AudioCodes Ltd. (NASDAQ:AUDC) Q4 2025 Earnings Call Transcript

AudioCodes Ltd. (NASDAQ:AUDC) Q4 2025 Earnings Call Transcript February 3, 2026

AudioCodes Ltd. misses on earnings expectations. Reported EPS is $0.16 EPS, expectations were $0.17.

Operator: Good morning, ladies and gentlemen. Please remain on the line. Your conference will begin in just a few moments. Greetings. Welcome to AudioCodes Ltd. Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, all participants 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 note this conference is being recorded. I will now turn the conference over to your host Roger Chuchen, Vice President of Investor Relations. You may begin.

Roger Chuchen: Thank you, operator. 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 forward-looking statements relating to AudioCodes Ltd.’s business outlook, future economic performance, product introductions, plans, and objectives. Related thereto, and statements concerning assumptions made or expectations as any future events, conditions, performance, or other factors are forward-looking statements as the term is defined under U.S. Federal securities law. Forward-looking statements are subject to various risks, uncertainties, and other factors that could cause actual results to differ materially from those stated in such statements.

These risks, uncertainties, and factors include, but are not limited to, the following: the effect of global economic conditions in general and conditions in AudioCodes Ltd.’s industry and target markets in particular, including governmental undertakings to address such conditions. Shifts in supply and demand, market acceptance of new products, the demand for existing products, the impact of competitive products and pricing on AudioCodes Ltd. and its customers’ products and markets, timely product and technology development, upgrades, the advent of artificial intelligence, and the ability to manage changes in market conditions and evolving regulatory regimes as applicable. Possible need for additional financing, ability to satisfy covenants in AudioCodes Ltd.’s financing agreements, possible impacts and disruptions from AudioCodes Ltd.’s acquisitions, including the ability of AudioCodes Ltd.

to successfully integrate the products and operations of acquired companies into AudioCodes Ltd.’s business, possible adverse impacts attributable to any pandemic or other public health crisis on our business and results of operations, the effects of the current and any future hostilities involving Israel, including in the regions in which we or our counterparties operate, which may affect our operations and may limit our ability to produce and sell our solutions. 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 any other factors described in AudioCodes Ltd.’s filings made with the U.S. Securities and Exchange Commission from time to time.

AudioCodes Ltd. assumes no obligation to update the information. In addition, during the call, AudioCodes Ltd. will refer to non-GAAP net income and net income per share. AudioCodes Ltd. has provided a full reconciliation of the non-GAAP net income and net income per share to this 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 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 Shabtai. Shabtai, please go ahead.

Shabtai Adlersberg: Thank you, Roger. Good morning, and good afternoon, everybody. I would like to welcome all to our fourth quarter full year 2025 conference call. With me this morning is Niran Baruch, Chief Financial Officer and Vice President of Finance of AudioCodes Ltd. Niran will start off by presenting a financial overview of the core. I will then review the business highlights and summary for the core, and discuss trends and developments in our business and industry. We will then turn it into the Q&A session. Niran?

Niran Baruch: Revenues for the fourth quarter were $62.6 million, an increase of 1.7% over the $61.6 million reported in the fourth quarter of last year. Full year 2025 revenues were $245.6 million, an increase of 1.4% over the $242.2 million reported in 2024. Services revenues for the fourth quarter were $34.6 million, an increase of 1% over the year-ago period. Services revenues in the fourth quarter accounted for 55.3% of total revenues. On an annual basis, service revenues were $130.7 million, an increase of 0.4% over the $130.2 million reported in 2024. Revenues by geographical region for the quarter were split as follows: North America, 47%; EMEA, 35%; Asia Pacific, 13%; and Central and Latin America, 5%. Our top 15 customers represented an aggregate of 58% of our revenues in the fourth quarter, of which 41% was attributed to our 10 largest distributors.

The amount of deferred revenues that sold as of 12/31/2025, was $84.2 million compared to $84.4 million as of 12/31/2024. GAAP results are as follows. Gross margin for the quarter was 65.6% compared to 66.2% in Q4 2024. Operating income for the fourth quarter was $3.7 million or 6% of revenues compared to operating income of $4.1 million or 6.7% of revenues in Q4 2024. Full year 2025 operating income was $14 million compared to operating income of $17.2 million in 2024. Net income for the quarter was $1.9 million or $0.07 per diluted share. Compared to net income of $6.8 million or $0.22 per diluted share for Q4 2024. Full year 2025 net income was $9 million or $0.31 per diluted share compared to $15.3 million or $0.15 per diluted share in 2024.

