AudioCodes (NASDAQ:AUDC) reported modest revenue growth in the fourth quarter and full year 2025, while management emphasized an ongoing transition toward an “AI-driven hybrid cloud software and services company.” On the company’s earnings call, executives pointed to continued strength in connectivity offerings and accelerating traction in VoiceAI-related products and managed services, alongside lower profitability versus the prior year.
Fourth-quarter and full-year financial results
Chief Financial Officer Niran Baruch said fourth-quarter revenue rose to $62.6 million, up 1.7% from $61.6 million a year earlier. Full-year 2025 revenue was $245.6 million, a 1.4% increase from $242.2 million in 2024.
By geography in the quarter, revenue was split 47% North America, 35% EMEA, 13% Asia Pacific, and 5% Central and Latin America. Baruch said the top 15 customers represented 58% of fourth-quarter revenue, with 41% attributed to the 10 largest distributors. Deferred revenue at year-end 2025 was $84.2 million, roughly flat with $84.4 million at year-end 2024.
On a GAAP basis, fourth-quarter gross margin was 65.6% versus 66.2% a year ago. Operating income was $3.7 million (6% of revenue), down from $4.1 million (6.7%) in the prior-year quarter. GAAP net income fell to $1.9 million, or $0.07 per diluted share, from $6.8 million, or $0.22 per diluted share, in Q4 2024.
For the full year, GAAP operating income was $14.0 million compared with $17.2 million in 2024, and GAAP net income was $9.0 million, or $0.31 per diluted share, versus $15.3 million in 2024.
On a non-GAAP basis, fourth-quarter gross margin was 65.9% and non-GAAP operating income was $5.4 million (8.6% of revenue), down from $7.5 million (12.2%) a year ago. Non-GAAP net income for the quarter was $4.5 million, or $0.16 per diluted share, compared with $11.6 million, or $0.37, in Q4 2024. Full-year 2025 non-GAAP net income was $18.1 million, or $0.61 per diluted share, down from $27.3 million, or $0.87, in 2024.
Cash, capital return, and 2026 guidance
AudioCodes ended December 2025 with $75.7 million in cash, cash equivalents, bank deposits, marketable securities, and financial investments. Net cash provided by operating activities was $4.1 million in the fourth quarter and $29.4 million for the full year. Days sales outstanding were 117 days as of December 31, 2025.
Baruch said the company received Israeli court approval in October 2025 to purchase up to $25 million of additional ordinary shares, with the approval also permitting the declaration of a dividend of any part of that amount through April 27, 2026. During the quarter, AudioCodes repurchased 667,000 shares for approximately $6.1 million.
The company also declared a $0.20 per share cash dividend (approximately $5.4 million in aggregate), payable on March 6, 2026, to shareholders of record as of February 20, 2026.
For 2026, management guided to revenue of $247 million to $255 million and non-GAAP diluted EPS of $0.60 to $0.75.
Strategy shift: connectivity stability and VoiceAI investment
CEO Shabtai Adlersberg described 2025 as a “period of stabilization and growth,” following economic challenges in 2023 and 2024 that pressured legacy and hardware lines. He said the connectivity business recovered in 2025, while the rate of decline in legacy business moderated.
Adlersberg highlighted two “primary growth engines”: Live managed services and the emerging VoiceAI business. He said the two units combined contributed to $79 million in annual recurring revenue (ARR) exiting 2025, representing 22% year-over-year growth. He also said VoiceAI grew 35% year over year in 2025.
Management framed the company as operating in two broad segments:
- Connectivity business: about 93% of revenue, described as mature and profitable, with operating margin “above 14%” in 2025 and a longer-term target of 16% to 18%.
- VoiceAI business: about 7% of revenue at year-end 2025, growing from “$12 million+” in 2024 to “close to $17 million” in 2025. Adlersberg said the unit is in investment mode and carries an annual “budget burn” of about $9 million to $10 million, with a goal of reaching breakeven in about two years as growth continues.
