Q1 2020 Earnings Call
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Thank you everyone for joining us today your teleconference will begin shortly thank you for joining us in your conference will begin shortly thank you.
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Greetings, ladies and gentlemen, thank you were standing by welcome to the Audiocodes first quarter 2020 earnings Conference call.
At this time, all participants will be in listen only mode and the question answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero from your telephone keypad.
Please note this conference is being recorded.
At this time only in the conference over to Brett most with Hayden IR right you may begin.
Thank you hosting the call today are Shabtai, Adlersberg, President and Chief Executive Officer, and around Brooks, Vice President Finance and Chief Financial Officer before we begin I like to remind you that the information provided during this call may contain forward looking statements relating to audiocodes business outlook future economic performance product introductions plans and objectives.
Related there too and statements concerning assumptions made or expectations as to any future events conditions performance or other matters are forward looking statements as the term as defined under U.S. Federal Securities law.
Forward looking statements are subject to various risks uncertainties and other factors that could cause actual results to differ materially from those stayed in such statements. These risks uncertainties and factors include but are not limited to the effective global economic conditions in general conditions in audiocodes industry in target markets in particular.
Since supply and demand market acceptance of new products and the demand for existing products 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 the market conditions as needed possible need for additional financing the ability to satisfy covenants and the company's loan agreement.
Possible disruptions from acquisitions, the ability of audio coaches successfully integrate the products and operations have acquired companies into Audiocodes business possible adverse impact of the cobot 19 pandemic on our business and results of operations and other factors detailed in Audiocodes filings with the U.S. Securities Exchange Commission Audiocodes assumes no obligation to update this information.
In addition, during the call Audiocodes refer to non-GAAP net income in net income per share Audiocodes has provided a full reconciliation of the non-GAAP net income and net income per share to its net income in net income per share. According to GAAP in the press release is posted on its website.
Before I turn the call over to management I like to remind everyone. This call is being recorded an archive webcast will be made available on the Investor Relations section of the company's website at the conclusion of the call.
With all that said like the to the Cobre Shabtai Shabtai. Please go ahead.
Thank you Brett good morning, and good afternoon, everybody I would like welcome all well for core conference calls with me. This morning is unbelievable.
I'm not sure officer, and Vice President the finest logical.
Iran with saw though like there's nothing that national overview. The core I will then review of the business highlights in summary for the core and then discuss trends on developments in our business and then that's true.
Dan Sunday into the cure a nice session Iran.
Thank you so far in their lives.
As usual on today's call will be starting to both GAAP and non-GAAP financial results.
No I mean breast wonder Duffy issued earlier. This morning contains a reconciliation of the supplemental non-GAAP financial measure.
I wouldn't be starting on this call.
Revenues for the first quarter with 52 million young and increased 11.7%.
That's the first quarter last year.
So that's probably not supposed to walk through Rose 17.7, New York accounting for 44% of stuff already.
There are multiple studies, so grabbing adult smoker study so when it when he was 64.2 billion compared to 52 news on March 31st 2019.
Revenues by geographic region for the quarter with little or.
North America, 41%.
Hi, Good morning America, 10%, India, 44% and that was up a 50 tasting person.
Our book gifting cost than they should not be okay.
Jump at 62% to fill the news in the quarter, well reach 50% well attribute that to our 11th largest distributors.
Gross margins for the quarter, what 65.9% compared to 62.8% in Q1 2000 thing.
Non-GAAP gross margin for the quarter, what 66.1 person compared to 63% in Q1 2019.
Operating income for the fourth there were 6.2 million compared to an up there in income of 4.5 million in Q1 2019.
On a non-GAAP basis, what barely operating income was 7.9, you done well she's <unk>, 0.2% she had been <unk>.
And pick your North American income of 5.5 can you again in Q1 2019.
Nothing compared to what they won't sustain three new young or 17 cents, especially compared to net income of 3 million attend censorship in Q1 2019.
On a non-GAAP basis quarterly net income or 7.8 million or 25 cents Fisher.
Net income of 5.5, new long or 18 cents their share in Q1 2019.
