Q2 2025 AudioCodes Ltd Earnings Call

A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I will now turn the conference over to your host Roger to Gen V. P of Investor Relations you may.

Begin.

Thank you operator hosting the call today are shopped I was president and Chief Executive Officer, and neuron Baruch, Vice President Finance and Chief Financial Officer before we begin I would like to remind you that the information provided during this call may contain forward looking statements relating to audio codes 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 is defined under U S. Federal Securities Law forward looking statements are subject to various risks and uncertainties and other factors that could cause actual results to differ materially from those.

Such statements. These risks uncertainties and factors include but are not limited to the effect of global economic conditions in general and conditions in audio codes industry and target markets in particular shifts in supply and demand market acceptance of new products and the demand for existing products the impact of competitive products and pricing on <unk>.

<unk> and its customers' products and markets timely product and technology development upgrades and the ability to manage changes in market conditions as needed possible need for additional financing the ability to satisfy covenants in the company's loan agreements possible disruptions from acquisitions the ability of audio codes to successfully integrate the products and opera.

<unk> of acquired companies into audio codes business possible adverse impact of the COVID-19 pandemic on our business and results of operations the effects of the current terrorist attacks by Hamas and the war in hostilities between Israel, and Hamas and Israel and Hezbollah as well as the possibility that this could develop into a broader regional conflict involving Israel with other parties may affect our operations and may limit.

Our ability to produce and seller solutions any disruption in our operations by the obligations of a personnel to perform military service as a result of current or future military actions involving Israel and other factors detailed in audio codes filings with the U S Securities and Exchange Commission audio codes assumes no obligation to update this information in addition.

During the call audio codes will refer to non-GAAP net income and net income per share audio codes has provided a full reconciliation of the non-GAAP net income and net income per share to its net income and net income per share. According to GAAP in the press release that is posted on its website before I turn the call over to management I'd like to remind everyone that this call is being recorded.

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 I'd like to turn the call over to the shop to shop that please go ahead.

Thank you Roger Good morning, Good afternoon, everybody I would like to welcome all to our second quarter 2025 Conference call with me. This morning is unbelievable Chief Financial Officer.

As president of finance for further could you run a thought of by presenting a financial overview of the quarter I will then.

Review, the business highlights and summary for the quarter and discuss trends and developments you know business in the industry. We will then turn it into the Q&A session neuron.

No.

Thank you.

Hello, everyone.

Before I start I'll Scott.

My formal remarks, I would like to remind everyone that in conjunction with our earnings release. This morning, We will post shortly on our Investor Relations website.

And that will mean supplemental deck.

On today's call, we will be referring to both GAAP and non-GAAP financial results.

<unk> press release that we issued earlier. This morning contains a reconciliation of the supplemental non-GAAP financial information.

But I will be discussing on this call.

Revenues for the second quarter were $61 1 million, an increase of one 3% over the $60 3 million reported in the second quarter of last year.

Services revenue for the quarter were $32 6 million up one 9% over the year ago period.

Services revenues in the second quarter accounted for 53, 3% of total revenues.

The amount of deferred revenues as of June 32025.

A $2 7 million compared to $80 3 million as of June 32024.

Revenues by geographical region for the quarter with clip as follows.

North America, 48% EMEA, 34%.

Asia Pacific 14%.

Central and Latin America, 4%.

Our top 15 customers represented an aggregate of 54% of our revenues in the second quarter of which 34% was attributed to our nine largest distributors.

In the second quarter of 2025, we experienced increased expenses due to the implementation of new tariffs on the U S. In book accounting to approximately $1 million additional cost.

<unk> impacted on both GAAP and non-GAAP results.

GAAP results are as follows gross margin for the quarter was 64, 1% compared to 65, 5% in Q2 2024.

Operating income for the second quarter was $2 6 million or.

Four 3% of revenues compared to operating income of $4 9 million or eight 2% of revenues in Q2 2024.

EBITDA for the quarter was $3 6 million compared to EBITDA of $6 2 million for Q2 2024.

Net income for the quarter was zero point $3 million or one cents per diluted share compared to net income of $3 8 million or 12 cents per diluted share for Q2, 'twenty 'twenty four.

non-GAAP results are as follows non-GAAP gross margin for the quarter was 64, 5% compared to 65, 8% in Q2 2024.

non-GAAP operating income for the second quarter was $4 4 million or seven 2% of revenues compared to $7 2 million or 11, 9% of revenues in Q2, 'twenty 'twenty four.

non-GAAP EBITDA for the quarter were $5 2 million compared to non-GAAP EBITDA of $8 3 million for Q2 2024.

non-GAAP net income for the second quarter was $12 1 million or 14 cents per diluted share compared to $5 5 million or 18 cents per diluted share in Q2 2024 at the end of June 2025, cash cash equivalents bank deposits marketable securities.

And financial investment totaled $95 3 million.

Net cash provided by operating activities was $7 7 million for the second quarter of 2025.

Operator: are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone.

And statements concerning assumptions made or expectations as to any future events conditions performance or other matters are forward looking statements as the term is defined under U S. Federal Securities Law forward looking statements are subject to various risks and uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. These risks uncertainties.

Days sales outstanding as of June 30 were 112 days.

During the quarter, we acquired 715000 of our ordinary shares for a total consideration of approximately $6 6 million.

Operator: Please note this conference is being recorded.

Roger Chuchen: I will now turn the conference over to your host, Roger Chuchen, VP of Investor Relations. You may be Thank you, Operator.

Certainties and factors include but are not limited to the effect of global economic conditions in general and conditions in audio codes industry and target markets in particular shifts in supply and demand market acceptance of new products and the demand for existing products the impact of competitive products and pricing on audio codes and its customers products and markets.

In July 2025, we received court approval in Israel to purchase up to an aggregate amount of $20 million of additional ordinary shares.

Roger Chuchen: Hosting the call today are Shabtai Adlersberg, President and Chief Executive Officer, and Niran Baruch, Vice President of Finance and Chief Financial Officer. Before we begin, I'd like to remind you that the information provided during this call may contain forelooking statements relating to AudioCode's business outlook, future economic performance, product introductions, plans, and objectives related thereto. And statements concerning assumptions made or expectations as to any future events, conditions, performance, or other matters are forelooking statements as the term is defined under U.S. Federal Securities Law. Forelooking statements are subject to various risks and uncertainties and other factors that could cause actual results that differ materially from those stated in such statements.

Court approval also permits us to declare a dividend of any part of this amount there.

The approval is valid through December 32025.

Timely product and technology development upgrades and the ability to manage changes in market conditions as needed possible need for additional financing the ability to satisfy covenants in the company's loan agreements possible disruptions from acquisitions the ability of audio codes to successfully integrate the products and operations of acquired companies into audio codes.

Earlier. This morning, we also declared a cash dividend of <unk> 20 per share the aggregate amount of the dividend is approximately $5 7 million the dividend will be paid on August 28 to all of our shareholders of record at the close of trading on August 14.

Possible adverse impact of the COVID-19 pandemic on our business and results of operations the effects of the current terrorist attacks by Hamas and the war in hostilities between Israel, and Hamas and Israel and Hezbollah as well as the possibility that this could develop into a broader regional conflict involving Israel with other parties may affect our operations and may limit our ability to produce and sell our solutions.

Regarding the direct cost impact from tariff announced since the beginning of 2025, we continue to expect three to 4 million of cost burden for full year 2025.

Roger Chuchen: These risks, uncertainties, and factors include, but are not limited to, the effect of global economic conditions in general and conditions in AudioCode's industry and target markets in particular. Shifts in supply and demand, market acceptance of new products, and the demand for existing products, the impact of competitive products and pricing on AudioCode's and its customers' products and markets, timely product and technology development, upgrades, and the ability to manage changes in market conditions as needed.

As discussed last quarter, we will look to resume practice of providing annual outlook. When we have better visibility on the final tariff rate I will now turn the call back over to shop there.

Any disruption in our operations by the obligations of a personnel to perform military service as a result of current or future military actions involving Israel and other factors detailed in audio codes filings with the U S Securities and Exchange Commission audio codes assumes no obligation to update this information. In addition, during the call audio Coatesville referred to.

Roger Chuchen: Possible need for additional financing, the ability to satisfy covenants in the company's loan agreements, possible disruptions from acquisitions, the ability of AudioCode to successfully integrate the products and operations of acquired companies into AudioCode's business, possible adverse impact of the COVID-19 pandemic on our business and results of operations, the effects of the current terrorist attacks by Hamas and the war and hostilities between Israel and Hamas and Israel and Hezbollah, as well as the possibility that this could develop into a broader regional conflict involving Israel with other parties, may affect our operations and may limit our ability to produce and sell our solutions.

Thank you Darren.

I'm pleased to report second consecutive quarter of topline growth in second quarter and execution of our strategic objective another quarter of making progress towards our long term transformation through an AI driven hybrid cloud software and services company.

non-GAAP net income and net income per share audio codes has provided a full reconciliation of the non-GAAP net income and earnings per share to its net income and net income per share. According to GAAP in the press release that is posted on its website before I turn the call over to management I'd like to remind everyone that this call is being recorded an archived webcast will be made available on the inverse.

Our second quarter 2025 performance demonstrates our success in navigating a dynamic market environment, while continuing to build on strength in our connectivity franchise, which accounts for about 90% of our revenues, we continued to drive traction in our portfolio.

Relations section of the company's website at the conclusion of the call with all that said I'd like to turn the call over to the shop. They shop. They please go ahead.

Roger Chuchen: Any disruption in our operations by the obligations of our personnel to perform military service as a result of current or future military actions involving Israel, and other factors detailed in AudioCode's filings with the U.S. Securities and Exchange Commission.

<unk> gross AI powered business applications.

Thank you Roger good morning, good afternoon, everybody.

Voice services second quarter 'twenty five as the second quarter in a row, where we saw stabilization in the connectivity space.

I'd like to welcome all who are.

Second quarter 2025 conference call with me. This morning is unbelievable Chief Financial Officer, and Vice President of Finance for further could you run a thought of by preventing refinish overview of the quarter.

