On August 4, AudioCodes (NASDAQ:AUDC) reported second-quarter revenue of $63 million, a modest 3.1% increase from $61.1 million a year earlier, and paired the update with a 20-cent-per-share semi-annual dividend that was paid on September 3 to shareholders of record as of August 19. Beneath that slow topline number sits a business quietly reshaping itself, with one small division growing more than 50% a year while the legacy hardware side barely moves the needle. That split between old and new is the story investors need to watch.
Voice AI Is Doing The Heavy Lifting
AudioCodes’ Conversational AI business grew more than 50% year over year in the second quarter, matching the pace it set in the first quarter of 2026. Combined with the Live suite of managed services for Microsoft Teams and other collaboration platforms, these two segments pushed annual recurring revenue up 20% year over year to $84 million as of June 30. Recurring revenue compounds quietly, and a growing slice of AudioCodes now runs on that basis rather than resetting every quarter.
Microsoft Teams-related sales climbed 5% year over year, a smaller number but one built on an already established customer base rather than a new product line. Voice AI Connect and Live Hub, the products built for contact centers, delivered what the company called record bookings during the quarter, with new customer wins and expansion inside existing accounts both cited as drivers. Meeting Insights, a newer meeting-intelligence product, is still in the traction-building stage, but its pipeline is expanding.
Services revenue, at $34.6 million, grew 6.2% year over year, twice the pace of total revenue, meaning subscriptions and managed offerings are gaining share of the business rather than one-time hardware sales.
The Cash Pile Keeps Draining
Total revenue growth of 3.1% is the number that matters most for a company still generating the bulk of its business outside AI, and it shows the core is barely expanding. GAAP operating margin came in at 5.1%, and GAAP net income was just $0.5 million, or two cents a share, on $63 million of revenue. That is a thin cushion for a company simultaneously funding buybacks and a dividend.
On a non-GAAP basis, net income actually slipped to $3.9 million from $4.1 million a year earlier, even though per-share earnings rose slightly because AudioCodes has been steadily shrinking its share count. During the quarter, the company spent $8.9 million buying back 950,133 shares, and cash, deposits, and investments fell to $64.2 million as of June 30, from $75.7 million at the end of 2025. Operating cash flow of $6.1 million for the quarter did not come close to covering what went out the door for buybacks.
The board’s $25 million buyback and dividend authorization, approved by an Israeli court in May and valid only through November 12, had just $17.4 million left as of June 30, meaning the pace of shareholder returns will need to slow, or a new approval will be required soon.
Wall Street Isn’t Rattled Yet
14 hedge funds held AudioCodes shares in the most recent quarter, up from 11 in the prior quarter, a rising count that suggests institutional interest is building rather than fading. Short interest sits at just 0.89% of the float, among the lowest levels a stock can show, meaning almost nobody is positioned against the company right now. The stock trades at a forward P/E of 13.05 as of September 4, a modest multiple that does not price in aggressive growth.
Two Stories, One Stock
AudioCodes is really two businesses layered into one stock: a legacy voice hardware operation growing in the low single digits, and a Voice AI and Live services business compounding at a much faster clip. For the faster-growing side to eventually dominate the numbers, annual recurring revenue needs to keep expanding well beyond its current $84 million base. For the slower side to stop being a drag, overall revenue growth needs to move past 3.1%.
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