Our balance sheet, and then stronger youngest much plenty plenty of cash cash equivalents and bank deposits that fell 74.2 million.
Day sales outstanding as a small they said when you're 21 50 days.
Operating cash flow generated during the quarter was 6.8 meal.
On February four plenty plenty, we declared a semiannual dividend of 13 cents don't show that BB gun not good amount of 3.9 million, who will spend on March.
For 20 frames.
Now to providing an update on our guidance.
We reiterate our guidance for everything will support 2022 being the range of 2000 214 billion to 200 than 22 million.
We now raising our guidance and then got they looping and there should be the rights or $1.90 cents to $1.13 cents.
I think the original range of $1.88 cents, one bell MPLX and I will now turn the call over back to shop.
Thank you and Aaron.
Yeah look through both strong financial results, what that's score.
I was a month warning.
As stated earlier enough initially we enjoyed good business momentum in the core both Indiana price stays in the so lucky strike.
We experienced growth in all of the major market segment.
Which we.
Well I think we used to the market.
The contact center market and it's the latter or like the my question Mark.
On the line our success in the first score it just doesn't Bonnie is this a national performance.
Got you each of the main college revenue growth, we continue though our double digit growth back two years and the lever 11.7% growth year over year.
Gross margin expansion, we kept that'd be progressing improving gross marking the first score was much in what 66.17 compared with [laughter] score keep on the 19, 65.1%.
Fourth quarter 2019.
Operating margin improved substantially from 11.9% and that's quite a year ago, 15.2% in the first score without them plenty.
I couldn't be any growth in cross logging in the second core in the second topic. When it's funny I tell you without the nor expenses anticipate dozens of them budget items, resulting from the copy and print them Duncan.
Net income growth, so nothing quizzing owning the Swiss core Lonnie Lonnie the lingering net income of 7.8 million compared to 5.5 million in third quarter 2019, any great though 41.8%.
Cash flow get reducing cash from operating activities.
Great what they need and in line with dark ride for the all year.
Really the third the revenues continued to grow in Mount that [laughter] 4.2 million, an increase of 23.4% over first quarter 2019.
Like the threat to stretch to note here, that's with revenue growing steadily in the past several course <unk> revenue growing in its you know try and all along or ability to lead the top line target every new core stepping game you can prove.
Cool and the momentum as the confidence in achieving the revenue targets in coming quarters.
No no not that that's the the impact of the Corona virus.
You can put square funny, 20, and protection or second core and for the year.
The middle of the FICO score, we experienced difficulties the manufacturing ball hardware products in China.
I never was doing business.
Actually picking up a February and more so in March we were able to quickly recover from the associate would be like and were able to see well <unk> product that you're going to get core.
Then in compliance with you throughout the organization.
Nice to cope with the Cobbett 19 crisis with move on March 16, the majority of board where employees about 85% of them.
Well work from bomb basis.
Seamless such transitions, it's like you know our U.S. facilities and that's more in the world.
Well, what slate, including our research and development team sales and marketing.
Only must carry on premise.
That's just warehouse I know that thing.
Hey, we tried to you on Prem equipment continues to be carried you know facilities.
I'm glad to report know that so for none of the foreign belief was diagnosed philosophy.
<unk> growing a virus.
No no pleasant surprise, where like working remotely gives me collaboration tools.
That's I've mentioned before we move to working from home on box that's it.
Then I can report that productivity, it's essentially group.
Yeah.
He was confirmed across the company very famous.
Across the crime, who are using gossip Vincent.
Okay, which did great alright, that's caught up question.
However, no remotely work the Mckesson caught up rushing gear on the sabre nothing gets done them unless you do well communicate the document that followed et cetera right.
Currently communication and collaboration is much more worsen when you're not India.
So.
We see no bright future for club rushing in it but it would be minimally with large enterprises.
Well logic sense.
And well certainly you had the worked from you know well managed to coordinate working Berman.
It seems like not pure productive equal growth Youre correct.
It's been nominally the don't get discussion I like it did that this phenomenon what's the point.
Bill Bill the through lower operating expenses isn't an area going forward.
