Transcript Slide 1

© 2005 AudioCodes Ltd.
All rights reserved.
‘Safe Harbor’ statement
Statements concerning AudioCodes' business outlook or future economic
performance; product introductions and plans and objectives related thereto;
and statements concerning assumptions made or expectations as to any future
events, conditions, performance or other matters, are "forward-looking
statements'' as that term is defined under U.S. Federal securities laws.
Forward-looking statements are subject to various risks, uncertainties and other
factors that could cause actual results to differ materially from those stated in
such statements. These risks, uncertainties and factors include, but are not
limited to: the effect of global economic conditions in general and conditions in
AudioCodes' industry and target markets in particular; shifts in supply and
demand; market acceptance of new products and continuing products' demand;
the impact of competitive products and pricing on AudioCodes' and its
customers' products and markets; timely product and technology
development/upgrades and the ability to manage changes in market conditions
as needed; and other factors detailed in AudioCodes' filings with the Securities
and Exchange Commission. AudioCodes assumes no obligation to update the
information in this presentation.
Agenda
 Brief introduction to AudioCodes
 VoP market overview
 AUDC - Market Share
 Q3 - 2007 Highlights
 Financials
AudioCodes At a Glance
• Focus on Voice over IP - connecting networks , enabling applications.
• Market leading - Media Gateways and Media Servers.
• Leaders – Voice quality, security, feature richness and interoperability.
• Netrake acquisition - Session Border Controllers, Security Gateways.
• 14 Years Focused on Voice over IP.
• Deployed in over 75 Countries.
• ~ 677 Employees (~ 50% R&D).
• Executing and Growing – $27M 2002 , $147M 2006.
• Nuera , Netrake & CTI Acquisitions.
AudioCodes At a Glance
• Proven execution record in evolving the business.
• Chips, Blades, Systems.
• Technology 35% , Networking 65%.
• Customer base - VOIP pioneers and application developer,
NEPs\OEMs, Service Providers.
• Move up the value chain and add more value to
customers.
• 2007 Transition year
–
–
–
–
Shifting to broader customer base (NEPs\OEMs to Service Providers).
Integrating acquisitions.
Enhancing our value proposition: bundled offerings, services, responsiveness.
Offer a broader solution to customers, challenges and not just a “technology or
product sale”.
Where We Play in Networks
AudioCodes and IMS
Service/Application Plane
Signaling
Media
Application Servers - AS
HSS - HLR/AuC
SIP-AS
i.
MGW - PSTN to IP
ii.
SBC - IP to IP, security
iii.
MS - Applications
OSA SCS
BGCF
CSCF
S-CSCF
IM-SSF
Control Plane
I-CSCF
MGCF
SGW
P-CSCF
CS Network
(PLMN/PSTN)
MRF
MRFC
IMS-MGW
MRFP
UE/Devices
Access Networks
(BB, WLAN, 3G)
IP Network
IBCF
TrGW
Core IP
Network
Transport Plane
IP Network
Growing Business with Diversified Customer Base
$27M to $147M in Four Years
•Balanced Business.
160000
140000
$147,353
120000
•Networking and Technology.
100000
$115,827
80000
40000
20000
•Carrier and Enterprise Markets.
$82,756
60000
•Top 15 Customers - 47% of Sales (from 70%).
$44,228
$27,189
100%
0
2002
2003
2004
2005
2006
90%
37%
80%
70%
64%
59%
54%
48%
60%
50%
40%
63%
30%
20%
36%
41%
46%
52%
10%
0%
2003
2004
Networking
2005
2006
Technology
Jan-Sep
07
Balanced Business
•Carrier and Enterprise Markets
•3 segments : wireline, wireless (FMC, EVDO RevA, UMTS) and cable
•Grew from nearly none to many Service Provider customers within 18 months
•Global Presence, Sales & Support Infrastructure in Place
•Aligning OPEX with Growth Strategy
•Regional perspective :
North America 57% , EMEA 26%
Focused on Customers and Partners
Service Providers
Focused on Customers and Partners
System
Integrators
Leading
NEPs
SSW & Solution
Providers
Telecom - Play in Growing Markets and …
Carrier VoIP and 3G, 4G
Fastest Growing Sectors in Telecom
40%
32.20%
30%
20%
10%
25.20%
19.30%
15.60%
8.70%
6.80%
5.40% 4.20%
3.80%
2006-2010 Growth
0%
WCDMA CarrierLayer 4-7 WLAN IP PBX Routers OpticalLayer 2-3 CDMA WAN Circuit GSM Traditional
VoIP Switch
Wsitch
Switching
Switching
PBX
-10%
-8.00%
-20%
-30%
-40%
-12.80%
-16.50%
-28.60%
2010 Market Size
Growing Product Segments
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
Voice Application Servers
Media Servers
$1,000,000
Session Border Controllers
Trunk Media Gateways
$500,000
$0
CY2005