Roger Chuchen: AudioCode assumes no obligation to update this information. In addition, during the call, AudioCode will refer to non-GAAP net income and net income per share. AudioCode has provided full reconciliation of the non-GAAP net income and net income per share to its net income and net income per share according to GAAP in the press release that is posted on its website.

Prior to the decline we have witnessed during the years 2023, and 2024 or enterprise UC and CX revenue again accounted for above 90% of revenues in the quarter.

Will then review the business highlights and summary for the quarter and discuss trends and developments you know business and industry.

Alighted by ongoing strength in the Microsoft teams business, which grew six 5% year over year key development in the core is the official certification S. A Cisco webex cloud connect and they've been one provider.

Roger Chuchen: Before I turn the call over to management, I'd like to remind everyone that this call is being recorded. An archived webcast will be made available on the investor relations section of the company's website at the conclusion of the call.

He will then turn it into the Q&A session neuron.

Thank you and Hello, everyone.

Roger Chuchen: With all that said, I'd like to turn the call over to Shabtai. Shabtai, please go ahead.

Before I start.

This milestone and we now enable connectivity services for a major U C platforms.

My formal remarks, I would like to remind everyone that in conjunction with our earnings release. This morning, We will post shortly on our Investor Relations website.

Shabtai Adlersberg: Thank you, Roger. Good morning. Good afternoon, everybody.

Microsoft teams is.

Zoom and Webex more of the significance of this development later.

Shabtai Adlersberg: I would like to welcome all to our Second Quarter 2025 conference. With me this morning is Niran Baruch, Chief Financial Officer and Vice President of Finance of AudioCodes. Niran will start off by presenting a financial overview of the Corps.

And the earnings supplement of there.

In the fixed business, we made progress as planned and our healthy pipeline continues to support a positive outlook for the second half and full year 2025.

On today's call, we will be referring to both GAAP and non-GAAP financial results.

<unk> press release that we issued earlier. This morning contains a reconciliation of the supplemental non-GAAP financial information.

The conversational AI practice, we're seeing substantial robust demand, which supports our plan for 40% to 50% growth outlook for the segment in 2025.

Shabtai Adlersberg: I will then review the business highlights and summary for the Corps and discuss trends and developments in our business and industry. We will then turn it into the Q&A session.

But I will be discussing on this call.

Revenues for the second quarter were $61 1 million or an increase of one 3% over the $60 3 million reported in the second quarter of last year.

Noteworthy is the success, we experienced with the newly launched meeting insights on premise service.

Niran Baruch: Thank you, Shabtai, and hello everyone. Before I start my formal remarks, I would like to remind everyone that in conjunction with our earnings release this morning, we will post shortly on our investor relations website an earnings supplemental. On today's call, we will be referring to both GAAP and non-GAAP financial returns. The earnings press release that we issued earlier this morning contains a reconciliation of the supplemental non-GAAP financial information that I will be discussing on this call. Revenues for the second quarter were $61.1 million, an increase of 1.3% over the $60.3 million reported in the second quarter of last year.

Good thing regulated industries and enterprises seeking the utmost level of privacy and security.

Services revenue for the quarter were $32 6 million up one 9% over the year ago period.

Overall services accounted for 53% of revenues and grew one 9% year over year.

Services revenues in the second quarter accounted for 53, 3% of total revenues.

First half 2025 services invoicing were in line with our budget plans based on services bookings ending here on visibility in this line item. We expect second half 2025 services revenue growth to further improve.

The amount of deferred revenues as of June 32025.

A $2 7 million compared to $80 3 million as of June 32024.

Within services managed services year over year growth remained robust up 25% year over year to end the quarter at 70 million.

Revenues by geographical region for the quarter with Clippers photos.

North America, 48% EMEA, 34%.

Asia Pacific 14%.

Recurring revenues.

Central and Latin America, 4%.

Backlog of five minutes services exit cause the second quarter of 2025 was 73 million compared to $6 7 million at the end of the year ago quarter.

Our top 15 customers represented an aggregate of 54% of our revenues in the second quarter of which 34% was attributed to our nine largest distributors.

Niran Baruch: Services revenues for the quarter were $32.6 million, up 1.9% over the year-ago period. Services revenues in the second quarter accounted for 53.3% of total revenues. The amount of deferred revenues as of June 30, 2025 was $82.7 million compared to $80.3 million as of June 30, 2024. Revenues by geographical region for the quarter were split as follows. North America 48%, EMEA 34%, Asia Pacific 14%, and Central and Latin America 4%. Our top 15 customers represented an aggregate of 54% of our revenues in the second quarter, of which 34% was attributed to our nine largest distributors. In the second quarter of 2025, we experienced increased expenses due to the implementation of new tariffs on the U.S.

As previously.

Previewed last quarter, we officially launched our next generation life platform a major milestone in our managed services strategy with the recent addition of Cisco Webex, calling certification the platform now fully integrates our comprehensive suite of.

In the second quarter of 2025, we experienced increased expenses due to the implementation of new tariffs on the U S. In book accounting to approximately $1 million additional cost, which impacted on both GAAP and non-GAAP results.

Unified communications customer success capability.

What sets this class of them apart is its ability to on par or channel partners service providers and system integrators. So seamlessly layer Gen. AI powered voice application and third party solution on top of their core connectivity offering.

GAAP results are as follows gross margin for the quarter was 64, 1% compared to 65, 5% in Q2 2024.

Operating income for the second quarter was $2 6 million or.

<unk> platform is a cloud native fully automated platform for launching and scaling voice services, especially around Microsoft teams and a broker connect deployments.

Four 3% of revenues compared to operating income of $4 9 million or eight 2% of revenues in Q2 2024.

From a support social zoom phone and Cisco Webex Corning to enable zero touch automation session border control as a service routing billing reporting and provisioning workflows, all integrated into one system to reduce deployment time and operational complexity feed.

EBITDA for the quarter was $3 6 million compared to EBITDA of $6 2 million for Q2 2024.

Net income for the quarter was 0.3 million or one cents per diluted share compared to net income of $3 8 million or 12 cents per diluted share for Q2, 'twenty 'twenty four.

Niran Baruch: imports, accounting to approximately $1 million additional cost, which impacted on both GAAP and non-GAAP reserves.

Feedback from partners across all sizes has been over overwhelming positive since showcasing the platform we have seen a measurable uptick you know.

Niran Baruch: Gap results are as follows. Gross margin for the quarter was 64.1%, compared to 65.5% in Q2, 2025. Operating income for the second quarter was $2.6 million or 4.3% of revenues compared to operating income of $4.9 million or 8.2% of revenues in Q2 2024. EBITDA for the quarter was $3.6 million compared to EBITDA of $6.2 million for Q2 2024. Net income for the quarter was $0.3 million or $0.01 per diluted share compared to net income of $3.8 million or $0.12 per diluted share for Q2 2024.

non-GAAP results are as follows non-GAAP gross margin for the quarter was 64, 5% compared to 65, 8% in Q2 'twenty 'twenty four.

Offline and enough acceleration in sales cycles and clothing with several tier one service providers.

non-GAAP operating income for the second quarter was $4 4 million or seven 2% of revenues compared to $7 2 million or 11, 9% of revenues in Q2, 'twenty 'twenty four.

It means the new product momentum, we continue to enhance the value proposition and the stickiness of our platform with new innovations is an example of where a developing a new AI powered real time analytics.

non-GAAP EBITDA for the quarter was $5 2 million compared to non-GAAP EBITDA of $8 3 million for Q2 2024.

So far strategic insights into the CX business manager.

While it may take time for these life platform wins to be material revenue contributors. We are super excited about its potential to drive stronger footprint in the market recurring revenue growth and improve our overall revenue mix.

non-GAAP net income for the second quarter was $12 1 million or 14 cents.

Diluted share compared to $5 5 million or 18 cents per diluted share in Q2 2024.

Niran Baruch: Non-GAAP results are as follows. Non-GAAP gross margin for the quarter was 64.5 percent compared to 65.8 percent in Q2 2024. Non-GAAP operating income for the second quarter was $4.4 million or 7.2% of revenues, compared to $7.2 million or 11.9% of revenues in Q2 2024. Nongap EBITDA for the quarter was $5.2 million compared to Nongap EBITDA of $8.3 million for Q2 2024. Non-GAAP net income for the second quarter was $4.1 million or $0.14 per diluted share, compared to $5.5 million or $0.18 per diluted share in Q2 2024. At the end of June 2025, cash, cash equivalents, bank deposits, marketable securities, and financial investment total $95.3 million.

A great example is AT&T North America, one of our earliest life classroom partners, which uses our solution to onboard and customers to Microsoft teams, our secure and scalable solution is provided AT&T in North America with significant operational flexibility and resulted in multi million dollar of annual.

At the end of June 2025, cash cash equivalents bank deposits marketable securities and financial investment totaled $95 3 million.

Net cash provided by operating activities was $7 7 million for the second quarter of.

2025.

Recurring revenue over the past few years.

Days sales outstanding as of June 30 were 112 days.

On the conversational AI front, we have experienced increased interest all around our activity progress has been made in most of the leading product categories such as the book of customer interaction center for the Microsoft teams environment meeting is that serving as an enterprise meeting intelligence.

During the quarter, we acquired 715000 of our ordinary shares for a total consideration of approximately $6 6 million.

In July 2025, we received court approval in Israel to purchase up to an aggregate amount of $20 million of additional ordinary shares.

And the newly developed and introduced agents technology for voice spots.

The court approval also permits us to declare a dividend of any part of this amount.

Case in point, we recently introduced me to in fact on Prem and the G&A I never meeting productivity intelligence benefits to regulated and security sensitive environments and industry. This industry first solution has already garnered important customer interest.

The approval is valid through December 32025.

Niran Baruch: Net cash provided by operating activities was $7.7 million for the second quarter of 2025. Day sales outstanding as of June 30 were 112 days. During the quarter, we acquired 715,000 of our ordinary shares for a total consideration of approximately $6.6 million. In July 2025, we received court approval in Israel to purchase up to an aggregate amount of $20 million of additional ordinary shares. The court approval also permits us to declare a dividend of any part of this amount. The approval is valid through December 30, 2025. Earlier this morning, we also declared the cash dividend of $0.20 per share.