No because some of the top highlights of the for core or made market you see a server.
No. We all the thing you, though you get the service.
We score.
But the world is going to be just though and the transformation digital and remote work, but you can argue.
In recent years, we've kind of most of foreign investment then airport, so unified communication and collaboration market.
2019, we did right about 65, that's all 200 million annual revenue from gets market.
Welcome to the Mark So that's what makes it seems market.
If I did around 80 million due.
Igs revenue.
Chris close we highlighted the fact that market, it's going well pad in years and that we see them getting growth.
Well see a neutral.
Coding tool kit from early 2019.
Mark because shown compound annual growth rate about 18% and will grow.
Rushing to about 45 to something North America, and 7% globally.
Obviously market over a lot of room for expansion and growth where it both infrastructure vendors like that.
The first quarter of 2000 funny he thought acceleration the transition you cannot.
Very good crudes here [laughter] attributed mainly to the both gross several hundred said more than 600 million users worldwide using communication collaboration and web video consulting a result, with the current number or some Doug.
Yeah. So she did move to working remotely work from home.
That's reported by leading companies such as Microsoft is going well you kept usage skyrocket dug into fourth quarter of them 20 phenomena, which contributed to improved sales across the board is it safe.
It's a result.
Revenues related to you see and you see us it service in the first sport group grew more than six it depends too far business its growth mainly puts us in the market. So it seems market will provide more details.
Hey, John.
This is not passing trend.
So continued strength in April and believe that we'll see continued substantial growth.
So good in coming years, I believe that you know realized most leading businesses worldwide in advancing the patient communication collaboration application Keith we create whether you see.
The enterprise and also keep in the new emerging work, so I'm trying to.
Now I'll review some of the business nine Oh in which we are focusing go.
Our networking business kept growing 12% year over year knits reached the level of 49.9 million.
Counting know for 96% why business.
Technology line remains at 4% omni.
The networking business comprised the kooky bins like you used to sick and to be gateway again like they used to say been think go nuts into core that's affecting the moment Oh, we sold decline in dollar gateway.
Yes, it doesn't think were substantially above 20% in the first floor and provides no Bob fix it could sensipar business revenue core [laughter].
The gross weren't great certainly true up our leading product lines, including the session border control on our centralized network management, so for indoor advance routing management solution.
Well he is the fact that revenue they use the Sip business line was substantially above.
15% to 20% and you are right in previous years.
Gross margin emergence could you just one quick then no above 65, then do you think increase.
So well that transition telecommunication nice 11 looks of itself Eau de combined country, but not.
The company overall gross mugging [laughter], 6.1%.
So in summary of the review and going right. The four Oh said the based on the momentum you know our business during the third or it doesn't Bonnie and written few weeks copy with good productivity in our operations, we believe that our ability to meet the original sorry on the trends for the second core <unk> full year isn't.
Right Okay.
Oh thought like bad that are currently with no Glenn Oh, well, let you.
Oh, so it's a matter of fact, the company expects to keep like hiring a worldwide when new job this year.
Rig capital for operations into markets. So HM.
So revenue grew more than 20% compared to the year ago core.
That's what the very strong core revenue was also from Penn, calling up writing new cooking <unk>.
Nearly right at the opportunities on the square at more than doubled compared to the year ago core we see.
Continued to kill Oregon trend up New York since its Greg in recent weeks nightclub.
That's the Microsoft might look repos, a massive demand for the trial the Ips adoption by them.
What's happened you could karate right.
I have reported 44 million daily active users before the end of March So one can back that would keep growing GAAP.
Hey, Chris So that they have reported in the March 44 million compared to only 20 million in November we just said that those aren't business Kosmos with the side, so more well use of video conferencing.
One major common that they need to make here is that the majority of the seems deployment. These days.
Our maybe you or color brushing purposes, meaning.
Functionality, all presence and chat or you keep functionality being you.
And most of the time voice.
Always channels are not add that according to some estimates we believed that only about five.
Maybe.
The 10% any goulds voice that means a lot for us understanding that game Boy HM.
