AudioCodes (AUDC) Earnings Date & Reports

Key Takeaways

• AudioCodes reported third quarter 2026 revenue of $64.1 million, up 4.2% year over year and above the roughly $63.4 million consensus estimate.
• Non-GAAP earnings came in at $0.16 per diluted share, in line with analyst expectations, while GAAP diluted EPS rose to $0.15 from $0.10 a year earlier.
• Services revenue climbed 19.9% year over year to $37.1 million, now representing about 58% of total revenue and reinforcing a recurring-revenue shift.
• Voice AI revenue kept growing at a 40% to 50% pace, keeping the company on track toward its $25 million full-year target.
• Management reiterated full-year 2026 guidance of $251 million to $256 million in revenue and non-GAAP EPS of $0.60 to $0.75.
• For more on the company, you can explore its Major News, Today's Price Move, Price Targets, and Forecast pages.
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Earnings Context and Why It Matters

AudioCodes is in the middle of a deliberate transformation, shifting from its legacy voice-networking hardware toward software, managed services, and conversational AI. That transition has made its quarterly results an important gauge of whether recurring revenue can offset slower growth in traditional gateway products. The company has also become deeply tied to the Microsoft Teams ecosystem, which accounted for roughly two-thirds of its business, making its Microsoft-related bookings a closely watched signal. Heading into this report, investors were focused on whether Voice AI growth could sustain its momentum, whether margins could hold up under increased investment, and whether the company would reaffirm its full-year outlook.

Reported Results

For the third quarter ended September 30, 2026, AudioCodes posted revenue of $64.1 million, a 4.2% increase from $61.5 million in the prior-year period and ahead of the consensus estimate of about $63.4 million. Services revenue grew 19.9% year over year to $37.1 million and represented 57.8% of total revenue. GAAP gross margin was 65.7%, up slightly from 65.5% a year earlier, while GAAP operating income was $3.4 million, or 5.3% of revenue, compared with $4.1 million, or 6.6%, in the prior-year quarter. GAAP net income rose to $3.6 million, or $0.15 per diluted share, from $2.7 million, or $0.10 per diluted share.

On a non-GAAP basis, which excludes items such as share-based compensation and amortization, gross margin held steady at 65.8%, and non-GAAP operating income was $4.8 million, or 7.4% of revenue, down from $5.8 million, or 9.5%, a year earlier. Non-GAAP net income was $4.0 million, or $0.16 per diluted share, compared with $4.9 million, or $0.17, in the year-ago quarter. Management reiterated its full-year 2026 outlook for revenue of $251 million to $256 million and non-GAAP earnings per share of $0.60 to $0.75.

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Market Reaction and Investor Sentiment

The initial market response was cautious. Despite revenue coming in above consensus and non-GAAP EPS landing in line with expectations, the stock traded lower in the wake of the release, suggesting investors focused on the decline in non-GAAP operating margin, which fell from 9.5% to 7.4% year over year. That compression reflects stepped-up investment in the Voice AI and Live Platform initiatives, a dynamic that weighs on near-term profitability even as recurring revenue expands. Sentiment also reflects broader uncertainty around the pace at which the company's AI-related growth can translate into higher earnings, particularly given the company's heavy concentration in the Microsoft ecosystem.

Forward Outlook and Key Factors to Monitor

Looking ahead, investors will be watching whether AudioCodes can convert its expanding recurring-revenue base into more consistent profitability. Annual recurring revenue reached $87 million by the end of the third quarter, up 16% from a year earlier, with Live managed services and Voice AI applications acting as the two primary growth engines. The company reaffirmed its target of $25 million in Voice AI revenue for 2026 and a longer-term goal of $50 million by 2028, making the trajectory of conversational AI adoption a central theme.

Margin trends will also remain in focus. As AudioCodes accelerates investment in intelligent-voice solutions, the gap between GAAP and non-GAAP results, and any further compression in operating margin, could shape investor confidence. Microsoft-related bookings are another key indicator: new-contract value tied to Microsoft Teams Phone activity has been rising sharply, and continued momentum there would support the revenue outlook.

Finally, capital-allocation decisions deserve attention. The company declared a semiannual cash dividend of $0.20 per share earlier in the year and received Israeli court approval to repurchase up to $30 million of shares, buying back roughly $15.1 million in the quarter. Any updates to guidance, cost trends, or the Voice AI roadmap in the next report will help clarify whether the current growth strategy is translating into durable shareholder value.

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