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Q1 revenue was $62.1 million, up 2.9% year‑over‑year, with non‑GAAP EPS of $0.14 (vs. $0.15 a year ago), and the company reiterated full‑year 2026 guidance of $247–$255 million revenue and $0.60–$0.75 non‑GAAP EPS.
AudioCodes is shifting to managed services and voice AI—services now represent 54.7% of revenue and the company exited Q1 with $80 million ARR (nearly 20% YoY growth); conversational AI grew over 50% and the company is targeting 40–50% segment growth in 2026.
Balance sheet and capital return moves: cash and equivalents were $68.1 million, the company paid a $0.20 per‑share dividend (~$5.3M) and repurchased 1.7 million shares for about $13.7M, while backlog rose to $79 million (up ~15%).
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AudioCodes (NASDAQ:AUDC) reported first-quarter fiscal 2026 revenue of $62.1 million, up 2.9% from $60.4 million in the prior-year period, citing accelerating momentum in managed services and voice AI offerings. The company also reiterated its full-year 2026 outlook for revenue of $247 million to $255 million and non-GAAP earnings per diluted share of $0.60 to $0.75, according to Chief Financial Officer and Vice President of Finance Niran Baruch.
Baruch said services revenue rose 4.3% year over year to $34.0 million and represented 54.7% of total revenue. Geographic revenue mix for the quarter was 49% North America, 34% EMEA, 13% Asia Pacific, and 4% Central and Latin America. AudioCodes’ top 15 customers represented 53% of revenue, with 34% attributed to its eight largest distributors.
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On a GAAP basis, gross margin was 66.2% compared with 64.8% in the year-ago quarter. GAAP operating income was $3.4 million, or 5.4% of revenue, compared with $3.6 million, or 6.0% of revenue, a year earlier. GAAP net income was $2.0 million, or $0.07 per diluted share, down from $4.0 million, or $0.13 per diluted share, in the first quarter of 2025.
On a non-GAAP basis, gross margin was 66.3% versus 65.2% a year earlier. Non-GAAP operating income was $4.8 million, or 7.7% of revenue, compared with $5.4 million, or 8.9% of revenue, in the prior-year quarter. Non-GAAP net income was $3.8 million, or $0.14 per diluted share, compared with $4.7 million, or $0.15 per diluted share, in the first quarter of 2025.
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Baruch said the company ended March 2026 with $68.1 million in cash equivalents, short-term bank deposits, short-term marketable securities, and long-term financial investments. Net cash provided by operating activities was $12.8 million in the quarter, and days sales outstanding were 104 days.
AudioCodes paid a $0.20 per share cash dividend during the quarter. Baruch said the dividend, totaling approximately $5.3 million, was paid on March 6, 2026, after being declared on Feb. 3, 2026.
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The company also repurchased shares. “During the quarter, we acquired 1.7 million of our ordinary shares for a total consideration of approximately $13.7 million,” Baruch said.
President and Chief Executive Officer Shabtai Adlersberg described the quarter as reflecting continued execution on a strategy to transform AudioCodes into “a voice AI-driven hybrid cloud software and services company.” He said the company’s “two primary growth engines,” live managed services and voice AI, together contributed to an $80 million annual recurring revenue (ARR) exit at the end of the first quarter of 2026, growing “nearly 20% year-over-year.”
Adlersberg said conversational AI grew “above 50%” and accounted for roughly 8% of quarterly revenue. He added that the company has increased investments in voice AI across research and development and sales and marketing to scale its channel presence and drive cross-selling into its enterprise installed base. He said those initiatives are “delivering tangible results and returns,” and that the company’s start in voice AI puts it on track for a 40% to 50% growth target for the segment in 2026.
AudioCodes said enterprise revenue represented “over 90%” of total revenue in the quarter, with Adlersberg highlighting ongoing strength in Microsoft-related business, which he said grew 6% year over year. He also said product revenue was about flat while services revenue grew 4.3% and now accounts for about 55% of total revenue.
Adlersberg pointed to an expanding managed services backlog as a support for future revenue conversion. The company exited the first quarter with backlog of $79 million, up from $67 million a year earlier, which he said represents growth of close to 15%.