Oh, Yes, then the active users would growth 100 meter and above all that lives for us a huge Eric grow one we will see more emphasis food on the voice side games and we believe that we should see that's coming into the second north of 2020, a we've seen in the core accelerate.
Number two gives the Microsoft Fame.
With you know thing, but the other activity in a meeting devices.
We've seen rigel quotas developing market awareness or a partnership with Dalby and or conference room do back this year.
We have announced few weeks ago, Oh, because like Microsoft game.
Oh with <unk> with a plan really.
Rather both games afraid I.
You could that Microsoft same provides a minute service.
The fully booked a numbers game. The course of include <unk> direct route.
Microsoft Senate management use the life cycle management, most I didn't change it personnel and platts integration with on premise ATM because we both communication already know it allows businesses to move that the team relying Gennady <unk>, Oh, decode clawbacks and let's see.
Deploying project.
Universe that manner.
Let me just mesh and give some caught our eye system. Notable deal. We have won they deal with one of the world's largest chemicals company with over 100000, well you that select as Microsoft seems to work is that because what I'm networking solution.
Right from early selected thanks for the capabilities to run on markets, So as Youre and implementing markets of new local media optimization functionality, but their remote branches. They selected the other good median 800 mended application it appliances and sorry, if I mean, the dog because its monitoring and managing them.
Again, eight hundreds from our I'm network Operation Center.
Yes, the counter again demonstrate how do you could call them from its portfolio all working together and meet the needs of John Company and when combined with our professional services with a very compelling solution.
Another example is a huge energy company.
Our device its trajectory continues to gain ground with lots being done with one of the world's largest oil and energy manufacturers.
The company throwing out with Microsoft Infinite selected our flagship.
[laughter].
For 50 color touch screen phone calls there'll be workers overtime and that's the grow their deployments, we expect about 1 million in that one devices and media.
Yes.
We were awarded this project.
Folio device is an excellent sound quality.
Internalized management that we demonstrated its rob evaluation process.
In other account unified communication market zoom.
We're growing the number <unk> [laughter] or such growth.
Intensive <unk> often.
Oh, we then.
Amount so potentially look so you'll minions.
We have been up the those up on seems or amending North America, but sun.
Come from you need a pack.
And you know what opportunities, mainly the F.B.C.N., Jackie phone, which would be probably best doomed or he both right.
So a double U.S., we went live with a very efficient.
Oh session border controller, which is they pay as you go with he made up with marketplace end of January we have generated more than 30 craft. Most in February and March with first public case study a company called <unk> insurance.
Before I enjoyed employee 19, U.S. location Golden Gate, Debrided chime Sip trunk.
Oh, great who aren't session border controllers were directly on core Oh, well more than 30% year over year. I'm also the revenue came from at the private accounts about 7% Revenued in terms of Geos sleep.
Well, maybe even between North America, and what's your it's contributing about 36%.
With that so it's stepping up in the new Greg <unk> see number.
Give you an.
Active on the line you know that line, it's being you know I nearly that plan has been about 16 million in 2015 wheel on should end up plenty plenty with more than 70 million. So nice role also on the quarterly basis, what could bring both product and services. So that no one else want more.
People did the Sunday. So it is very competitive a winning many wins against compared to those out unless they want such thing.
Ah you mentioned the products and new products, we have so I've mentioned the fate as you go off bringing they doubled its mark.
Okay.
Aligning without a double it.
Align our offering without <unk> charges, which I'm boasts an actor and so I've mentioned were more than 30 cats was also today, we've been now cooperation with Google The Google One QIP program Oh. This is a true. So first so soap rank the cannot go doubts you hope virtual agents to Phil.
Let me and you, Brian Posner, where capital is can push at school numbers in the U.S. and gay.
At the moment and connect them to data. So I'll bet you light jets in the future. We've got to connect with those who are well actually I get way, which should provide a better philips on the access.
Coming to talk a bit about the war you know the globally covered and then seeing prices. It's looking companies all over the world. The move all aren't significant parts of the workforce remotes working you know to ensure business continued you. A this is what is driving teams in films usage.