Non-GAAP results are as follows: Non-GAAP gross margin for the quarter was 65.9%, compared to 66.5% in Q4 2024. Non-GAAP operating income for the fourth quarter was $5.4 million or 8.6% of revenues. Compared to $7.5 million or 12.2% of revenues in Q4 2024. Full year 2025 non-GAAP operating income was $21 million compared to non-GAAP operating income of $28 million in Q3 in 2024. Non-GAAP net income for the fourth quarter was $4.5 million or $0.16 per diluted share compared to $11.6 million or $0.37 per diluted share in Q4 2024. Full year 2025 non-GAAP net income was $18.1 million or $0.61 per diluted share, compared to $27.3 million or $0.87 per diluted share in 2024. At the December 2025, cash, cash equivalents, bank deposits, marketable securities, and financial investments totaled $75.7 million.

Net cash provided by operating activities was $4.1 million for the 2025, and $29.4 million for the year 2025. Day sales outstanding as of 12/31/2025 were 117 days. In October 2025, we received court approval in Israel to purchase up to an aggregate amount of $25 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 04/27/2026. During the quarter, we acquired 667,000 of our ordinary shares a total consideration of approximately $6.1 million. Earlier this morning, we also declared a cash dividend of $0.20 per share. The aggregate amount of the dividend is approximately $5.4 million. The dividend will be paid on 03/06/2026, all of our shareholders of record at the close of trading of 02/20/2026.

Our guidance for the full year 2026 is as follows: We expect revenues in the range of $247 million to $255 million and non-GAAP earnings per share diluted earnings per share of $0.60 to $0.75. I will now turn the call over to Shabtai.

Shabtai Adlersberg: I’m pleased to report another quarter of solid top-line growth in full quarter ’25. This performance shows our focus progress towards becoming an AI-driven hybrid cloud software and services company. 2025 marked a period of stabilization and growth for our company. After facing economic challenges in 2023 and 2024 that affected our legacy and hardware business lines, and have led to a decline in revenue in past years. We saw 2025 a recovery of our connectivity business. Over the course of 2025, we saw promising signs of top-line growth inflection. The rate of decline in legacy business has moderated and we saw the newly invested Voice AI strategic areas maintaining their robust upward trajectory. This momentum in our strategic business has been driven by our two primary growth engines, our live managed services and the emerging voice AI business.

Combined, these two units contributed to $79 million annual recurring revenue exit 2025. Representing growth of 22% year over year. While holding the line in our connectivity business, we executed well on our Voice AI initiative. Growing revenues by 35% year over year. The transition in overall company business trajectory is a result of deliberate actions. Reallocating our product development investments and efforts to high market potential areas and investing in sales and marketing to build market awareness to these innovative solutions. Looking ahead to 2026, plan to maintain this formula for success. Improving revenue growth, driving steady margin expansion, and strengthening our leadership in voice AI-driven business application for the UCaaS and CX markets.

Now to highlight so far our business performance in first quarter twenty five and full year 2025. Fourth quarter total revenue grew as Niran mentioned, 1.7% year over year. As we have continued to build on the strength of our connectivity business and successfully leverage our enterprise customer base, installed base to drive cross-sell of GenAI business voice applications that make up our conversational AI operations. As discussed earlier, our solid fourth quarter results were marked again by strong traction in our dual growth engines. Lab services delivery for UCaaS and CX and Conversational AI. Business lines. Specifically, in all the years of a previous quarter, our conversational AI business increased in over 50% year over year for both the first quarter twenty five and also for the second half two thousand twenty five.

Full year 2025 Conversational AI revenues reached nearly $17 million and accounted for 7% of total revenues. As a result, we’re growing ever more optimistic about the continued stronger near recurring revenues momentum. For coming years. This conviction is further reinforced by the growing backlog of live and managed services that we convert to revenues in coming quarters. Exit 2025, our backlog for live services reached a level of $75 million compared to $69 million at the end of 2024. Now let me provide more of a visibility into how we operate so that our overall company financial results are better understood. As stated in previous course, we are now in transition in a transition period from our main focus on connectivity solution to expand and build a new AI-first voice AI-led business application operations for enterprises.