Adlersberg said the company’s non-GAAP gross margin of 66.3% was within its long-term target range of 65% to 68%. He also cited first-quarter non-GAAP operating expenses of $36.4 million, compared with $35.0 million in the fourth quarter of 2025 and $34.0 million in the year-ago quarter. The year-over-year increase was attributed “mainly to targeted investment plan to support long-term growth in the conversational AI business,” which he called the company’s main growth engine for coming years.
AudioCodes ended the quarter with 1,000 full-time employees, up from 920 in the prior quarter and 960 in the year-ago quarter, Adlersberg said. Adjusted EBITDA was $5.8 million, representing a 9.4% margin, compared with $6.2 million and a 10.2% margin in the prior-year quarter.
Adlersberg detailed several customer wins and product developments during the quarter, including activity tied to Microsoft Teams deployments and growth in AI-related offerings.
Microsoft-related wins: Adlersberg said the company signed a 48-month contract with a tier 1 system integrator to deliver session border controllers (SBCs) and gateways on a recurring revenue basis to support a global Teams voice deployment for a European multinational. He also said AudioCodes signed a multi-year “low single-digit million-dollar agreement” with an existing tier 1 global carrier customer to transition an on-premises deployment to a cloud-based service, enabling the carrier to provision connectivity services for enterprise clients. In addition, he said the company recognized bookings for an initial phase of a 20,000-user migration to the on-premises Live Pro platform for Teams Voice supporting high-security prison facilities, with expectations that the platform will ultimately support at least 70,000 users.
VoiceAI Connect and Live Hub: Adlersberg said bookings in the quarter increased by more than 80% year over year and newly created opportunities grew by about 100% compared with the year-ago quarter. He cited a “tier 1 win” with a major North American retail conglomerate adopting VoiceAI Connect to power virtual agent customer experience. He also said Live Hub annual recurring revenue grew more than 20% sequentially and more than 100% year over year.
Voca CIC contact center offering: Adlersberg said AudioCodes recorded “record invoicing” for Voca CIC in the quarter, growing more than 60% year over year. He highlighted a Swiss banking institution selecting Voca CIC as its exclusive platform for customer service engagement on top of Microsoft Teams, replacing a legacy contact center system. He also said the company added another U.S. university customer, marking its 10th university customer in North America for Voca CIC.
Meeting Insights Cloud Edition: Adlersberg said the service reached record levels for number of meetings and active users, contributing to strong year-over-year monthly recurring revenue growth exiting March 2026. He noted the platform integrated Cisco Webex during the quarter following earlier support expansion to Google Meet, positioning Meeting Insights across what he called the four top UCaaS systems.
Mia-OP and edge/on-premise GenAI: Adlersberg said the company saw a “significant pickup” in opportunities in Israel and internationally, with geopolitical dynamics acting as a catalyst to demand for edge computing. He cited new customers in Israel’s public sector, including an agreement with a large healthcare services organization for transcription services and an initial purchase order tied to a centralized municipal purchasing entity. He also said the company signed a contract with a regional IDF command for transcription and summarization services for incoming citizen interactions. Outside Israel, he described a proof-of-concept trial with a North American system integrator serving major U.S. government agencies.
No analyst questions were taken during the call, as the operator noted the company reached the end of the question-and-answer session without any questions in the queue.
In closing remarks, Adlersberg said AudioCodes sees continued momentum in its UCaaS and CCaaS operations and ongoing growth in voice AI, adding that the company believes it is “on track to continue our growth in next coming years.”
AudioCodes Ltd is a global provider of advanced voice networking and media processing solutions for enterprises and service providers. The company designs and manufactures a comprehensive portfolio of products, including session border controllers (SBCs), media gateways, IP phones, management and monitoring software, and cloud-based communications microservices. Its offerings support a wide range of unified communications (UC) and contact center deployments, enabling secure, high-quality voice connectivity across on-premises, hybrid and cloud environments.
Founded in 1993 and headquartered in Rosh Ha'Ayin, Israel, AudioCodes serves customers in North America, Europe, Asia-Pacific and Latin America.
The article "AudioCodes Q1 Earnings Call Highlights" was originally published by MarketBeat.