CY2006
CY2007
CY2008
CY2009
CY2010
Voice Application Servers
$151,915
$195,795
$267,394
$374,782
$481,622
$607,040
Media Servers
$64,448
$109,116
$185,246
$269,132
$370,825
$490,664
Session Border Controllers
$87,240
$143,126
$226,375
$330,365
$444,879
$591,866
Trunk Media Gateways
$1,119,495 $1,484,006 $1,648,987 $1,800,331 $1,932,538 $2,050,264
Source: Infonetics Research, 2007
AudioCodes CPE Opportunity
•
Customer Premises Equipment
•
•
Good momentum
CPE & SIP Gateway opportunities
are expanding
– Migration to C5 and Hosted
Services and enlarges
addressable market
– We surround the App, enabling
bundled offerings
Significant Enterprise opportunity
•
CPE : Complete Product Line
Mediant™ 2000 with SS7
capabilities for Operators and
Service Providers
Mediant™ 1000
with mix-and-match
modularity for Businesses
MediaPack™ 11x with FXS/FXO
interfaces
MediaPack™ 40x
with BRI interface
MediaPack™ 20x with internal
router for residential\SOHO
deployment
Microsoft Partnership
Unified Messaging, March 2006
Unified Communications, June 2006
FXO
MediaPack (Analog)
FXO
E1/T1
Mediant 1000 (Mixed)
Exchange UM
E1/T1
SMDI
Mediant 2000 (Digital)
AudioCodes and Microsoft
• The broadest gateway range for Microsoft
Unified Communications
– Exchange 2007
– Office Communications Server 2007
Q3 2007 Service Provider VoIP Worldwide Market Share
Q3 2007 Service Provider VoIP Worldwide Market Share
3Q07 market share for mid density media gateways:
• Audio Codes is first worldwide in DS0s (27%) and second in revenue
(15%);
• AudioCodes is also number one for DS0s in North America (35%),
EMEA (28%), and Asia Pacific (26%)
Worldwide M id Density Trunk M edia Gateway
DS0 M arket Share
Market Share (%)
AudioCodes
40%
Cisco
Verso Technologies
20%
Nortel
Nokia Siemens
0%
4Q06
1Q07
2Q07
Calendar Quarter
3Q07
Q3 2007 Service Provider VoIP Worldwide Market Share
Worldwide Mid Density Trunk Media Gateway Market Share
Manufacturer
AudioCodes
Carrius
Cisco
Metaswitch
Nokia Siemens^
Nortel
Thomson Cirpack
Verso Technologies
Other
Total
Category
DS0s
Revenue
DS0s
Revenue
DS0s
Revenue
DS0s
Revenue
DS0s
Revenue
DS0s
Revenue
DS0s
Revenue
DS0s
Revenue
DS0s
Revenue
DS0s
Revenue
Amount
354,828
$8,102,390
12,279
$1,568,500
198,600
$14,497,800
29,184
$1,310,720
33,000
$1,442,100
138,719
$6,519,840
17,816
$1,065,940
141,962
$5,187,600
378,274
$14,243,540
1,304,662
$53,938,430
3Q07
Share
Rank
27%
15%
1%
3%
15%
27%
2%
2%
3%
3%
11%
12%
1%
2%
11%
10%
29%
26%
100%
100%
1
2
8
5
2
1
6
7
5
6
4
3
7
8
3
4
NA
NA
Q3 2007 Service Provider VoIP Worldwide Market Share
Worldwide Low Density Trunking Media Gateway Market Share
Manufacturer
Alcatel-Lucent*
AudioCodes
Cantata
Cisco
GENBAND
Verso Techologies **
Veraz
Other
Total
Category
DS0s
Revenue
DS0s
Revenue
DS0s
Revenue
DS0s
Revenue
DS0s
Revenue
DS0s
Revenue
DS0s
Revenue
DS0s
Revenue
DS0s
Revenue
Amount
26,509
$1,377,000
87,772
$5,604,980
52,350
$2,597,000
132,400
$9,665,200
92,202
$9,678,240
36,856
$3,214,000
173,198
$7,447,472
14,989
$1,003,190
616,276
$40,587,082
3Q07
Share
4%
3%
14%
14%
8%
6%
21%
24%
15%
24%
6%
8%
28%
18%
2%
2%
100%
100%
Rank
7
7
4
4
5
6
2
2
3
1
6
5
1
3
NA
NA
Financial Performance and Targets
•
2006 + Q3 2007 Business Highlights
•
Operating Model
Business Highlights
• 2006 - ACL business grew above 25%
• Networking grew > 40%
– Mid density MGWs, CPE, MS, Service
• Technology grew ~15%
– Blades, Chips
• ACL Direct sales to Service Providers grew > 40%
• Q3 2007 Non GAAP results:
–
–
–
–
Revenues $40.4M +5% vs Q2
Pro forma gross margin 58.1%, Net Income $2.8M
Cash $134M , cash provided by operating activities $2.9M
GAAP 56% GM, NP $200K
Actual results 2007
USD in Thousands, Non-GAAP
Revenues
Cost of revenues
Gross profit
Operating expenses:
Research and development
Sales and marketing
General and administrative
Total operating expenses
Operating income
Net income
EPS
Q1-07
36,543
15,146
21,397
5.2%
Q2-07
38,444
16,025
22,419
5.1%
Q3-07
40,408
16,948
23,460
58.6%
58.3%
58.1%
9,201
9,599
2,210
21,010
387
9,594
9,764
2,160
21,518
901
9,444
9,238
2,191
20,873
2,587
506
1,383
2,784
0.01
0.03
0.06
Operating Model (Non-GAAP)
Revenues
Gross
Margin
Operating
Expenses:
R&D
Sales & Marketing
G&A
Operating income
2004
2005
2006
100.0%
100.0%
100.0%
58.5%
59.4%
59.7%
24.2%
21.1%
22.0%
24.0%
22.4%
22.7%
5.9%
5.2%
5.0%
4.4%
10.8%
10.0%
Summary
• Growing Company in a Growing Market
• Leading Edge Technology
• Business Model that Fits the Market Needs
• Global Market Presence
Thank you for your time