AudioCodes Q2 2026 Earnings Highlight AI and Teams Momentum
Overview of AudioCodes Second Quarter 2026 PerformanceAudioCodes delivered its financial results for the second quarter of 2026 during a conference call held on Tuesday, August 4, 2026, beginning at 8:30 a.m. Eastern Time. The discussion featured key company leaders who provided detailed insights in
Overview of AudioCodes Second Quarter 2026 Performance
AudioCodes delivered its financial results for the second quarter of 2026 during a conference call held on Tuesday, August 4, 2026, beginning at 8:30 a.m. Eastern Time. The discussion featured key company leaders who provided detailed insights into revenue growth, strategic initiatives, and future projections. The session emphasized the company's ongoing shift toward a model centered on software, services, artificial intelligence, and cloud communications. This transition has been supported by two primary engines of expansion: Live Managed Services and Voice AI solutions, which together achieved an annual recurring revenue exit rate of 84 million dollars, marking a 20 percent increase compared to the same period in the prior year and demonstrating a doubling of this metric over the preceding three years.
Key Financial Highlights from the Quarter
Total revenue reached 63 million dollars, reflecting a 3.1 percent year-over-year improvement from the 61.1 million dollars recorded in the corresponding quarter of the previous year. Within this total, services revenue stood at 34.6 million dollars, comprising 54.9 percent of overall quarterly revenue and expanding by 6.2 percent annually. Geographic distribution showed North America contributing 50 percent, EMEA 33 percent, Asia Pacific 14 percent, and Central and Latin America 3 percent. The top 15 customers accounted for 55 percent of revenue, while the 10 largest distributors represented 37 percent. Non-GAAP operating income came in at 4.6 million dollars or 7.4 percent of revenues, slightly above the 4.4 million dollars or 7.2 percent achieved in the second quarter of 2024. GAAP net income was 0.5 million dollars or 0.02 dollars per diluted share, up from 0.3 million dollars or 0.01 dollars per diluted share in the comparable prior period. Non-GAAP net income totaled 3.9 million dollars or 0.15 dollars per diluted share versus 4.1 million dollars or 0.14 dollars per diluted share previously. Cash and investments aggregated 64.2 million dollars at the end of June 2026, with operating cash flow providing 6.1 million dollars. Days sales outstanding were reported at 107 days, and the company repurchased 950,000 ordinary shares for approximately 8.9 million dollars while declaring a 0.20 dollar per share dividend payable in September totaling about 4.8 million dollars.
Strategic Guidance and Outlook Updates
Management updated its full-year 2026 revenue forecast upward to a range between 251 million and 256 million dollars from the earlier projection of 247 million to 255 million dollars. Non-GAAP earnings per diluted share guidance remained unchanged at 0.60 to 0.75 dollars for the year. Annual recurring revenue reached an exit rate of 84 million dollars, fueled by Live Managed Services and Voice AI, with the latter experiencing 50 percent year-over-year growth in the quarter and nearly 100 percent expansion in the first half compared to 2025. Backlog climbed to nearly 90 million dollars, a 23 percent rise from 73 million dollars a year earlier. Microsoft Teams-related revenue grew 5 percent year over year, positioning the company to attain roughly 170 million dollars in Microsoft ecosystem revenue for the full year, representing about 66 percent of total planned revenue. Total contract value for Microsoft Teams activities surged 73 percent to exceed 20 million dollars.
Business Transformation and Industry Trends
The company continues its evolution into an AI-driven provider of cloud and edge software and services, leveraging deep integration with the Microsoft Teams ecosystem. Voice is increasingly viewed as the most natural interface for interacting with large language models, enabling automation of verbal communications and accelerating adoption of conversational AI solutions such as virtual agents and agent-assist tools in enterprise settings. Sales cycles for new conversational AI projects have shortened to around six months in certain instances, down from the historical 12 to 24 month range. The VoiceAI Connect platform serves as a flexible orchestration layer allowing integration of diverse AI cognitive services and bot frameworks without vendor lock-in, supporting on-premises, private cloud, or public cloud deployments. The Voca CIC contact center solution holds unique dual Microsoft certifications for both Teams contact center functionality and AI voice agents, while the MIA Edge offering delivers on-premises meeting analysis tailored for regulated sectors like healthcare and finance to ensure complete data ownership and access control. Meeting Insights monthly recurring revenue expanded close to 150 percent year over year, prompting plans for broader international rollout following a 50 percent increase in active users.
Detailed Remarks from Company Leadership
During the call, the chief financial officer outlined GAAP and non-GAAP results in depth, noting gross margins of 65.7 percent GAAP and 65.8 percent non-GAAP. The president and chief executive officer highlighted steady progress on the strategic repositioning, with enterprise revenue exceeding 90 percent of the total and strong momentum in the Microsoft Teams Phone business alongside connectivity stability. Voice AI revenue growth exceeded 50 percent year over year, keeping the segment on track for 40 to 50 percent full-year expansion and a longer-term target of 50 million dollars by the end of 2028. Representative customer wins included follow-on orders exceeding 1 million dollars from a major state university system for managed services and equipment, plus expanded global deployment with a European logistics firm replacing traditional toll-free services. A large-scale connectivity project valued over 10 million dollars entered production, expected to add 3 to 4 million dollars in annual revenue over the next three years. The executive emphasized ongoing investments in conversational AI technology to capitalize on emerging agentic AI trends and the company's unique positioning at the intersection of voice infrastructure and AI orchestration.
Glossary of Key Industry Terms
Session Border Controller refers to network security devices managing IP communication sessions for VoIP quality and protection. Annual Recurring Revenue measures predictable yearly subscription income. Total Contract Value captures the complete worth of signed agreements including recurring and one-time elements. Days Sales Outstanding tracks average collection time after sales. Unified Communications as a Service delivers cloud-based collaboration tools, while Contact Center as a Service enables multichannel customer support. Voca CIC represents the company's AI-focused Teams contact center product, MIA Edge provides secured on-premises meeting intelligence, and Customer Premises Equipment denotes hardware installed at client locations.