I believe this will also provide more clarity into our financials too. At this stage, business can be generally broke down into two business units. Long established and running connectivity business provides for about 93 of the company revenue. It is a mature, profitable business, which runs steadily over the past five years, and which has delivered operating margin of above 14% in 2025. On a on a longer term basis, we target these businesses to deliver 16% to 18% operating margin. Relying on our success in these meetings along the past ten years, we are confident in our ability to continue and drive long term stable growth as we are the front runner in this connectivity business for both the UCaaS and the CX markets. The second business, the Voice AI business, focusing on software as a service recurring business model provided at the 2025 about 7% of the company revenue, growing from $12 million plus in 2024 to close to $17 million exit 2025, yielding revenue growth of about 35% year over year.

Now that several product lines reached maturity and started to produce growing annual revenue, we are confident in our ability to keep growing this business line at a rate of 40 to 50% annually in coming years. And we plan to reach a revenue level of $50 million in 2028. Need to say, that we rely extensively using the Chennai technology in the solution to provide business voice application. For the UCaaS and CX enterprise market. It is important to note, though, that the Voice AI business is in investment mode currently. And generates an annual budget burn of about $9 to $10 million a year. With the 50% annual revenue growth plan for this business line, we believe we should reach breakeven two years from today. Before turning to detailed business line discussion, let quickly shift into the fourth core profitability metrics.

As mentioned before, full score total revenue grew 1.7%, Our non-GAAP gross margin for the quarter of 65.9% is within our long-term target range of 65 to 68%. And a slight improvement sequentially from 65.8% last quarter. Fourth quarter rate related cost headwinds accounted to $600,000 and aggregated to $2.7 million for the full year 2025. We expect tariff-based impact to approximately get to $2.3 million in 2026. Fourth quarter non-GAAP operating expense of $35.8 million compared to $34.7 million in the third quarter and $33.4 million from the year-ago period. On a year-over-year basis, the higher expenses are attributable to targeted investment in marketing and sales tied to the Voice AI business. Allowing it to grow further and impact from the weakening US dollars against the euro in the full score.

Full year 2025 non-GAAP operating expense decreased point two versus the year-ago period for the same reasons. In terms of workforce, concluded 2025 with 981 employees, representing an increase from 961, the previous score, and 946 at the end of 2024. Adjusted EBITDA for the fourth quarter was $6.5 million reflecting a 10.4% margin compared to 6.9 or 11.2% in the prior quarter. For the full year, adjusted EBITDA reached $24.8 million or 10.1% margin. Non-GAAP EPS was $0.16 in line with our plans, in the year-ago quarter. Net cash provided by operating activities was $4.1 million for the quarter, and $29.4 million for the full year 2025. On the guidance on the guidance front, we expect 2026 to be a gross year. We expect 02/2026 revenues of 200 I’m sorry, of $247 million to $255 million in the year and non-GAAP EPS of 60 to 75¢.

This projection assumes continued strong growth of 40 to 50% in the voice AI business. And a stable connectivity outlook assuming no significant changes in the macroeconomic landscape. Our overall annual recurring revenues, which encompasses our managed services for connectivity plus conversational AI is expected to grow from 79 exit 25 growing 20% in 2026 and reaching a range of $92 to $98 million. In ’26. Now let’s move to the actual business line. Let let’s talk first about Microsoft. During the fourth quarter, Microsoft business saw a sequential increase of 7%. This growth was largely driven by the continued strength of the connectivity franchise and rising attach rate for AI first Evocus EAC, which is our team certified CCaaS solution.

The total contract value signed at the full score remained consistent with previous scores. On an annual basis, total contract value grew by 5% year over year reflecting steady progress. The Microsoft Teams Voice ecosystem continues to demonstrate very healthy situation. Recently, it was disclosed that the number of PSTN users reached 26 million, up from 20 million stated in April 2024. Which indicates an annual growth rate of 16 to 17%. Although Teams phone users represent less than 10% over the total team’s monthly active worldwide user, which is estimated at 320 million seats, there’s potential of total of 80 to 100 million prelicensing five users creating immediate large addressable market. Looking ahead to 2026, we anticipate an additional increase of three to 4 million users supporting the evolution towards an AI-powered workplaces.