Good to know treat work if not offering we have announced oh, because that's the market. So it seems that the fact that the right. They are we also all for connectivity solution for walk at some contact center agents. This isn't a highly efficient weren't bar, if you see base cellphone, which matures high bodes well be solution.
And for workers comp complex I guess.
Oh two examples some they launched I'm North American health benefits company, which is moving all of their agents to work from home basically that'd be someone that agents working from home or more proactive if you easier to fund returns.
Alan and places, it's actually bar and improve.
Provides business agility, Oh, because whats elected to defend throwing off peak one voice solution include <unk> session border controller IP phones, the nor management, one boy suppression said.
This project is expect to gradually expensive supposed won't been 15000 agents work at home.
Ah lots as Jeff mentioned that another company from Australia, and I've got a thinner company is adopted were Webrtc you see there so listen Oh for agents that boosting down Baum rapid growth of different retail chains that are weak.
Ah work technology can help the much. This company was you know just need to expense aircraft in the service capacity to thick older by phone calls and worked with them agent and leveraging guar out where I was just a couple of it gets bugel far session border controller.
We also one and this is very nothing but when we won one of the leading you see market provided worldwide. The art funny. There are seven rush into specific countries. The night back in Cala and need for <unk> and neither the high capacity, especially both control thoughtful.
<unk> regulatory requirements, we were selected <unk> seven.
As you can vendor thanks to our flexible if we see capability alongside with oral.
Back to the management suite and primary rose by both well on its sorry.
And with that that basically came through loud yet the review of our business plan. If you see I'll just get back to normal worth talking about above guidance based on the TV themed score Oh, we believed that we should be able to meet dory regional performance targets with the second quarter and full year. So we do not.
Changed guidance provided earlier, but the revenue range of.
[laughter] team the to 222.
We are confident to owning your confidence in our ability to confuse gross earnings. It's the results of the success growing again, so score above the original plan no updating door.
Good there and it's strange to 109 to one good thing.
With that that completes my.
Prison fashion and.
Can move 'em, because you don't know session.
Operator.
Thank you will not be conducting the question answer session.
If you like to ask a question. Please press star one on your telephone keypad and a confirmation telling indicate your line is in the question Q.
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One moment, please help me poll for questions.
Thank you.
First question is from the line of Rich Valera with Needham. Please proceed with your questions.
Thank you congratulations on the strong results in a challenging environment Shabtai team.
Thanks. So you you gave the the growth for the Microsoft related business, but I think you said well over 20%. So I'm wondering if you could put a finer point on that in terms of how fast. It grew and then I'm wondering if you could give a sense of how fast you're expecting that business to grow for all of 2029.
No historically, you have tended to bracket that in a range of 15 to 20, but it sounds like you're running.
Head of that so far.
And then.
Yes, you reiterated your full year guidance and it sounds like actually the Microsoft piece is running ahead of plan. So wondering if anything is running below plan. I know you mentioned your gateway business was down for the quarter. You know is that what you expected and do you expect that business to be down for the year. So so a lot there, but I'll let you.
Yeah sure those thanks Chuck.
Okay. Thanks, Rich that's the Microsoft.
Well you know originally we all we all remember you know 2019, it's been a bit slow.
But towards the end of 2019, I believe that many of 'em potential customer you know moved off defense. They were sitting on decided to go with Tim. So that's driven initially in January and February good portion of the business then this week.
No the krona crisis really closed the huge dramatic growth in Israel.
You know I'm used to service needs so meetings calls.
Conferences, so data definitely help who raised up interest in the solution, a which will business purposes.
Since to be at that moment.
Probably the bad cloud based solution.
Then on top of that I would say that we were tracking voice too.
Take 'em part again in the second although the year and I think you isn't the fact that conferencing is being oh, especially more than you shouldn't land use the web conferencing drives the Oh I mean, you if your watch zoom say, which went out and you should be with.
Conferencing solution and then followed that the phone.
You would see two thoughts focus here convalescing function.
It's very successful very good but that drive the usage of phone calls et cetera. So all in all I'll tell you that it could be pretty mature.
Mexico, <unk> or Europe.
