AudioCodes Q4 2024: Contradictions Surface on Microsoft Teams Growth, Legacy Product Challenges, and AI's Influence

These are the key contradictions discussed in AudioCodes' latest 2024Q4 earnings call, specifically including: Microsoft Teams adoption expectations, legacy product declines, and AI's impact on business segments:



Revenue and Services Growth:
- AudioCodes reported revenues for the fourth quarter of $61.6 million, an increase of 2.2% over the previous quarter. Services revenues grew 5.4% to $34.2 million, representing 55.6% of total revenues.
- Growth in services revenue was driven by a 10.9% year-over-year increase in professional and managed services.

Microsoft Business Expansion:
- The company's Microsoft business revenue increased by 13% year-over-year in the fourth quarter, marking the highest quarterly growth this year. Full-year growth was 6%.
- The increase was due to the adoption of Microsoft Teams phone ecosystem, which added over 3 million new seats, and the launch of the live services platform.

Voice.ai Business Development:
- The Voice.ai business experienced 30% growth in 2024, contributing about 5% to total revenue.
- This growth is attributed to the emergence of Gen AI technology and increased customer demand for AI-driven business voice applications.

Profitability and Cash Flow:
- Non-GAAP gross margin improved to 66.5% in the fourth quarter, and net cash provided by operating activities was $15.3 million for the quarter.
- The improvement in profitability and cash flow is due to cost management and operational efficiency, despite increased investing in sales and marketing to drive business growth.