Stated by Microsoft. One notable win was a 30 win in the quarter was a thirty-six month contract signed with AT and T to support the large public university. Igorand provides for a comprehensive range of services including managed gateway, SBC, and calling plans, as well as IP phones. Facilitating the migration to Teams’ words from Cisco. Another key contract was a sixty-month deal with an international equipment manufacturer based in Europe engagement began with the live premium managed service for initial phase of 2,000 users. Marking the start of a full migration to Teams Voice from Cisco. Upon completion of migration, the focus will shift to cross-selling additional business voice applications such as VocaC AC. In the fourth score, we actually we have been engaged in the other front extending and expanding our, efforts in The US market.

So all the UCaaS front yesterday, we announced that we now offer an end-to-end push portfolio of certified voice solution for Cisco Webex calling. From CloudConnect PSTN connectivity analog gateways and desk phones. Webex calling is Cisco cloud phone system, a cloud PBX that provides enterprise telephony business calling features and PSTN connectivity, delivered and managed through Webex cloud. For 2025, Cisco publicly stated in November that Webex Calling serves now more than 18 million users worldwide. So for us, this new evolving cooperation with Cisco represents a major new opportunity in expanding our connectivity and devices business for UCaaS in coming years. Now to our conversational AI activity. In the last eighteen months, conversational AI moved from experimentation to expectation.

In both UCaaS and customer experience, buyers are no longer asking should we use AI. They are asking, which AI? Where does it run? Who controls the data, and how fast can we scale it? That is exactly why we have been investing in past years in developing a rich portfolio of solutions. Across UCaaS, is about turning conversation into business assets meeting into decision, and voice interactions into actions. Across CX, it is about moving from basic cell service bots to real automation, voice agents that can resolve route, summarize, comply, and improve over time. Pivoting towards a more intelligent enterprise, our conversational AI portfolio is already built for this reality. Our solution namely Voice AI Connect, Live Hub, LocustCIC, Meeting Insights Cloud Edition, Meeting Insights on prem, and more.

Are all designed to connect voice and conversation enterprise systems and to support multiple models and deployment options. But let me challenge one assumption. I see here in the market that AI value comes from the model. True. The large language model matters. However, is a durable value that comes from orchestration security, integration, and governance. So combining our vast telephony technology base, with our conversational AI portfolio, towards bring your own AI approach to deploying solution in various UCaaS and CX environments. It’s our way to meet customers with the AR, make adoption faster, reduce risk, and expand what partners can deliver. To summarize the quarter, as mentioned earlier, fourth quarter, twenty five, Conversational AI revenue grew over 50% year over year.

Now let’s start with, the leading line which is the Voice AI Connect Live Hub line. This discussion focuses and revolves around the conversational AI platform market and the emerging voice AI agent sector, which gained significant traction over the past two years. Leading research firms estimate that the market for Voice AI agent will reach between $8 billion to $15 billion by 2028, with expectation that it will double by 2030. Regarding our business activities, both Voltia Connect and the Live Lab business delivered robust results in the 2025. For the full year, this segment achieved growth exceeding 50% compared to 2024, This strong performance was driven by consistent acquisition of new clients across The US Europe, and APAC as well as considerable expansion within our existing customer base.

Live Hub service or Voice CPaaS self-service cloud platform empowering voice board developers to build solutions such as conversational IVR, voice agents, agent assist, and real-time translation services. In late third quarter two thousand twenty five, we announced enhancement to the live app voice CPaaS offering notably the integration of newly developed voice AI agents. By year end two thousand twenty five, Live App experienced substantial increase in both number of developers and platform usage in minutes, while monthly recurring revenue approached a 150% increase compared to the fourth quarter in 2024. Notably, many existing VoiceThera Connect Live Hub customers have accelerated their consumption rates beyond the initial projections, reinforcing our belief that the adoption of Gen AI enabled virtual agent virtual an agent assist application is entering a phase of rapid growth.

A significant achievement in full score ’25 was securing an initial order with a tier one international carrier adopting our voice and eye connect service to support their call summarization solution. The deployment initially targets enterprise fixed line customers, with plans to expand to the entire mobile consumer and enterprise user base in late two thousand twenty six. We view this contract as an important entry point with substantial potential for further expansion as the service is scaled across current clients new use cases are developed.

