AudioCodes (AUDC) Q2 2025 earnings summary

Executive summary

• Revenues for Q2 2025 rose 1.3% year-over-year to $61.1 million, driven by growth in connectivity, Live managed services, and AI-powered business applications.

• Microsoft Teams business increased 6.5% year-over-year, with strong demand in Conversational AI and a healthy CX pipeline.

• Services revenue grew 1.9% year-over-year to $32.6 million, representing over half of total revenues.

• Live managed services annual recurring revenue reached $70 million, up 25% year-over-year, supporting a robust outlook for the second half of 2025.

• Strategic transformation towards an AI-driven hybrid cloud software and services model continues, with robust pipeline and traction in Conversational AI and managed services.

Financial highlights

• Q2 2025 revenues: $61.1 million (+1.3% YoY); services revenues: $32.6 million (+1.9% YoY).

• GAAP gross margin: 64.1% (down from 65.5% in Q2 2024); non-GAAP gross margin: 64.5% (down from 65.8%).

• GAAP operating income: $2.6 million (4.3% of revenues); non-GAAP operating income: $4.4 million (7.2% of revenues), both down YoY.

• GAAP net income: $0.3 million ($0.01 per diluted share), down from $3.8 million ($0.12) YoY; non-GAAP net income: $4.1 million ($0.14 per diluted share), down from $5.5 million ($0.18).

• EBITDA: $3.6 million (GAAP), $5.2 million (non-GAAP), both down YoY.

• Cash and equivalents: $95.3 million as of June 30, 2025; net cash from operating activities: $7.7 million.

• Declared cash dividend of $0.20 per share, totaling $5.7 million, payable August 28.

Outlook and guidance

• No annual financial outlook provided due to tariff uncertainty; will resume guidance when tariff rates are clarified.

• Expect $3–$4 million in tariff-related cost burden for full year 2025.

• Conversational AI segment expected to grow 40%-50% in 2025, with hyperbolic growth anticipated in the second half.

• AudioCodes Live ARR target for 2025 is $78M-$82M.

• Webex-related revenue impact expected mainly in 2026, with initial pipeline building in 2025.