Adlersberg said AudioCodes is targeting 40% to 50% annual growth for VoiceAI in coming years and a revenue level of $50 million in 2028.
Operational metrics, tariffs, and workforce
Adlersberg said non-GAAP gross margin of 65.9% was within the company’s long-term target range of 65% to 68%, and slightly higher sequentially from 65.8% in the prior quarter. He also cited tariff-related cost headwinds of $600,000 in Q4 and $2.7 million for full-year 2025, with an estimated tariff impact of approximately $2.3 million in 2026.
Fourth-quarter non-GAAP operating expenses were $35.8 million, up from $34.7 million in the third quarter and $33.4 million in the year-ago period. Management attributed the year-over-year increase to targeted sales and marketing investments tied to the VoiceAI business and the impact of a weakening U.S. dollar against the euro. Full-year 2025 non-GAAP operating expenses increased 6.2% year over year.
AudioCodes ended 2025 with 981 employees, up from 961 the previous quarter and 946 at the end of 2024. Adlersberg said the company has about 350 employees in R&D, with 150 working on VoiceAI, up from roughly 40–50 when the initiative began.
Adjusted EBITDA was $6.5 million in the fourth quarter (10.4% margin) and $24.8 million for the full year (10.1% margin).
Business highlights: Microsoft, Cisco Webex, and conversational AI products
On Microsoft-related activity, Adlersberg said the Microsoft business increased 7% sequentially in the fourth quarter, driven by connectivity strength and rising attach rates for Voca CIC, AudioCodes’ Teams-certified CCaaS solution. He said total contract value signed in the quarter was consistent with prior quarters and grew 5% year over year on an annual basis. He also referenced Microsoft’s disclosure that PSTN users reached 26 million, up from 20 million in April 2024, and described a large addressable market given overall Teams usage.
Adlersberg highlighted a 36-month contract signed with AT&T to support a large public university migration to Teams Voice from Cisco, and a 60-month deal with a European equipment manufacturer starting with a Live Premium managed service for 2,000 users.
In the U.K., the company announced it now offers an end-to-end portfolio of certified voice solutions for Cisco Webex Calling, including Cloud Connect PSTN connectivity, analog gateways, and desk phones. Adlersberg cited Cisco’s statement that Webex Calling serves more than 18 million users worldwide.
In conversational AI, management said Q4 2025 conversational AI revenue grew over 50% year over year, with full-year conversational AI revenue reaching nearly $17 million (about 7% of total revenue). The company also reported a $75 million backlog for Live services exiting 2025, up from $69 million a year earlier.
Adlersberg discussed multiple product lines, including VoiceAI Connect and Live Hub, Voca CIC, and Meeting Insights. He said Live Hub’s monthly recurring revenue approached a 150% increase compared to full-year 2024, and noted an initial order with a “tier-1 international carrier” using VoiceAI Connect for call summarization, with plans to expand in late 2026. For Voca CIC, he said revenue grew over 55% year over year in 2025, the product has more than 200 enterprise customers, and the company added more than 15 university accounts in 2025. Meeting Insights Cloud Edition added support for Google Meet in Q4 and management expects Cisco Webex integration in the current quarter.
During Q&A, Adlersberg said AudioCodes expects VoiceAI growth to come from both expanding the customer base and increasing spend per customer as capabilities expand. He also said pipeline visibility has improved for some SaaS applications that can be tested via proof of concept in 30–60 days, compared with longer sales cycles for connectivity deals.
About AudioCodes (NASDAQ:AUDC)
AudioCodes Ltd is a global provider of advanced voice networking and media processing solutions for enterprises and service providers. The company designs and manufactures a comprehensive portfolio of products, including session border controllers (SBCs), media gateways, IP phones, management and monitoring software, and cloud-based communications microservices. Its offerings support a wide range of unified communications (UC) and contact center deployments, enabling secure, high-quality voice connectivity across on-premises, hybrid and cloud environments.
Founded in 1993 and headquartered in Rosh Ha’Ayin, Israel, AudioCodes serves customers in North America, Europe, Asia-Pacific and Latin America.