Shabtai Adlersberg: Now to Vocacy, I see. 1,000 agent range, recorded another quarter of strong revenue growth for both fourth quarter and full year. Revenue for the year grew over 55% compared to previous year. Thousand twenty five was very proactive in terms of progress in the VOCA business line. During the year, we have developed cooperation with regional channel channel partners as well as with global system integrators. Activity has been fairly positive. By now, VOCA CIC has more than 200 enterprise customers worldwide We saw extremely success. We are extremely successful in the education space. Especially in North America, UK, and other regions where Microsoft Teams is dominant in the vertical. We have now more than 15 universities accounts acquired in 2025.

We have introduced new out of the box practical AI experiences such as agent insights, then AI receptionist, some of which extends beyond the Microsoft Teams installed base. We have productized an on prem survival version of Vocus AIC, to act as a backup in case of cloud outage. Key for quarter highlights include, extending our momentum in higher education market, not only in The US, but also outside The US. We can talk about a large university in South Africa. Selected CIC contact center as part of their overall Microsoft Teams UCCX deployment. Success. Another major win is successful launch scale enterprise deployment with a top five global BPO provider. During the call, we issued a press release highlighting the deployment of Vocus EC with Aptento on a deal one in the Pricor.

The new conversational AI voice solution supports more than 500 concurrent AI voice agent for a large healthcare organization. And was delivered in just few weeks compared to typical three to six month deployment timeline for project of this scale. New product was introduced, Agent Insights, as discussed earlier, Ascor, we recently launched Agent Insights, which brings GenAI into the Vocus AIC platform. Agent insight provides contact center with customer customer customizable AI summaries, sentiment analysis, and one click CRM updates. Built natively in agent workflows. Looking ahead, we expect 2026 to be another year of strong revenue growth driven by continued traction in both direct sales and channel partnerships. Moving on to Meeting Insights Cloud Edition.

Meeting Insights Cloud Edition maintained impressive momentum throughout this quarter. Seeing consistent increases in new customer acquisitions. Record numbers again achieved in metrics such as total meetings and unique active users, leading to substantial year over year monthly recurring revenue growth as of December 2025. This strong performance was driven by continued product innovation boosting demand both across wider markets and within custom workflow solution designed for specific verticals such as higher education, local governments, HR, finance, and more. Meeting Insights now works independently of any particular UC systems. Expanding its flexibility. In fourth quarter two thousand twenty five, support was added for Google Meet. And we do expect integration with Cisco Webex in the current quarter.

That adding to the existing compatibility we have with Microsoft Teams and Zoom. These updates enable GenAI meeting summaries for interactions on a major UC platform so I’ll listen in person. Meetings. Beyond allowing customers to customize prompts, for their precise requirements, the platform now offers prebuilt templates created for specific enterprise roles and persona. Including those in legal and HR. This feature is expected to further streamline how efficiently customers can extract useful insights from meetings. Additionally, the platform’s mobile app enables on demand recording, action item management, meeting preparations, and chat based search of meeting records. Its features make the meeting user mobile app essential for daily office operations.

Now to another derivative of the meeting inside solution, which we call mia OP, mia on prem. Let’s talk first about the cloud repatriation trends emerging. The proportion of businesses planning to retain users on premise jumped from 5% to 15% over two years. Driven primarily by data sovereignty concerns in European markets. And regulated sectors such as legal, finance, and defense. Even cloud committed enterprise now scrutinize where data is hosted and processed. This trend validates hybrid deployment capabilities and position data read residency controls as competitive differentiators. Countering pure cloud narrative that dominate previous market cycles. In fourth quarter twenty five, we continue to make good progress with the newly introduced MiaOP solution.

With growing number of wins in the government and defense market in Israel. Positioning the business line to account for a growth in our conversational AI segment in 2026. Following last quarter, Israeli Nimbus contract award which streamlines procurement to form meeting intelligence services for all Israeli government ministries and agencies. We have already signed one first deal, and currently, I have several more additional proof of concept engagements across various ministries. We also received Nimbus care five approval, certifying that our solution meets the highest standard of security and compliance standards under the NIMBUS Israel and NIMBUS framework. We expect this designation to expand both the number of agencies we can serve and the range of services we can provide.

The MeLP solution supports currently the English and The US English and Hebrew languages. We expect to substantially grow that number of supposed languages to tens basically, already in this first quarter. So we we expect deployment of MeiLP in more countries already in the second quarter and beyond. So to wrap up my presentation, we exit 2025 good operational momentum. The connectivity business has stabilized in second half of the year. Voice AI business grew 35% on a yearly basis. And about 50% in the second half of the year. With the continued pace of investment in our life managed services activity, and in the voice AI area, we expect continued momentum in 2026 and beyond. And I’d like to move over the call to the Q&A session.

