AudioCodes Q1 2025: Conflicting Signals on Operator Connect, CCaaS Demand, and Manufacturing Strategy

Earnings DecryptTuesday, May 6, 2025 7:32 pm ET
2min read
Operator Connect trends, CCaaS demand and market opportunity, manufacturing strategy and tariff burden, go-to-market strategy with Cisco, and move of manufacturing out of China are the key contradictions discussed in AudioCodes' latest 2025Q1 earnings call.



Revenue and Service Growth:
- AudioCodes reported revenue of $60.4 million for Q1 2025, an increase of 0.5% over the previous year.
- The growth in services revenue, which was $32.6 million, up 3.4% year-over-year, accounted for 54% of total revenues.
- This growth was attributed to the company's focus on expanding AI-powered voice services and maintaining a strong connectivity business.

Impact of Tariffs and Cost Management:
- The impact of new tariffs on AudioCodes in Q1 2025 was approximately $350,000, with a total cost burden of $3 million to $4 million estimated for the full year.
- The company plans to mitigate this impact by relocating a majority of its manufacturing out of China to other countries within the next three to six months.
- This proactive measure aims to lower the tariff burden significantly, from a potential impact of $10 million to $12 million without action.

Microsoft and Cisco Opportunities:
- AudioCodes' Microsoft Teams business grew 7% year-over-year, with total contract value signed in Q1 reaching $18 million, growth of about 5%.
- The company was selected as one of four enablement partners for Cisco's Cloud Connect Enablement program, with an estimated opportunity of $5 million in the next three years.
- These strategic partnerships and market expansions are expected to expand the potential for connectivity business and contribute to future growth.

Conversational AI and Voice AI Expansion:
- The conversational AI business grew above 10% year-over-year, with a strong pipeline and healthy rate of new wins and bookings.
- The Voice AI Connect solution reported a high number of new logo wins and significant expansions, supporting the company's 2025 target of growing by 30%.
- This growth is attributed to superior SBC and voicebot technologies and increased customer interest in using voice as a natural interface for inbound calls.

Comments



Add a public comment...
No comments

No comments yet

Disclaimer: The news articles available on this platform are generated in whole or in part by artificial intelligence and may not have been reviewed or fact checked by human editors. While we make reasonable efforts to ensure the quality and accuracy of the content, we make no representations or warranties, express or implied, as to the truthfulness, reliability, completeness, or timeliness of any information provided. It is your sole responsibility to independently verify any facts, statements, or claims prior to acting upon them. Ainvest Fintech Inc expressly disclaims all liability for any loss, damage, or harm arising from the use of or reliance on AI-generated content, including but not limited to direct, indirect, incidental, or consequential damages.