ 8 million, which is 12.1% of turnover compared to 17.2% of turnover in 2021. The sharp decline in operating profit is mainly due to a sharp rise in component prices that the company was required to pay due to supply chain disruptions that reduced gross profit by $ 1.4 million. The decrease is also due to the recruitment of 132 new employees, which increased the number of the company's employees by 17%, and an increase in the average salary of the company's employees, which led to a 20% increase in the company's operating expenses.
Another factor in the decline in Audiocodes' operating profit and profitability in the last quarter was a 13.6% strengthening in the effective exchange rate (after the effect of hedging transactions) of the shekel against the dollar in the current quarter and last year. This strengthening has increased Audiocodes' payroll expenses in dollar terms.