Now we definitely see higher you <unk> you know you know development right. So at this stage I would say was our 15 to 20 million a projection by may well be that's when it comes floor next conference call. You know, we're making up that Oh, so we need to wait.
Oh, yes, who aren't gateways, yet they get with decline in the core.
More than 10% Oh actually we now can start to see that this is a trend. Unfortunately no you know gateways are being sold these days.
Wires indoor basically so the who forms one is you know and home gateway yeah, the warrant gateways.
We are embedding grossing could be and yes, there could be even called though that brought back up and it's VR, which stands for markets are stronger no ourselves into service right or a market for you all IP, where almost that Glenn.
There was no.
Hi, there but.
The portion off and that you are so well I'm more than the directly so so while that that one of the nation.
Sadly one more very important point you back when talking about revenue usually you know, we all know that we combine crack revenues and some stuff.
And while service revenues all remain at the same revenue even grow up here did decline with maintenance products. So that doesn't give some color as to what that's going into <unk>.
Got it and then I Didnt quite catch you gave some numbers for SBC revenue for last year and I think projected this year could you just.
Reiterate those numbers I didnt catch them and then if you could say how much of that.
SBC revenue you think will you know what software last year and how much you think might be software this year.
Okay. So roughly the numbers because I don't have them year, and we know those numbers are internal data and that's really all that but I would say that especially brothers control the school so for a bit above 60 minutes here.
This year, we look growth that's about 20% annually.
You know.
Squirt grew above that target we grew 30%.
That's roughly with regard to session book.
Hi, this is the mix by the way I'm being 25 cents sulfur.
So year I believed that we must be substantially higher growth. This year. So for us since they go on many of the new implementation or how they are both in <unk> I'm not sure.
Got it that's helpful. And then you mentioned your gross margin you expected I think you said you expected it to be up in Q2, and a you referenced Kobe and related.
Expenses or expenses, you're not going to incur because of co, but I wasn't sure what that comment, but if you could just clarify on your expectations for gross margin trajectory I guess into Q2.
Right. So you know we know I'm wondering if you're doing it the ranga will kind of stalled from the middle of the FICO score and and Im continues for the second core we did in new as Nate budget I am going.
Well, we're obviously, a everybody again and the traveling get going down so and some traveling good thing down a same core a marketing simply because you Ben which.
Some of which drawn out of the expense in terms of riser and growing close to shape.
Fashion or that is not happening yet no major way. So we expect all these items to come down.
Second quarter infecting off 20, corny and that would be so so you know door sensors and great increased operating margin.
No not lots my hope right.
Got it okay. So that was more in reference to operating the gross margin. Okay that makes that makes sense.
And then could you just give us an update on the voice say I business kind of where that is in terms of scale growth and any any updates there.
Right. So we have.
Domain.
There are the even though the and they'll be a bar activity and then they're looking to activity.
The MSR I know if they see a very goes very nicely and export.
Were hit we plan to go a major airports in other countries, but know that if so do the oh virus.
On the other and though we have very interesting if they would be developing your own them through new product.
Yes, we have a deliberate to market I've mentioned wanting though for us are they making inside that either yeah. So for.
For the kids and then when two of which allows you to basically crossings and allied and you're right actionable item from meeting in a very efficient way and basically we though many will become.
So what a productivity again.
Compared to what is Oh right today with a more than 10 accounts right now in beta and went back to go up in.
What was your way into second quarter. That's another very interesting product connected to the enough on who met that Google that balance so that was a gateway, which basically I love to connect collect from the in those channels into euro. The establish was this virtual agents and bought.
So we provide we have the day one of the bed bug its allow you take the Corona crisis.
Two action, where people were trying to call institution helped.
Organization or no.
That's right now you at massive lot of people most of which do not really know who use text based jet Bob.
Which you know telefonica, how much I'll take ellsberg thick.
Turning to stress. So we are providing right now very efficient solution. It's allowed to connect a massive number of indefinitely.
Channels into goes up but.
So those are two of the new developments web and we see I do.
Great. Thanks for taking the question Shabtai appreciate it.
Sure look.
