AudioCodes Q2 2025: Unpacking Contradictions on Tariffs, Microsoft Growth, and AI Demand

Manufacturing relocation due to tariffs, Microsoft business growth, conversational AI revenue growth and traction, and customer demand for AI investments are the key contradictions discussed in AudioCodes' latest 2025Q2 earnings call.



Revenue Growth and Market Performance:
- AudioCodes reported revenue of $61.1 million for Q2 2025, a 1.3% increase over the previous year.
- The growth was driven by stabilization in the connectivity space and strong performance in Microsoft Teams and Webex certification.

Services Revenue and Breakdown:
- Services revenues reached $32.6 million, up 1.9% year-over-year, contributing 53.3% to total revenues.
- Live managed services showed robust year-over-year growth of 25%, with annual recurring revenues reaching $70 million.

Conversational AI and Product Development:
- Conversational AI products, such as Meeting Insights On-Prem, showed strong demand and pipeline growth, supporting the 40% to 50% segment growth outlook for 2025.
- The introduction of new products like Mia OP, geared towards regulated and security-sensitive environments, contributed to the growth.

Profitability and Cost Management:
- Non-GAAP operating income was $4.4 million, down from $7.2 million in the previous year, impacted by $1 million in tariff-related costs.
- The company is focusing on cost management and expects around $4 million in tariff-related costs for the full year.