Q&A Session

Operator: Thank you. Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that is 1 to ask a question. One moment, please, while we poll for questions. Your first question for today is from Joshua Reilly with Needham and Company.

Joshua Reilly: Hey, there. Thanks for taking my questions. Maybe just starting off on the updated financial targets for conversational AI growth through 2028. Is the 40 to 50%, annual growth, is that intended to be a CAGR growth rate? Through 2028. And then along with that, should we think about the primary driver being customer growth or higher spend per customer driving that conversational AI growth. So you expect to get a lot more new customers, or sell more of the new conversational AI products to existing customers?

Shabtai Adlersberg: Right. Thank you, Joshua. Yeah. Actually, we’re looking for both. You know, as I’ve mentioned before, several of our conversational AI, you know, this voice application rich mature rich maturity in 2025, which really says that we we just started out with, you know, you know, few hundreds of of customers. We expect that this number will grow substantially as we adding more capabilities and more features. And, also, investing our sales operations. You know, I would say that in 2025, our sales ability was was a bit restrained simply because we didn’t want to move too quickly into the cells phase without having a more mature, more complete product. Now we feel fairly confident with you know? And and we get the feedback from customers.

So, yes, the number of potential customers should grow I would say I’ll use the word using usually. It will grow dramatically, I expect. In certain areas. Also, you know, do you to the addition of new capabilities and new features, we do expect that per customer you know, expand on our solution will grow simply because we intend bring more capability. So, yeah, growth should come from both. And and I’ll tell you that I’m talking now about 50% growth, but as as we talk, you know, there are new application popping up you know, on a weekly basis talking to customers. And, again, our ability to combine our vast telephony capabilities with the very large investments we made in, conversational AI. Just to give you a data point, You know, we we are known to be a company that investing, you know, rich in R&D out of about thousand employees.

We have 350 employees, doing R&D work. We are moving fastly into moving, you know, big portion of that R&D force into Voice AI. So while we when we started out back in 2010, we had only about 40 to 50 employees on this line. Now we have a 150 out of those 350 employees. So all in all, big investment. We see success. That gives us all the reason to continue to invest and and and believe in growth such as you know, 50%, and it could be more.

Joshua Reilly: Gotcha. And then you mentioned there’s been a shift in market expectations around AI. Can you just help us understand how is that maybe positively impacted your pipeline visibility and size now that we’re moving past the kind of a testing phase for customers with some of these voice AI products and now moving into broader adoption. Do you feel that your pipeline visibility and size, is improving and increasing?

Shabtai Adlersberg: Yes. As I’ve mentioned, you know, we are increasing our sales force. We’re spreading our operation into more countries. Some of these application are fairly you know, easy to use, you know, SaaS application that you know, a company can test, do a proof of concept for thirty to sixty days and then moving into production. And with some of the more complaint compelling capabilities we’re bringing to the game, we do have better visibility compared to take networking deals or connectivity deals is you you know, being being larger, but still, you know, usually takes essentially more time could turn to be anywhere between three months to nine months.

Joshua Reilly: Gotcha. And then last question for me is, how should we think about any impact from tariffs to the 2026 financials and gross margin and any other items to be considering regarding tariffs in 2026? Thank you.

Shabtai Adlersberg: Right. Right. So gross margin, we believe, will step up simply because our products you know, mix of products will turn substantially more into software and services. We do expect to keep that range of 65 to 68%, you know, operating margin. I’m sorry, gross margins. And yeah, gross margin. And then I’m sorry. What was the second one? Yeah. The tariff was about $2.7 million in 2025. We currently estimate it to be a bit lower, you know, probably around $2.3 million in ’26.

Joshua Reilly: Thank you.

Shabtai Adlersberg: Sure.

Operator: As a reminder, if you would like to ask a question, please press 1 on your telephone keypad. We have reached the end of the question and answer session. And I will now turn it over to Shabtai for closing remarks.

Shabtai Adlersberg: Thank you, operator. I’d like to thank everyone who attended our conference call today. With continuing good business momentum in our live managed services operations, continuing growth in our voice AI business. We believe we are on track to grow revenue profitability next coming years. We look forward to your participation in our next quarterly conference call. Thank you all. Have a nice day.

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