Earlier. This morning, we also declared a cash dividend of <unk> 20 per share the aggregate amount of the dividend is approximately $5 7 million.

Evidenced by robust pipeline, we expect the number of proof of concept for 'twenty is to further scale over the rest of the year.

The dividend will be paid on August 28 to all of our shareholders of record at the close of trading on August 13.

Two weeks ago, we have introduced some meeting each site on Prem internationally in the APAC region. The audience feedback was better than or elevated expectation common takeaways from these meetings is that the service is exactly what security sensitive managements and customers such as governor.

Regarding the direct cost impact from tariff announced since the beginning of 2025, we continue to expect three to 4 million of cost burden for full year 2025.

As discussed last quarter, we will look to resume practice of providing annual outlook. When we have better visibility on the final tariff rate I will now turn the call back over to shop there.

And banks are looking for unleashing the power of <unk> without compromise comprise.

Compromising our security this viewpoint bureaus customer feedback in Israel or initial markets launched several months ago.

Yeah.

Thank you Darren I'm pleased to report second consecutive quarter of top line growth in second quarter and execution of our strategic objective and another quarter of making progress towards our long term transformation through an AI driven hybrid cloud software and services company.

Niran Baruch: The aggregate amount of the dividend is approximately $5.7 million. The dividend will be paid on August 28 to all of our shareholders off record at the close of trading on August 14. Regarding the direct cost impact from tariff announced since the beginning of 2025, we continue to expect 3 to 4 million of cost burden for full year 2025. As discussed last quarter, we will look to resume practice of providing annual outlook when we have better visibility on the final tariff rate.

Before turning to detailed design discussion, let's quickly shift to the second quarter our profitability metrics.

Top line, we performed as planned with revenue growing one 3% year over year, our non-GAAP gross margin. If you Ron mentioned for the quarter was $64 five slightly below our long term targets.

Our second quarter of 2025 performance demonstrates our success in navigating a dynamic market environment, while continuing to build on strength in our connectivity franchise, which accounts for about 90% of our revenues will continue to drive traction you know puts photo of fat.

Target range of 55 to 68 and compares.

To 65, 8% in the year ago quarter.

Shabtai Adlersberg: I will now turn the call back over to Shabtai. Thank you, Niran.

Our second quarter non-GAAP gross margin absorbed roughly about $1 million of tariff related cost headwinds.

<unk> gross air powered business applications.

Voice services second quarter 'twenty five as the second quarter in a row, where we saw stabilization in the connectivity space as compared to the decline we have witnessed during the years 2023 and 2024.

Shabtai Adlersberg: I'm pleased to report second consecutive quarter of top-line growth in second quarter and execution of our strategic objectives. Another quarter of making progress towards a long-term transformation to an AI-driven hybrid cloud software and services company. Our Second Quarter 2025 performance demonstrates our success in navigating a dynamic market environment. While continuing to build on strengths in our connectivity franchise, which accounts for above 90% of our revenues, we continued to drive traction in our portfolio of fast, gross, AI-powered business applications and voice services. Second quarter 2025 is the second quarter in a row where we saw stabilization in the connectivity space as compared to the decline we have witnessed during the years 2023 and 2024.

Continue to expect close to 4 million of tariff related cost burden for the full year, assuming tariff rates for the various countries settled shortly.

Our enterprise you see in CX revenue again accounted for above 90% of revenues in the quarter highlighted by ongoing strength in Microsoft teams business, which grew six 5% year over year developing the core is the official certification S. A Cisco webex cloud connect in.

Which we hope will happen in the summer, we will be working to reduce the heat in the first score of 2025. Additionally.

Additionally, we incurred several 100 of those headwinds from a weaker U S dollar against the euro in the second quarter.

Second quarter non-GAAP operating expenses rose to 35 million up from $32 $5 million a year ago periods.

They've been one provider.

With this milestone we now enable connectivity services for a major U C platforms, including Microsoft teams Zoom and Webex more of the significance of this development later.

<unk> expenses are primarily attributable to higher investments in marketing and sales resources as part of our conversational AI investment.

In the fixed business, we made progress as planned and our healthy pipeline continues to support a positive outlook for the second half and full year 2025.

In terms of head count we ended the quarter with 963 employees roughly flat from the prior quarter and compared to 940 in the year ago period, adjusted EBITDA for the second quarter was $5 2 million.

Shabtai Adlersberg: Our enterprise UC and CX revenue again accounted for above 90% of revenues in the core, highlighted by ongoing strength in Microsoft Teams business, which grew 6.5% year-over-year.

On the conversational AI practice, we're seeing substantial robust demand, which supports our plan for 40% to 50% growth outlook for the segment in 2025.

We continue to generate healthy amount of cash flow with net cash from operating activity of $7 7 million for the quarter. This robust cash flow generation provides strong backing to our ability to keep investing in expanding our business moving forward.

Noteworthy is the success, we experienced with the newly launched meeting insights on premise service.

Shabtai Adlersberg: Key development in the core is the official certification as a Cisco Webex Cloud Connect enablement provider. With this milestone, we now enable connectivity services of all major UC platforms, including Microsoft Teams, Zoom, and Webex.

We're getting regulated industries and enterprises seeking the utmost level of privacy and security.

So the guidance as mentioned in our previous quarters discussion, we will respond to you.

Overall services accounted for 53% of revenues and grew one 9% year over year first half of 2025 services invoicing were in line with our budget plans based on services bookings ending here in visibility in this line item, we expect second half 2025 services.

Shabtai Adlersberg: More on the significance of this development later.

Issuing a financial outlook until we have better and clear understanding of the resolution regarding tariff rates.

Shabtai Adlersberg: In the CX business, we made progress as planned, and our healthy pipeline continues to support a positive outlook for the second half and full year, 2025. On the conversational AI practice, we are seeing substantial robust demand, which supports our plan for 40 to 50% growth outlook for the segment in 2025.

The key takeaways from these financial results at the bottom is that our business remains solid and is on an upward trajectory. It is several years now that we experienced nice growth.

Revenue growth to further improve.

Within services, all I've managed services year over year growth remained robust up 25% year over year to end the quarter at 70 million annual recurring revenue.

In our highly profitable connectivity segment, particularly in the Ucas and CX market in parallel.

Shabtai Adlersberg: Noteworthy is the success we experienced with the newly launched Meeting Insights on-premise service, targeting regulated industries and enterprises seeking the utmost level of privacy and security. Overall, services accounted for 53% of revenues and grew 1.9% year-over-year. First half 2025 services invoicing were in line with our budget plans. Based on services bookings and inherent visibility in this line item, we expect second half 2025 services revenue growth to further improve. Within services or live managed services, year-over-year growth remained robust, up 25% year-over-year, to end the quarter at $70 million annual recurring revenues. Backlog of live managed services exit to the second quarter of 2025 was $73 million, compared to $67 million at the end of the year-ago quarter.

We are successfully expanding our promising voice centric AI in January powered business applications.

Backlog of five minutes services exit because the second quarter of 2025 was 73 million compared to $6 7 million at the end of the year ago quarter.

So the general market. Despite the presumably recent volatile volatile business landscape stemming from the tariff challenges, we have not observed any shift in customer purchasing behavior. The pipeline for opportunities remain strong as we approach the latter part of 2025.

As previously.

Previewed last quarter, we officially launched our next generation life platform a major milestone in our managed services strategy with the recent addition of Cisco Webex, calling certification the platform now fully integrates our comprehensive suite of.

Now to the Microsoft business market surveys and partnering inputs continue to support the growth story for teams phone.

The fed's communication customer success capability.

What sets. This classroom part is its ability to on par or channel partners service providers and system integrators. So seamlessly layer Gen AI powered voice application.

Where adoption in the market continues well at over 20% annual growth.

It's fun to usage is also strongly supported by Microsoft airports to drive co pilot, it's a central capable chatbot for teams one meetings and calls.

But the solution on top of their core connectivity offering.

Key to continued Tim's phone gross is facilitating connectivity for large enterprises and network. In this regard was Microsoft operator cannot getting more mature and growing in addition to the already successful dark route connectivity. This provides further stimulus.

<unk> platform is a cloud native fully automated platform for launching and scaling voice services, especially around Microsoft teams and operator connect deployments.

Shabtai Adlersberg: As previewed last quarter, we officially launched our next-generation live platform, a major milestone in our managed services strategy. With the recent addition of Cisco Webex calling certification, the platform now fully integrates our comprehensive... Unified Communication, Customer Success, Capability. What sets this platform apart is its ability to empower our channel partners, service providers, and system integrators to seamlessly layer Gen AI-powered business voice applications and third-party solutions on top of their core connectivity offerings. Live Platform is a cloud-native, fully automated platform for launching and scaling voice services, especially around Microsoft Teams and Operator Connect deployments. The platform supports also Zoom phone and Cisco Webex calling.

From a support social zoom phone and Cisco Webex, calling to enable zero touch automation session border control.

<unk> fund growth.

Service routing billing reporting and provisioning workflows or integrated into one system to reduce the deployment time and operational complexity.

All this points to a strong market today and for coming years, and further supports business expansion and dominance in this connectivity area.

Our Microsoft business grew six 5% year over year fueled by ongoing strength of our connectivity business, coupled with increasing attach rate of Lucas the AC or team certified see Cas and our conversational AI business application services.

Fitbit from partners across all sizes has been over overwhelming positive since showcasing the platform. We have seen a measurable uptick you know potline and enough is the acceleration in sales cycles and clothing with several tier one service providers.

Key to our successes are alive managed services with annual recurring revenues, reaching 70 million exit second quarter, representing approximately 25% growth year over year booking of new large multimillion contract value opportunities inquiries about 6% in second quarter and the opportunities total.

It means the new product momentum, we continue to enhance the value proposition and the stickiness of our platform with new innovations as an example, we're developing a new AI powered real time analytics.

Shabtai Adlersberg: It enables zero-touch automation, session border control, SS service, routing, billing, reporting, and provisioning workflows, all integrated into one system to reduce deployment time and operational complexity. Feedback from partners across all sizes has been overwhelming positive. Since showcasing the platform, we have seen a measurable uptick in our pipeline and an accessible acceleration in sales cycles, including with several tier one service providers.