Thank you. Our next question is from the line of Tavy Rosner with Barclays. Please proceed with your question.
Hi, Thanks for taking my questions and congratulation on the solid result.
As a follow up to your comments on guidance you talk about how the company managed to weather the impact of coffee 19 on your supply chain and.
And you also talked about how to switch to working from home is having a positive impact on humans. So I guess.
Looking at your reiteration of guidance are you guys being conservative or put another way before king from whom wants to laugh.
Core longer period.
Would that be very positive who your top line.
Yeah, I think no you know in one of my phone the session with loan or Investor.
Yeah, It became obvious that because right now on who have the main try and you know.
Communication, one we choose the collaboration same and second is the work from home.
And because we have huge investment made over the last year and actually we are ready with those solution connected to the right ponderous into market. Yes, we definitely you know very confident in our business growing.
You mentioned that you look on or off bottom line earnings we've been able to grow earnings more than 25, 30% every year in the past five years and definitely known in view of the new development. The no reason to be Oh, that's the mystic about it I think we'll keep right. Good just need to do the right.
We need to execute.
That's a that's helpful and I guess the last one for me how do you guys you acquisitions those as part of your growth strategy I'm I'm asking in the context of your growing cash balance.
Right. So you know it's a matter of I'm you know I'm the radio business, we in each of the business line, we do money through our and studied the environment.
Yeah. The players so competition sometime and won so we'll get into conclusion that denied business would be.
This is very little or or a good to help grow or the receivable Nike jump.
Oh, we will definitely do that so yes, you are always looking for <unk>.
Great. Thank you I'll get back to their Q.
Sure.
As a reminder to ask a question today I mean press star one from your telephone keypad.
The next question is funnily enough, Greg Burns from Sidoti and company. Please proceed with your question.
Good morning, maybe.
Maybe a little bit on the last question.
How the business maybe negatively impacted.
The.
The actions taken to to fight the virus, whether it be from it.
Sales or deployment perspective, and if we do see.
Kind of me starting to open up a little bit more is there potentially maybe a backlog of business ex provide even even more of a tailwind as we go into the second half of your thanks.
Sure so.
I believe the you know the the world will these days a much faster to cloud communications and nor is traveling that's a company would be to cope with the development then and you know you look from name nationally. This call you know how long.
The was the biggest Dodgers and quite a fast ramping company. That's all I think these effect communication and collaboration market Woolworths Oh for us that would be a big challenge to keep pace with a the need to support them you know he harnessing Catholic so the difference.
Sure you know most so far and you would will go for.
You know given the fact that business is going to cloud that some that's requirement or on prime deployment, though that is coming down the plots and all in all I believe that you know we kind of you know reveal the value all you know.
Well work remotely and be efficient and the thing.
That would really help us to get more Hum, we will not get linear Oh <unk> growing our people by the thing you can definitely grow meaner, meaning a we can now oh I get access.
Into a good resources that can find in other places so well in all these very close to see about we not really concerned with Q1, two punch the magnitude of the square would not really bothered by the declining gateway that well.
Let's say to happen alone.
Hi men and the fact that you know no use it in more than 60% of the business then engage with really decline.
We worried that there are they trying to do that some material I think we're in good shape.
Okay, great Thanks, and in terms of the.
And what you're doing with Google.
Hello.
What's the business model there is it a a flat fee as a transactional and what kind of installed bases, Google have with that that platform. Thank you.
Okay. So basically this is they suffer the.
Solution, meaning that every jet boat developer that so that's wants to add phone accessing today the U.S. in the UK and good goes to the side and click.
On using bar solution, the I want to fill up when a gateway if the price.
That's cool it seems so all in all its the suffer so solution.
Very simple.
Okay, and just the installed base.
Maybe who has a number of bots are the number of transactions that there.
Yeah, transacting amongst just to get maybe.
Yeah.
I feel for the size of the market or maybe you could talk about the overall size of the top market. The opportunity you see there for yourself. Thanks.
Right actually actually what we announced today that racing Oh, we worked hard though you put many it's not that trivial, but still it's just afraid that you know that you can think about they see past solution. They communication platform writes itself.