System is to offer a strategic insights into the business manager.

Created value grew more than 10% in the quarter not.

While it may take time for these life platform wins to be material revenue contributors. We are super excited about its potential to drive stronger footprint in the market recurring revenue growth and improve our overall revenue mix.

Was it to our growth story is the latest certification of live classroom for Microsoft.

Operator connect for partners in EMEA and soon to be certified in the U S.

To put some color on the price maintenance second quarter here are some examples of wins in the quarter. We enjoyed much success in the U S higher education vertical in which we have secured several multi million key wins in contracts in the sector. One example is our win with a large state University.

A great example is AT&T North America, one of our earliest life classroom partners, which uses our solution to onboard and customers to Microsoft teams.

Our secure and scalable solution is provided at AT&T and North America with significant operational flexibility and resulted in multi million dollar of annual recurring revenue over the past few years.

Shabtai Adlersberg: Amid the new product momentum, we continue to enhance the value proposition and stickiness of our platform with new innovations. As an example of where we are developing a new AI-powered real-time analytic, It offers strategic insights into the CX business management. While it may take time for these live platform wins to be material revenue contributors, we are super excited about its potential to drive stronger footprint in the market, recurring revenue growth, and improve our overall revenue.

<unk> valued at more than 2 million total contract value of which about $800000.

On the conversational AI fronts, we have experience increased interest all around our activity growth has been made in most.

This came from a 36 month contract of life Pearl.

Managed services and related professional services.

The leading product categories, such as the book of customer interaction center for the Microsoft teams environment meeting insights everything cause an enterprise meeting intelligence platform and the newly developed and introduced agents technology for voice bots.

Yeah.

Second example is the large follow on order, we recently closed.

Amounting to over one 5 million total contract value from our private University in the Metis Midwest I'm sorry.

Shabtai Adlersberg: A great example is AT&T North America, one of our earliest live platform partners, which uses our solution to onboard end customers to Microsoft Teams. are secure and scalable solutions as provided by AT&T North America with significant operational flexibility and resulted in multi-million dollars of annual recurring revenue over the past few years.

We had won the initial deal in second half 2024 as part of.

It is a case in point, we recently introduced me to in fact on Prem extending the G&A I never meeting productivity intelligence benefits to regulated and security sensitive environments and industry. This industry first solution has already garnered important customer interest as evidenced by a robust pipeline we expect.

Its initial phase of UCC ex modernization and given the successful completion of the first phase the University has decided to standardize on Arctic code services for all of its campuses or success can be explained by.

Having the industry, most complete portfolio and best in class, you'll see CX capability strong track record of delivering customer satisfaction and refer recipe will list of marquee clients. We have built much where the building in this sector and we are now getting inbound leads from other prospective university customers.

The number of proof of concept.

Shabtai Adlersberg: On the conversational AI front, we have experienced increased interest all around our activity. Progress has been made in most of the leading product categories, such as the VOCUS Customer Interaction Center for the Microsoft Teams environment, Meeting Insights, Serving as an Enterprise Meeting Intelligence Platform, and the newly developed and introduced AI Agents technology for VoiceBot. As a case in point, we recently introduced Meeting Insights On-Prem, extending the Gen-AI-enabled meeting productivity and intelligence benefits to regulated and security-sensitive environments and industries. This industry-first solution has already garnered important customer interest, as evidenced by a robust pipeline. We expect a number of proof-of-concept opportunities to further scale over the rest of the year.

<unk> is the furthest scale over the rest of the year.

Two weeks ago, we have introduced some meeting each site on Prem internationally in the APAC region, the audience feedback was better than <unk>.

Our elevated expectation common takeaways from these meetings is that the service is exactly what security sensitive managements and customers such as government banks are looking for unleashing the power of generic without compromise.

Looking to modernize their UC CX.

Further on the success in the Uk's very I'll talk about two other entities first AT&T AT&T is our largest partner channel for Microsoft teams in the U S second quarter with very successful invoicing and booking grew above 10% in the quarter quarter sequentially.

Compromising our security this viewpoint.

Customer feedback in Israel or initial market launched several months ago.

With new logos journey into the core.

While traditional managed services business continued to grow second quarter was a pleasant surprise in terms of rising number of PSTN shutdown projects in various U S states embarking on parts replacement is trend should support further continued revenue growth in coming years.

Before turning to the baseline discussion, let's quickly shift to the second quarter our profitability metrics.

Shabtai Adlersberg: Two weeks ago, we have introduced Meeting Insight on-prem internationally in the APAC region. The audience feedback was better than our elevated expectation. Common takeaways from these meetings is that these services exactly what security sensitive managements and customers, such as government banks are looking for, unleashing the power of Gen AI without compromise. compromising our security. This viewpoint mirrors customer feedback in Israel our initial market launched several months ago.

Top line, we performed as planned with revenue growing one 3% year over year, our non-GAAP gross margin. If you Ron mentioned for the quarter was 64.5 slightly below our long term targets.

And then through our new activity with Cisco in the U K market, we announced our certifications for Webex connect in June 2025 during the second quarter. We've seen initial pipeline built with service providers in EMEA with opportunities created as representing potential of new multi million dollars, we intend to incur.

Target range of 55 to 68 and compares.

To 65, 8% in the year ago quarter.

Our second quarter non-GAAP gross margin absorbed roughly about $1 million of tariff related cost headwinds.

<unk> marketing and sales efforts, there worth calling space in coming years.

Continue to expect close to 4 million of tariff related cost burden for the full year, assuming tariff rates for the various countries settle shortly.

Turning to CX, we have made progress as planned in the core and our LC pipeline continues to support positive outlook for the second half for the full year.

Shabtai Adlersberg: Before turning to detailed baseline discussion, let's quickly shift to second quarter profitability metrics. On the top line, we perform this plan with revenue growing 1.3% year-over-year. Our non-gap gross margin, as Niran mentioned, for the quarter was 64.5, slightly below our long-term target range of 65 to 68, and compared 65.9% in the year ago quarter. Our second core unknown gap gross margin absorbed roughly about $1 million of the risk-related cost added. We continue to expect close to $4 million of tariff-related costs burden for the full year. Assuming tariff rates for the various countries settle shortly, which we hope will happen in the summer.

Which we hope will happen in the summer, we will be working to reduce the heat in the first score of 2025 <unk>.

We've been growing we've seen growing customer and partner interest in life, CX, which is an important topic for life platform.

Additionally, we incurred several 100 of those headwinds from a weaker U S dollar against the euro in the second quarter.

Argus application areas, such as one day.

Second quarter non-GAAP operating expenses rose to 35 million up from $32 $5 million a year ago period. The higher expenses are primarily attributable to higher investments in marketing and sales resources as part of our conversational AI investment.

Ration of contact centers to cloud and providing sip connectivity for Cts.

Second click to call application as a replacement for traditional one at one 800 service for contact centers and third a voice that connect and life hub, providing connectivity for cognitive services.

In terms of head count we ended the quarter with 963 employees roughly flat from the prior quarter and compared to $940 a year ago period adjusted EBITDA for the second quarter was $5 2 million.

Second quarter, we signed a tier one system integrator for lives CX in voice and connect that with service connectivity backbone in support of new customers, who have another tier one prospects in the pipeline.

Shabtai Adlersberg: We will be working to reduce the heat in the fourth quarter of 2025. Additionally, we incurred several hundred of those headwinds from the weaker U.S. dollars against the euro in the second quarter. Second Quora non-gap operating expenses rose to $35 million, up from $32.5 million in the year-ago period. The higher expenses are primarily attributable to higher investments in marketing and sales resources as part of our conversational AI investments. In terms of ad count, we ended the quarter with 963 employees, roughly flat from the prior quarter and compared to 940 in the year ago period. Adjusted EBDAL for the second quarter was $5.2 million.

We continue to generate healthy amount of cash flow with net cash from operating activity of $7 7 million for the quarter. This robust cash flow generation provides strong backing to our ability to keep investing in expanding our business moving forward.

Signing up more tier one system integrator is an important initiative is it's effectively skills or addressable market is partners target mid size CX customers, it's already circularly not targeted by our direct sales team.

Now to conversational AI or Cai.

So the guidance as mentioned in our previous quarters discussion, we will respond to you.

Yes.

Let's talk about highlights of what's happened in the second quarter as contemplated earlier in the year, we saw strong demand and opportunity wins, so putting golf, 40% to 50% segment growth outlook for <unk>.

Issuing a financial outlook until we have better and clear understanding of the resolution regarding tariff rates.

The key takeaways from these financial results at the bottom is that our business remains solid and is on an upward trajectory. It is several years now that we experienced nice growth in it.

Five we have experienced increased activity across all of our business lines.

Growth has been made in our leading product categories, such as the Volcker CIC for the Microsoft <unk> environment than we saw success in the meeting intelligence platform space with two leading solutions. One the first one meeting in fact, an enterprise SaaS application, which targets enterprise wide deployments and has demonstrated growth of above two <unk>.

Shabtai Adlersberg: We continue to generate healthy amount of cash flow with net cash from operating activity at $7.7 million for the core. This robust cash flow generation provides strong backing to our ability to keep investing and expanding our business moving forward.

Our highly profitable connectivity segment, particularly in the Ucas and CX market in parallel.

We are successfully expanding our promising voice centric AI in January powered business applications.

As a percent year over year in terms of number of accounts and proof of concepts and use of journey II for meeting summarization of interference.

General market. Despite the presumably recent volatile volatile business landscape stemming from the tariff challenges, we have not observed any shift in customer purchasing behavior.

Shabtai Adlersberg: As to the guidance, as mentioned in our previous quarter's discussion, we will postpone you issuing a financial outlook until we have a better and clearer understanding of the resolution regarding tariff rates. The key takeaways from these financial results at the bottom is that our business remains solid and is on an upward trajectory. It is several years now that we experienced nice growth in our highly profitable connectivity segment, particularly in the UCAS and CX markets. We are successfully expanding our promising voice-centric AI and GNI-powered business applications. As to the general market, despite the presumably recent volatile business landscape stemming from the tariff challenges, we have not observed any shift in customer purchasing behavior.

Second.

We've recently introduced meeting effect on Prem or EMEA O P extending Virginia enable meeting productivity and intelligence benefits, so regulated industries and security sensitive environments. These dangerous seat for a solution provides AI enabled meeting some revision of intelligence and he's completely detached from the cloud.

My plan for opportunities remain strong as we approach the latter part of 2025.

Now to the Microsoft business market surveys and partnering inputs continue to support the growth story for teams phone where adoption in the market continues well at over 20% annual growth themes.

And or the Internet.

Now, let's talk about Volcker CIC in the second quarter of what I see I see continued its strong momentum with bookings growing by 150% compared to the same period last year. We also established a robust pipeline of opportunities for the latter part of the year like I say I see benefits from the increased attach rate through its <unk>.

It's fun to usage is also strongly supported by Microsoft airports to drive co pilot, it's a central capable chatbot for teams one meetings and calls.

Key to continued Tim's phone gross is facilitating connectivity for large enterprises and network. In this regard was Microsoft operator cannot getting more mature and growing in addition to the already successful <unk> grout connectivity.

Government. It seems fone migration project, that's already cuts as especially within the higher education sector. As noted earlier revenue growing second quarter twenty-five remains strong, bringing us closer to our goal of surpassing 50% year over year growth.

Shabtai Adlersberg: The pipeline for opportunities remains strong as we approach the latter part of 2025.

This provides further stimulus.

Ames fund growth.

All of this points to a strong market today and for coming years, and further supports business expansion and dominance in this connectivity area.

Shabtai Adlersberg: Now to the markets of business. Market surveys and partner inputs continue to support a growth story for Tim's phone, where adoption in the market continues well at over 20% annual growth. Teams phone usage is also strongly supported by Microsoft Air Force to drive co-pilot as a central capable chatbot for Teams phone meetings and calls.

Delighting, our achievements CX public fix today publication recently recognized us with the best customer experience deployment award for the successful contact center migration at the University of Central Florida, one of the largest public universities in the United States. This project includes included emerging.

Our Microsoft business grew six 5% year over year fueled.

Fueled by ongoing strength for connectivity business, coupled with increasing attach rate of Luca CIC or Tim certified see Cas and our conversational AI business application services Keith.

Shabtai Adlersberg: Key to continued Teams phone growth is facilitating connectivity for large enterprises' network. In this regard, with Microsoft Operator Connect getting more mature and growing, in addition to the already successful direct route connectivity, this provides further stimulus. James von Gros All these points to a strong market today and for coming years and further supports business expansion and dominance in this connectivity area. Our Microsoft business grew 6.5% year-over-year, fueled by ongoing strength to form our connectivity business, coupled with increasing the touch rate of VocalCAC, our team-certified CCAS, and our conversational AI business applications and services. Key to our success is our live managed services, with annual recurring revenues reaching 70 million exit second quarter, representing approximately 25% growth year over year.

Key to our success is our alive managed services with annual recurring revenues, reaching 70 million exit second quarter, representing approximately 25% growth year over year bookings of new large multimillion contract value opportunities.

Over 40, epidemics and a single centralized contact center serving.

70000 students.

Furthermore, we secured second place in the best CX partnership category for a war with AT&T under HOKA, CIC partnership, which delivered a market oriented integrated the ucas and seek a solution for Microsoft teams.

There is about 6% in second quarter and the opportunities total created value grew more than 10% in the quarter towards.

Was it to our growth story is the latest certification of live classroom for Microsoft.

Moving onto meeting Isa meeting a sales cloud edition maintained strong momentum this quarter with continued growth in new customer acquisition in key metrics such as the number of meetings and unique active users reaching record levels on the product development side customer feedback has been positive regarding the launch of our mobile App, which brings.

Operator connect for partners in EMEA and soon to be certified in the U S.

To put some color onto price made in the second quarter here are some examples of wins in the quarter. We enjoyed much success in the U S higher education vertical in which we have secured several multi million key wins in contracts in the sector. One example is our win with a large state University.

Our generative AI transcription in summary features to in person meetings anti-war not only company facilities.

Additionally, we have developed custom Gen AI based templates and prompt and are now working on our workflow solutions designed for specific industries.

<unk> valued at more than 2 million total contract value of which about $800000 came from a 36 month contract of life Pearl teams managed services and related professional services.

Shabtai Adlersberg: Booking of new launch multi-million contract value opportunities increased about 6% in second quarter. And new opportunities total credit value grew more than 10%.

Moving onto me L P. Turning now too.

Shabtai Adlersberg: Noteworthy to our growth story is the latest certification of LivePlatform for Microsoft Operator Connect for partners in EMEA and soon to be certified in the U.S.

The solution, that's going to be deployed on premise since its launch few months ago. In these early Margaret we've observed strong interest from customers across multiple sectors, including defense government healthcare and media meeting is that on Prem user journey now in a local service.

Second example is the large follow on order, we recently closed.

Amounting to over one 5 million total contract value from our private University in the Mideast mid West I'm sorry.

Shabtai Adlersberg: To put some color on the progress made in the second quarter, here are some examples of wins in the quarter. We enjoyed much success in the U.S. Higher Education Vertical, in which we have secured several multi-million key wins and contracts in the sector. One example is our win with a large state university, valued at more than $2 million total contract value, of which about $800,000 came from a 36-month contract of LivePro Teams managed services and related professional services. Second example is the large follow-on order we recently closed. amounting to over 1.5 million total contract value from a private university in the Midwest.

We had won the initial deal in second half 2024 as part of.

This organization in regulated security sensitive industries by automatically producing secure accurate and efficient meeting recaps without the use of cloud or Internet services meeting in fact appears to be a key beneficiary of the cloud route but duration trend.

Its initial phase of UCC ex modernization and given the successful completion of the first phase the University has decided to standardize on <unk> services for all of its campuses or success can be explained by <unk>.

Having the industry, most complete portfolio and best in class, you'll see CX capability strong track record of delivering customer satisfaction and refer recipe will list of marquee clients. We have built much where the building in this sector and we are now getting inbound leads from other prospective university customers.

With the rapid adoption of generative AI customers now recognize.

There are certain workloads are better suited for on premise environment due to the <unk>.

Factors, such as high clouds cause latency issues in security demands launched earlier. This year, we have already close to 10 customers in production and more than 20 proof of concept projects all arising from word of mouth stroke accommodations. The solution has already been demonstrated literally outside of Israel.

Looking to modernize their UC CX.

Shabtai Adlersberg: We had won the initial deal in second half 2024 as part of... its initial phase of UCCX modernization, and given the successful completion of the first phase, the university decided to standardize AudioCode services for all of its campuses.

Further on the success in the Uk's area I'll talk about two other entities first AT&T AT&T is our largest partner channel for Microsoft teams in the U S second quarter with very successful invoicing and booking grew above 10% in the quarter quarter sequentially.

And as Gordon as much interest in past week Me O. P has been reviewed and received positive feedback from leading industry analysts, we work to expand market reach and awareness to more markets, including the U S in coming months.

Shabtai Adlersberg: or success can be explained by. Having the industry's most complete portfolio and best-in-class UCCX capability, a strong track record of delivering customer satisfaction, and a referenceable list of marquee clients. We have built much credibility in the sector, and we are now getting inbound leads from other prospective university customers looking to modernize their UCCX.

With new logos journey into the core.

While traditional managed services business continued to grow second quarter was a pleasant surprise in terms of rising number of PSTN shutdown projects in various U S states embarking on parts replacements Easter and should support further continued revenue growth in coming years.

So to wrap up my presentation.

Second quarter at 25, we continue to make solid progress in our long term transformation zone in hybrid cloud and voice services.

This application company, we delivered against our strategic objective in that.

When we add second consecutive quarter of top line growth, we made the necessary R&D and sales marketing investment, particularly in the conversation of activities that have fueled our robust pipeline of opportunities in the second half of the year.

And then through our new activity with Cisco in the U K market, we announced our certifications for Webex connect in June 2025. During the second quarter. We have seen initial pipeline built with service providers in EMEA with opportunities created as representing potential of new multi million dollars, we intend to.

Shabtai Adlersberg: Further on the success in the U.S.

Shabtai Adlersberg: area, I'll talk about two other entities. First, AT&T. AT&T is our largest partner channel for Microsoft Teams in the U.S. Second quarter was very successful. Invoicing and booking grew above 10% in the quarter sequentially, with new logos joining into the core. While traditional managed services business continues to grow, Second Core was a pleasant surprise in terms of rising number of PSTN shutdown projects in various U.S. states, embarking on POS replacements. This trend should support further continued revenue growth in coming.

Third we executed well to our playbook of leveraging our strong connectivity install base and driving successful cross sell value added services.

Increased marketing and sales efforts.

We are operating from a position of strength supported by a fortress balance sheet.

<unk> scanning space in coming years.

Turning to CX, we have made progress as planned in the quarter and our LC pipeline continues to support positive outlook for the second half for the full year.

The dominant connectivity franchise and a growing convert conversational AI segment that enhance enterprise intelligence and productivity. We believe these factors position us well to navigate the potential.

We have been growing we have seen growing customer and partner interest in life, CX, which is an important part of life platform targets application areas such as one the migration of contact centers to cloud and providing sip connectivity for Cts second click to call application as a replacement.

Into following years and with that I've completed my presentation, and I'd like to hand over the.

Shabtai Adlersberg: And then to our new activity with Cisco in the U.S. market, we announced our certifications for Webex Connect in June 2025. During the second quarter, we've seen initial pipeline built with service providers in EMEA, with opportunities created representing potential of new multi-million dollars. We intend to increase marketing and sales efforts in the Webex calling space in coming years. Turning to CX, we have made progress as planned in the core and our LC pipeline continues to support positive outlook for the second half of the full year. We've seen growing customer and partner interest in LiveCX, which is an important part of the live platform.

The session.

Two our cost thank you.

Traditional one at one 800 service for contact centers and third a voice that connect and life hub, providing connectivity for cognitive services.

At this time, we will be conducting a question and answer session.

If you would like to ask a question. Please press star one on your telephone keypad.

In second quarter, we signed a tier one system integrator for lives CX and voisey I connect that with service connectivity backbone in support of new customers, who have another tier one prospects in the pipeline.