Connected to the Oh, one, California gateway, so we intend to connect some apart because we'll go to in voice processing grade he more advanced communication platform as a service.
That will help you know a data so virtual agents, who use mainly trip. So files boys child, so definitely the huge potential out there I'm. The bought industry grows the need for you know easy access and we were bringing down the lapping the access to it.
Using just the same bought a the odd there.
Okay and lastly.
I guess when you give your initial guidance.
Shekel U.S. dollar was like.
I think like a five cents headwind or so, but it seems like shekels depreciated a little bit.
That.
Sure.
What's you're embedding in your guidance change in terms of.
In fact.
Yes, that's very important point, yes, indeed during the crisis.
The U.S. dollar.
As you appreciated against the new goods early Shack go we took advantage of that and basically when compared to your original budget, where we wouldn't know abbvie nature file the common core butter budget a position because expense.
With the newest those are going to be lower.
Okay. Thank you.
Sure.
[noise] Shabtai we have.
Question from a shareholder came in via email can you. Please go into details about the transition from Microsoft Skype for business to teams.
Well as you know in the past you've indicated this migration might be headwinds to Microsoft revenues also can you go into more detail on the transition How's Microsoft doing his team's dysfunctional yet as Skype what was the growth of Microsoft related sales what does the difference in content for Skype implementation as compared with teams for Audiocodes.
Oh, Okay. That's a that's your love what Okay I tried to take it one at the time basically <unk> I've mentioned I mean with the company use castle been so many years. It's a great you know unified communication on Prime solution. When we moved to work from home.
You we started using it personally I've I've given that and then you know the war you know you would your mouth traffic over the Internet. So I decided that a usage of thing.
I was surprised to see much better performance Tim.
First of the Skype for business and also obviously, Microsoft flipping body weight behind and adding features you know I'm really quickly so.
In a matter of about three weeks it became apparent that we want to at this stage put skype for business behind us and move.
Tim We actually had the project you know when we're all at all I'd I keep team.
Oh project, who although the company was talking about more than 506.
From Scott Bowman thin.
I'd like to say that basically I want you know they work right and will be among the first one so I will move I see some 400 anyway or if there ever think I'll play well and everybody's very happy with using came back into that you know what other people complain that was a few of these themes with Tom Rooney make.
A war essentially harder than they were used to where they can put you at coffeyville and and small stuff. So so yes, you can see very efficient I believe that interview or experience. We will definitely see odds are customers, Microsoft using stuff with me.
Consider moving the seem fairly quick.
All you know we believe that you know we're on top of that I think we are one of 'em, the leading company if not the largest along that supports that transition and so far. So we can see you know Oh Skype for business revenues are not going down dramatically simply because the <unk>.
Expansion or off accounts that have been declining got seven five in two years ago, the keep buying weapon or there other facilities.
But but we definitely see a he grew up with Samsung and hopefully I've covered all of your question right, though remember more of them no no. It's okay.
To my worship gross margins level off and why and then also can you explain what you can sell into enterprise accounts that use you cast service like Ringcentral.
Okay. So that is.
No that is exactly what I'll watch because like is it out so we definitely have.
Products associated with the crime interesting.
Session border controllers for dark roast phone management system, So conference devices et cetera, but the real value. It's really in their ability to help you know companies gap fast on board and because it's a very fast we will provide them they euro so.
We love them with the planning and the deployment that then they do Serbia, a with bringing it up and money during good and asking so all we know what I think we can expedite.
The deployment seems account.
Definitely the meet the market now and for SMB and by the way one of the products and now which is called well because like cloud exactly that we target.
No large oh channels would be you know companies could be service providers will then deployed or solution.
Who their customers.
Thank you.
This concludes our question answer session I'll turn the call back to Shabtai Adlersberg for closing remarks.
Okay. Thank you operator, we'd like to thank everyone within enough conference call today.
Continuing good business momentum and execution in all markets in 2020, we believe we're on track to achieve another strong growth here you know business. We look for your participation in our next quarterly conference call. Thank you very much have a nice thing.
Thank you.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
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