A confirmation tone will indicate your line is in the question queue.

You May press Star two if you would like to remove yourself from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Signing up more tier one system integrator is an important initiative is it effectively scales or addressable market is partners target midsized CX customers, it's already circularly not targeted by our direct sales team.

One moment, please while we poll for questions.

Shabtai Adlersberg: It targets application areas such as, one, the migration of contact centers to cloud and providing SIP connectivity for CCAS. Second, click-to-call application as a replacement for traditional 1-800 service for contact centers. And third, VoiceAI Connect and LiveHub providing connectivity for cognitive services. In second core, we signed a Tier 1 system integrator for LiveCX and VoiceAI Connect that will serve as connectivity backbone in support of new customers. We have another Tier 1 prospect in the pipeline. Signing up more T1 system integrators is an important initiative as it effectively scales our addressable market. These partners target mid-sized CX customers that are historically not targeted by our direct sales.

Your first question for today is coming from Joshua Reilly with Needham.

Now to conversational AI or Cai.

Alright, Thanks for taking my question, maybe just starting off on the tariff impact here.

Let's.

Let's talk about highlights of both up in the second quarter as contemplated earlier in the year, we saw strong demand and opportunity wins, so putting golf, 40% to 50% segment growth outlook.

Are you seeing in terms of customer demand for our virtual versus.

Versus physical hardware.

Following the tariffs being implemented and what are your thoughts on pricing have you adjusted.

25, we have experienced increased activity across all of our business life process has been made in our leading product categories such as the focus EAC for the Microsoft <unk> environment than we saw success in the meeting intelligence platform space with two leading solutions one the first one meeting inside an enterprise SaaS.

Excuse me have you adjusted your pricing are you thinking about it or what should investors be considering here.

Okay. So.

Usually you know as this is our design into specific.

You know well designs solution architecture. So if.

<unk>, which targets enterprise wide deployments and as demonstrated growth of above 200% year over year in terms of number of accounts and proof of concepts.

The design wins for our cloud virtual SBC and or for an.

Shabtai Adlersberg: Now to Conversation on AI or CHI.

No on Prem data center physical device, that's something that isn't.

And use of journey II for meeting summarization of interference.

Shabtai Adlersberg: Let's talk about highlights of what happened in the second quarter. As contemplated earlier in the year, we saw strong demand and opportunity wins, supporting our 40-50% segment growth outlook. We have experienced increased activity across all of our business lines. Processes have been made in our leading product category, such as the VOCA CAC for the Microsoft Teams environment. Then we saw success in the meeting intelligence platform space with two leading solutions. One, the first one, Meeting Insight, an enterprise SaaS application which targets enterprise-wide deployments and has demonstrated growth of above 200% year-over-year in terms of number of accounts and proof of concepts and use of GenAI for meeting summarization and inference.

Second.

It is not changing that fast okay.

We recently introduced meeting effect on Prem or EMEA O P. Extending the gender enable meeting productivity and intelligence benefits, so regulated industries and security sensitive environments.

We also believe I mean.

We believe that's after we'll go through those months itself.

Instability, we believe at the end of the day, you know things will settle.

This is C for our solution provides AI enabled meeting some revision of intelligent and is completely detached from the cloud and or the internet.

We also believe that we have obviously you know <unk> taken steps to make sure that our margin or not.

Her to buy.

Now, let's talk about Volcker CIC in the second quarter of Oak I see I see continued its strong momentum with bookings growing by 150 per cent compared to the same period last year. We also established a robust pipeline of opportunities for the latter part of the year like I say I see benefits from the increased attach rate through its <unk>.

The increase in caused by raising.

The price for those devices. So all in all we don't really see much impact on.

On the business from that that's a temporary you know extra cost that we are you know.

Curing during you know this.

A second third quarter, but we believe that.

<unk> It seems fone migration project, that's already codes as especially within the higher education sector.

Shabtai Adlersberg: Second. We recently introduced Meeting Insights On-Prem, or MIA-OP, extending the GNI-enabled meeting productivity and intelligence benefits to regulated industries and security-sensitive environments. This industry-first solution provides AI-enabled meeting, summarization, and intelligence, and is completely detached from the cloud and or the internet.

There's no real effect on the actual business in or a decision, which SBC to use or not.

Earlier revenue growing second quarter twenty-five remains strong, bringing us closer to our goal of surpassing 50% year over year growth.

Got it that's helpful and then.

If you look at the Microsoft business.

To be a bit above.

Highlighting our achievements CX public fixed data application recently recognized us with the best customer experience deployment award for the successful contact center migration at the University of Central Florida, one of the largest public universities in the United States. This project includes included emerging.

Both rate above my expectations for the quarter, maybe you can just give us some more color on what's driving that strength in particular.

Shabtai Adlersberg: Now let's talk about VOCA CAC. In the second quarter, VOCA CAC continued its strong momentum, with booking growing by 150% compared to the same period last year. We also established a robust pipeline of opportunities for the latter part of the year. VOCA CAC benefits from the increased attach rate through its involvement in Tim Swann's migration project at AudioCodes F, especially within the higher education sector as noted earlier. Revenue growing in the second quarter remained strong, bringing us closer to our goal of surpassing 50% year-over-year growth.

Yeah, I'd say I think actually you know as I've mentioned you know.

The underneath our infrastructure is the fact that Tim Sloan continues to grow at least 20% a year now. The fact is that we are a very dominant player there I think.

Over 40, epidemics and a single centralized contact center serving.

70000 students.

At this stage more than 60 or 70% market share.

Furthermore, we secured second place in the best CX partnership category with World War with AT&T under HOKA, GIC partnership, which delivered a market oriented integrated the ucas and seek a solution for Microsoft teams.

We have heard about one competitor or you know.

Leaving the space.

What's happening is that.

I believe in many cases, it's word of mouth is the fact that you know.

Shabtai Adlersberg: Highlighting our achievements, CX Today publication recently recognized us with the Best Customer Experience Deployment Award for the successful contact center migration at the University of Central Florida, one of the largest public universities in the United States. This project included merging over 40 help desks in a single centralized contact center serving 70,000 students.

Moving onto meeting Isa meeting SaaS cloud edition maintained strong momentum this quarter with continued growth in new customer acquisition in key metrics such as the number of meetings and unique active users reaching record levels on the product development side customer feedback has been positive regarding the launch of our mobile App, which brings.

Customers acknowledge <unk> dominance in the team's fone.

It services.

Pace and then you know we enjoy the fact that we are signing in the second word science at first quarter and second quarter, we've done some very large.

Our generative AI transcription in summary features to in person meetings anti-war not only in company facilities.

Multimillion dollar total contract value project with a.

Large companies so far.

For us that's going to be you know.

Additionally, we have developed custom Gen AI based templates and prompt and are now working on our workflow solutions designed for specific industries.

Shabtai Adlersberg: Furthermore, we secured second place in the Best CX Partnership category for work with AT&T on the VOCA CAC Partnership, which delivered a market-oriented integrated U-CAS and C-CAS solution for Microsoft Teams. Moving on to Meeting Insight. Meeting Insight Cloud Edition maintains strong momentum this quarter with continued growth in new customer acquisition and key metrics such as the number of meetings and unique active users reaching record levels. On the product development side, customer feedback has been positive regarding the launch of our mobile app, which brings our generative AI transcription and summary features to in-person meetings anywhere, not only in company facilities.

A growth area for many years and the fact that we've got that dominance and we don't see any rush.

Either a new.

Entrants of the market.

We will enjoy.

Moving onto MEO P. Turning now too.

Also the fact that we are improving you know.

The solution, that's going to be deployed on premise since its launch few months ago in the Israeli market. We have observed strong interest from customers across multiple sectors, including defense government healthcare and media meeting insights on Prime uses right now in our local service to us.

On.

The platform, we are going to deploy those services. So just mentioned you know on the call life platform, which we are automating substantial part of the processes more and more every year. So our ability to deploy you know successfully good good performing solution growth and with that the thing that affects it.

This organization in regulated security sensitive industries by automatically producing secure accurate and efficient meeting recaps without the use of cloud or Internet services meeting in fact appears to be a key beneficiary of the cloud report duration trend.

The overall success of that.

Nice.

Shabtai Adlersberg: Additionally, we have developed custom gen-AI-based templates and prompts and are now working on workflow solutions designed for specific industries.

Got it that's very helpful. And then last question for me is if you look at the pipeline for the Webex opportunities have you won any of those deals yet.

With the rapid adoption of generative AI customers now recognize.

Would you expect to win any in 2025 or just give us a sense of how you would expect the trajectory of those opportunities.

Shabtai Adlersberg: Moving on to Miaopi, turning now to... The solution that's going to be deployed on-premise since its launch a few months ago in the Israeli market, we have observed strong interest from customers across multiple sectors, including defense, government, health care, and media. Meeting insights on-prem uses JNL on a local service in order to assist organizations in regulated and security-sensitive industries by automatically producing secure, accurate, and efficient meeting recaps without the use of cloud or internet service. Meeting Insights appears to be a key beneficiary of the cloud repatriation trend. With rapid adoption of generative AI, customers now recognize that certain workloads are better suited for on-premise environments due to factors such as high cloud costs, latency issues, and security demands.

That certain workloads are better suited for on premise environment due to the <unk>.

Come into the model over the next couple of years.

Factors, such as high clouds cause latency issues in security demands launched earlier. This year, we have already close to 10% customers in production and more than 20 proof of concept projects all arising from word of mouth stroke accommodations. The solution has already been demonstrated it actually outside of Israel.

Right that that's still very very early in the game and we just completed certification in second quarter, but as I've mentioned on the call. We have at this stage I believe you know between five and 10.

The opportunities we need to do a lot of work with Cisco partners, because we have not been in that market. So it will take a while for that to catch up so in terms of revenue we won't see much impact in 'twenty five but I can tell you that we see a lot of interest actually there's one big tier one service provider in.

And as Gordon as much interest in past week Me O. P has been reviewed and received positive feedback from leading industry analysts, we worked to expand market reach and awareness to more markets, including the U S in coming months.

So to wrap up my presentation.

Asia Pacific that's already talking to US you know a few months about deploying life platform supporting Cisco Webex, calling so all in all we do expect to see a rise, but the majority of it will come in 'twenty six.

In second quarter of 'twenty five we continued to make solid progress in our long term transformation zone in hybrid cloud and voice services.

The business application company, we delivered against our strategic objective in that one we add second consecutive quarter of top line growth, we made the necessary R&D and sales marketing investment, particularly in the conversation of activities that have fueled our robust pipeline of opportunities in the second half of the year.

Shabtai Adlersberg: Launched earlier this year, we have already close to 10 customers in production and more than 20 proof-of-concept projects, all arising from word-of-mouth recommendations. The solution has already been demonstrated lately outside of Israel and has garnered much interest. In the past week, MEO-PA has been reviewed and received positive feedback from leading industry analysts, who work to expand market reach and awareness to more markets, including the U.S.

Understood. Thank you.

Sure.

Your next question for today is from Samad Samana with Jefferies.

And third we executed well to our playbook of leveraging our strong connectivity install base and driving successful cross sell.

Hey, guys. This is bill if it's an enzyme for some odd.

Maybe to start Shanghai, you talked about how how conversational AI remains a key area of growth supporting the 40% to 50% segment growth for 2025 first off did you guys disclose the second quarter growth rate I knew it grew I think 10% plus in the first quarter and just trying to better figure out.

Services.

Our operating from a position of strength.

Shabtai Adlersberg: in the coming months.

Posted by a fortress balance sheet, a dominant connectivity franchise and a growing convert conversational AI segment that enhance enterprise intelligence that productivity. We believe these factors position us well to navigate the potential.

Shabtai Adlersberg: So to wrap up my presentation. The second quarter of 2025, we continued to make solid progress in our long-term transformations on hybrid cloud and voice services business application company. We delivered against our strategic objective in that when we had second consecutive quarter of top-line growth, we made the necessary R&D and sales marketing investment, particularly in our conversational activities that fueled our robust pipeline of opportunities in the second half of the year.

How that product is kind of ramping into the back half.

Right. So we.

Into following years.

We didn't disclose you know the growth for second quarter.

And with that I've completed my presentation, and I'd like to turn it over.

Yeah.

<unk> thinks needs to be understood. Okay. We're talking about a set of application at this stage four five application.

Session.

Two our host thank you.

Sure. Each you know either you know in its first phase of selling in or getting mature and therefore, you know we do expect not a linear growth year, but it's really much more.

Shabtai Adlersberg: And third, we executed well to our playbook of leveraging our strong connectivity install base in driving successful cross-sales value-added services. We are operating from a position of strength, supported by a fortress balance sheet, a dominant connectivity franchise, and a growing conversational AI segment that enhances enterprise intelligence and productivity. We believe these factors position us well to navigate the potential market.

At this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Kind of <unk> in the second half. So just give you an idea with me O P that produce almost none in first half in terms of Ren.

A confirmation tone will indicate your line is in the question queue.

You May press Star two if you would like to remove yourself from the queue for.

Room revenues, we do expect very substantial uptick.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Well more than $1 million or more in the second half and same goes for the other ones. So it's really the maturity.

One moment, please while we poll for questions.

Shabtai Adlersberg: And with that, I've completed my presentation and I'd like to hand over the session to our host. Thank you.

We'll basically COSE growth to be more at the Baltic than linear so yeah, we do expect.

Your first question for today is coming from Joshua Reilly with Needham.

Keep up with our plan for 40% to 50% growth in 'twenty five.

Alright, Thanks for taking my questions, maybe just starting off on the tariff impact here.

Operator: At this time, we will be conducting a question and answer. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question.

And then maybe a little more high level I think investors are trying to look at this voice AI landscape and trying to figure out the lines of demarcation between vendors.

Are you seeing in terms of customer demand for virtual ftes versus physical hardware.

Following the tariffs being implemented and what are your thoughts on pricing have you adjusted.

What drives differentiation vendor to vendor so Jeff can you talk about audio codes underlying technology, there and then how you differentiate yourself in the conversational AI market.

Operator: You may press star 2 if you would like to remove yourself from the call. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key.

Excuse me have you adjusted your pricing are you thinking about it or.

What should investors be considering here.

Yes definitely.

Okay. So.

So you know.

Operator: One moment, please, while we poll for questions.

We are obviously not among.

Usually you know as this is our design into specific.

The list of companies providing.

You know well design solution architecture. So if.

Joshua Reilly: Your first question for today is coming from Joshua Reilly with NEDA. All right. Thanks for taking my questions.

Our cognitive services technologies in the cloud right, we're not a vendor.

The design is for cloud virtual SBC and or for an.

Vendors, so far large language models and or you know are not selling to other people you know services such as special tax in Texas speech and machine learning et cetera. Our focus really is on applications. Okay application end to end application now we know that and this here I think.

No on Prem data center in a physical device that's something that.

Shabtai Adlersberg: Maybe just starting off on the tariff impact here. What are you seeing in terms of customer demand for virtual FDCs versus physical hardware following the tariff being implemented? And what are your thoughts on pricing? Have you adjusted your pricing? Are you thinking about it? Or what should investors be considering?

It is not changing that fast okay.

We also believe I mean.

We believe the tougher we'll go through those months a sofa instability, we believe at the end of the day, you know things will settle.

We've got an advantage over you know the.

Charity of the players in the market why because even if you have the best city in or one of the best seller Lemme connect them you still need to connect to the actual real world and I noticed the connected the rewards you need to connect with CRM solutions needed connected telephony needs to connect our contact centers and need to.

We also believe that we have obviously you know <unk> taken steps to make sure that our margin or not.

Shabtai Adlersberg: Okay, so usually, you know, SBCs are designed into specific, you know, well-designed solution architecture. So, you know, if the design is for a cloud virtual SBC and or for an, you know, on-prem data center physical device, that's something that is not changing that fast, okay? We also believe, I mean, we believe that after we'll go through those months of instability, we believe at the end of the day, you know, things will settle. We also believe that we have obviously, you know, taken steps to make sure that our margin are not hurt by the increasing cost by raising the price for those devices.

Her to buy.

Cruising caused by raising the.

The price for those devices. So all in all we don't really see much impact on.

On the business from that that's a temporary you know extra cost that we are you know.

Apply management, so recording services et cetera, now because before you know heritage of more.

Kieran you know you know this.

More than 10, 15, and already goes to 20 years, so for developing all of those components.

Second third quarter, but we believe that the.

There's no real effect on the actual business in or a decision, which SBC to use or not.

At Arctic codes, we do have a very rich and I would say set of capabilities and portfolio that helps us to deploy easily MEO P. Now deployed in a matter of a day, if you'll talk to other companies.

Got it that's helpful and then.

If you look at the Microsoft business.

To be a bit above.

Both rate above my expectations for the quarter, maybe you can just give us some more color on what's driving that strength in particular.

First we do not know many such or even small number of such <unk>.

Beating solution and if you go with such a solution to a new facility or a new customer usually it will take you know other companies, which lack the amount of infrastructure that we have it will take them and I would say at least weeks of Matas, we can deploy in days. So our special sauce. If you will is.

Yeah, I think actually you know as I've mentioned you know.

Shabtai Adlersberg: So, all in all, we don't really see much impact on the business from that. That's a temporary, you know, extra cost that we are, you know, incurring, you know, during, you know, this second, third quarter but we believe that there's no real effect on the actual business and or decision which SBC to use or not.

The Anthonys Oh.

Infrastructure is the fact that Samsung continues to grow at least 20% a year now. The fact is that we are a very dominant player there I think.

The fact that we own all of this technology. We also by the way we do improve them. So just to make that <unk> solution, we had to go into some of them.

At this stage more than 60 or 70% market share.

Actually we have heard about one competitor or you know.

Leaving the space.

The tools, we have some open source tools and we're tweaking them. So we have a very strong team here. That's you know developing specialized speech to tax if you want for a medical application. We can you know fine tune.

Shabtai Adlersberg: got it. That's helpful.

What's happening is that.

Shabtai Adlersberg: And then if you look at the Microsoft business, you know, that seemed to be a bit above a growth rate above my expectation. for the quarter.

I believe in many cases, it's word of mouth is the fact that you know.

Customers acknowledge <unk> dominance in the team's fone managed services space.

Shabtai Adlersberg: Maybe you can just give us some more color on what's driving that strength in particular. Yeah, I think, actually, you know, as I've mentioned, you know, the underneath infrastructure is the fact that Tim's phone continues to grow at least 20% a year. Now, the fact is, a, that we are a very dominant player there. I think at this stage more than 60 or 70 percent market share. Actually we have heard about one competitor you know leaving the space. What's happening is that, I believe in many cases, it's word of mouth is the fact that, you know, Customers acknowledge AudioCode's dominance in the Teams phone, you know, managed services.

Space and then you know we enjoy the fact that we are signing in the second word science at first quarter and second quarter, we signed some very large.

This database just to make sure that medical our discussion will come as good as you know other discussion. So we have the ability to internally tweak all those technologies and basically connect them all into a fully working fully integrated solution and I think that sets us up.

Multimillion dollar total contract value project with a large.

A large company so far.

For us that's going to be you know.

Growth area for many years and the fact that we've got that dominance and we don't see.

Apart from many other companies and that explain why you know or you know.

Any rush.

We do not have a tracker or a failing projects. Okay. We are capable of deploying them rather fast and.

Either a new entry.

Entrants of the market.

We will enjoy.

Also the fact that we are improving you know.

But no we simply need time and the time is.

The platform, we are going to deploy those services. So just mentioned you know on the call life platform, which we are automating substantial part of the processes more and more every year. So our ability to deploy you know successfully.

Growing those application et cetera, So we believe that.

This year, we will end up you know as we planned.

Shabtai Adlersberg: space, and then we enjoy the fact that we are signing in the first quarter and second quarter. We found some very large multimillion total commercial value projects with large companies. For us, that's going to be a growth area for many years. The fact that we've got that dominance and we don't see any rush of other new entrants to the market, we will enjoy also the fact that we are improving the platform we're using to deploy those services. We just mentioned the call-live platform, which we are automating a substantial part of the processes more and more every year.

Year of $17 million to $18 million of you know <unk>, but we believe that as we go forward, you'll see very substantial.

Good good performing solution growth and with that the thing that affects the overall success of that.

Higher growth in 'twenty, six 'twenty seven and beyond.

<unk> business.

Perfect. Thank you so much.

Business.

Got it that's very helpful. And then last question for me is if you look at the pipeline for the Webex opportunities have you won any of those deals yet.

Sure.

We have reached the end of the question and answer session and I will now turn the call over to Shanghai for closing remarks.

Would you expect to win any in 2025.

Thank you operator, I would like to thank everyone, who attended our conference call today.

Just give us a sense of how you would expect the trajectory of those opportunities.

With continued good business momentum in our enterprise operations and good underlying market growth trends in new KFC Catherine Cai. We believe we are transitioning the business towards growth and better profitability in coming years.

Come into the model over the next couple of years.

Right that's fair.

Sorry.

Very early in the game and we just completed certification in second quarter, but as I've mentioned on the call. We have at this stage I believe you know between five and 10 new.

Shabtai Adlersberg: Our ability to deploy successfully, good-performing solution growth, and with that, I think that affects the overall success of that business. Got it.

We look forward to your participation in our next quarterly conference call. Thank you all.

New opportunities, we need to do a lot of work with Cisco partners, because we have not been in that market. So it will take a while for that to catch up so in terms of revenue we won't see much impact in 'twenty five but I can tell you that we see a lot of interest actually this one big tier one service provider in.

Have a great day.

This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

Shabtai Adlersberg: That's very helpful.

Shabtai Adlersberg: And then last question for me is, if you look at the pipeline for the WebEx opportunities, have you won any of those deals yet? Would you expect to win any in 2025? Or just give us a sense of how you would expect the trajectory of those opportunities. to come into the model over the next couple. Right. That's still very early in the game. We just completed the certification in the second quarter, but as I mentioned on the call, we have at this stage, I believe, between five and ten new opportunities. We need to do a lot of work with Cisco partners because we have not been in that market, so it will take a while for that to catch up.

Asia Pacific that's already talking to us for few months about deploying life platform supporting Cisco Webex, calling so all in all we do expect to see a rise, but the majority of it will come in 'twenty six.

Understood. Thank you.

Sure.

Your next question for today is from Samad Samana with Jefferies.

Hey, guys. This is bill if it <unk> for some odd.

Maybe to start Shantou, you talked about how how conversational AI remains a key area of growth supporting the 40% to 50% segment growth for 2025 first off did you guys disclose the second quarter growth rate I knew it grew I think 10% plus in the first quarter and just trying to better figure out.

Shabtai Adlersberg: In terms of revenue, we won't see much impact in 2025, but I can tell you that we see a lot of interest. Actually, there's one big tier one service provider in Asia-Pacific that's already talking to us for a few months about deploying a live platform supporting Cisco WebEx calling. All in all, we do expect to see a rise, but the majority of it will come in 2025.

How that that product is kind of ramping into the back half.

Right. So we didn't disclose you know the growth for second quarter.

Shabtai Adlersberg: Understood. Thank you.

One thinks needs to be understood. Okay, we're talking about a set of application.

William Fitzsimmons: Your next question for today is from Samad Samana with Jeff. Hey guys, this is Billy Fitzsimmons out for SMAD. Maybe to start, Shabtai, you talked about how conversational AI remains a key area of growth supporting the 40% that... growth for 2025.

This stage four five applications, which are each you know either you know in its first phase of selling in or getting mature and therefore, you know we do expect not a linear growth year, but it's really much more.

And kind of <unk> in the second half. So just give you an idea with me O P that produce almost none in first half in terms of.

Shabtai Adlersberg: First up. You guys disclosed the second quarter growth rate, I knew it grew I think 10% plus in the first quarter and just trying to better figure out how that product is kind of ramping into the back half. Right. So we didn't disclose, you know, the growth for second core. One thing needs to be understood. Okay, we're talking about a set of applications, you know, at this stage, four, five applications, which are each, you know, either, you know, in its first phase of selling and or getting mature. And therefore, you know, we do expect not a linear growth here, but really much more.

Rental revenues, we do expect very substantial uptick.

Well more than $1 million or more in the second half and same goes for the other ones. So it's really the maturity.

We'll basically COSE growth to be more active politics than linear so yeah, we do expect.

Keep up with our plan for 40% to 50% growth in 'twenty five.

And then maybe a little more high level I think investors are trying to look at this voice AI landscape and trying to figure out the lines of demarcation between vendors.

What drives differentiation vendor to vendor so Jeff can you talk about audio codes underlying technology, there and then how you differentiate yourself in the conversational AI market.

Shabtai Adlersberg: we do expect a very substantial uptick of more than a million or more in the second half. And the same goes for the other one. So it's really the maturity will basically cause growth to be more hyperbolic than linear. So yeah, we do expect, you know, keep up with our plan for 40 to 50 percent growth in 2025.

Yes definitely.

So you know.

We are obviously not among.

The list of companies providing.

Our cognitive services technologies in the cloud right, we're not a vendor.

The vendors are far larger language models and or you know are not selling to other people you know services such as special tax in Texas speech and machine learning et cetera. Our focus really is on applications. Okay application end to end application now we know that and this here I think.

William Fitzsimmons: And then maybe a little more high level, I think investors are trying to look at this voice AI. are trying to figure out the lines of demarcation between vendors and what drives differentiation vendor to vendor.

We've got an advantage over you know.

Shabtai Adlersberg: So Shabtai, can you talk about AudioCodes underlying technology there, and then how you differentiate yourself in the conversational AI?

The majority of the players in the market why because even if you have the best city in or one of the best seller Lemme connect them you still need to connect to the actual real world and I noticed the connected the rewards you need to connect to CRM solutions needed connected telephony need to connect our contact centers.

Shabtai Adlersberg: Yes, definitely.

Shabtai Adlersberg: A, we are obviously not among the list of companies providing cognitive services technologies in the cloud. We're not venerous of large language models or not selling to other people services such as speech-to-text and text-to-speech and machine learning, etc. Our focus really is on applications, end-to-end applications. Here, I think we've got an advantage over the majority of the players in the market. Why? Because even if you have the best STT or one of the best LLM and you connect them, you still need to connect to the actual real world. In order to connect to the real world, you need to connect to CRM solutions, you need to connect to telephony, you need to connect to contact centers, you need to apply management, so recording services, etc.

You need to apply management, so recording services et cetera, now because before you know heritage of no more.

More than 10, 15, and or is it goes to 20 years. So for developing all of those components at Arctic codes, we do have a very rich.

Say set of capabilities and portfolio that helps us to deploy easily MEO P. Now deployed in a matter of a day, if you'll talk to other companies first we do not know many such or even a small number of such competing.

Competing solution and if you go with such a solution to a new facility or a new customer usually it will take you know other companies, which lack the amount of infrastructure that we have it will take them.

At least weeks of Matas, we can deploy in days. So our special sauce. If you will is the fact that we own all of this technology. We also by the way we do improve them. So just to make that <unk> solution. We had to go into some of.

Shabtai Adlersberg: Now, Because of our heritage of more than 10, 15, it already goes to 20 years of developing all those components at AudioCodes, we do have a very rich set of capabilities and portfolio that helps us to deploy easily. MIAOP now deploys in a matter of a day.

The tools, we have some open source tools and we're tweaking them. So we have a very strong team here. That's you know developing specialized speech to tax if you want for a medical application. We can you know fine tune the.

Shabtai Adlersberg: If you talk to other companies, first we do not know many such or even a small number of such competing solutions. If you go with such a solution to a new facility or a new customer, usually it will take other companies which lack the amount of infrastructure that we have, it will take them, I would say at least weeks or months. We can deploy in days. Our special source, if you will, is the fact that we own all of the technology. Also, by the way, we do improve them, so just to make that MIAOP solution, we had to go into some of the tools we have, some open source tools, and we are tweaking them.

<unk> just to make sure that medical.

Our discussion will come as good as you know other discussion. So we have the ability to internally tweak all those technologies and basically connect them all into a fully working fully integrated solution and I think that sets us apart from many other companies and that explain why you know our.

You know.

We do not every tracker overdue failing projects. Okay, we are capable of deploying them rather fast and.

Shabtai Adlersberg: We have a very strong team here that is developing specialized speech to text. If you want a medical application, we can fine-tune the database just to make sure that the medical discussion will come as good as other discussions. We have the ability to internally tweak all those technologies and basically connect them all into a fully working, fully integrated solution. I think that sets us apart from many other companies. That explains why we do not have a track record of failing projects. We are capable of deploying them rather fast. But now we simply need time. And the time is growing those applications, et cetera.

But no we simply need time and the time is now.

Growing those application et cetera, So we believe that.

This year, we will end up.

<unk> plans.

India of $17 million to $18 million of.

They are but we believe that as we go forward, you'll see very substantial higher.

Higher growth in 'twenty, six 'twenty seven and beyond.

Perfect. Thank you so much.

Sure.

We have reached the end of our question and answer session and I will now turn the call over to Shanghai for closing remarks.

Thank you operator, I would like to thank everyone, who attended our conference call today.

With continued good business momentum in our enterprise operations and good underlying market growth trends and you can see Katherine Cai. We believe we are transitioning the business towards growth and better profitability in coming years.

Shabtai Adlersberg: So we believe that this year we'll end up, as we planned, in the year of $17 to $18 million of ARR. But we believe that as we go forward, you'll see very substantial higher growth in 2026, 2027, and beyond. Perfect.

We look forward to your participation in our next quarterly conference call. Thank you all.

Have a great day.

This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

William Fitzsimmons: Thank you so much. Sure.

Shabtai Adlersberg: We have reached the end of the question and answer session, and I will now turn the call over to Shabtai for closing. Thank you, Operator.

Shabtai Adlersberg: I would like to thank everyone who attended our conference call today. With continued good business momentum in our enterprise operations and good underlying market growth trends in UCAS, CCAS, and CHI, we believe we are transitioning the business towards growth and better profitability in coming years. We look forward to your participation in our next quarterly conference call. Thank you all.

Operator: and Ray Day.

Operator: This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.