AudioCodes Ltd. (AUDC): Business Model Canvas [Dec-2025 Updated]

You're digging into how AudioCodes Ltd. is actually making money as they push hard into AI, moving beyond just selling Session Border Controllers (SBCs). Honestly, after two decades analyzing tech pivots, this one is interesting: they've managed to get services revenue, including their Live managed offerings, up to 50.3% of their Q3 2025 take, all while maintaining a GAAP Gross Margin of 65.5% in that same quarter. This shift, targeting 40% to 50% growth in their Conversational AI solutions for 2025, is the key to their valuation now, so let's break down exactly where the revenue is coming from and who their critical partners are in this new model below.

AudioCodes Ltd. (AUDC) - Canvas Business Model: Key Partnerships

You're looking at the core relationships that fuel AudioCodes Ltd.'s revenue engine as of late 2025. These aren't just casual acquaintances; these are deep integrations driving the pivot to AI and hybrid cloud services.

The partnership ecosystem is heavily weighted toward the Microsoft stack, which remains a primary growth driver. Microsoft-related business showed growth of 6.5% in the second quarter of 2025. Furthermore, the success of the AudioCodes Live Platform for Microsoft Teams is central, with Voca Customer Interaction Center (CIC) for the Microsoft Teams environment being a key product. Voca CIC achieved the Microsoft Teams Unify Integration Certification in August 2025.

The Live Platform is designed to be vendor-agnostic across the major players, which is key for broad market adoption. This platform now supports comprehensive UC and CX features for all major global UCC vendors.

• Webex Calling certification is in place for the Live Platform.
• Success has been noted in the Zoom space, particularly around Zoom Phone.

Securing agreements with large-scale implementers is critical for scaling the Live Platform. AudioCodes secured a landmark agreement with a global Tier 1 system integrator for managed connectivity services for all major UC/CX systems. This deal is expected to generate low single-digit millions in recurring revenue during the first year.

Telecom service providers act as crucial on-ramps for enterprise adoption. AT&T North America, an early Live Platform partner, uses the solution to onboard end customers to Microsoft Teams, which has resulted in multimillion dollar of annual recurring revenue over the past few years.

The channel remains a significant revenue source, though the focus is shifting to value-added services through these routes. Here is a summary of the key partnership metrics we see as of the third quarter of 2025:

The Conversational AI business, which grew 50% in Q3 2025, is being driven through these same channels, putting the company on track for 40% to 50% growth for the full year 2025. Annual Recurring Revenue (ARR) hit $75 million by the end of Q3 2025, up 25% year-over-year, targeting an exit of $78 million to $82 million for the full year 2025.

AudioCodes Ltd. (AUDC) - Canvas Business Model: Key Activities

R&D for Conversational AI and Generative AI applications

AudioCodes Ltd. directs internal operations to manage two distinct business units, connectivity and value add services, with a focus on the latter for growth. The company invests approximately $8-$10 million annually in voice AI research and development. This investment supports the targeted growth in Voice AI bookings for 2025, which is guided to be over >40%, aiming for bookings exceeding $17 million for the year. Conversational AI products, such as Meeting Insights On-Prem and Mia OP, drove segment growth expectations of 40% to 50% for 2025.

Key AI-related activities and metrics include:

• Targeted Voice AI booking growth for 2025: >40%.
• Estimated annual investment in voice AI: $8-$10 million.
• Segment growth outlook for Conversational AI in 2025: 40% to 50%.
• New module launch: AI Agents for LLM-powered voice bots in Live Hub.

Developing and managing the AudioCodes Live Platform

The AudioCodes Live Platform is central to the shift toward cloud and software services. Live managed services demonstrated robust growth, with Annual Recurring Revenues (ARR) reaching $70 million as of the second quarter of 2025, representing a 25% year-over-year increase. The platform, which includes Live Hub Voice CPaaS, unifies Conversational IVR, Voice AI Agents, Live-Agent Assist, and real-time translation.

Manufacturing and logistics for Session Border Controllers (SBCs) and IP phones

While the focus shifts, connectivity hardware remains a core activity, though its segment revenue contribution is decreasing relative to services. In the first half of 2025 (1H25), AudioCodes Ltd. led the enterprise SBC (eSBC) market in revenue share for both Q1 and Q2. The company's eSBC sales were down by 1.8% compared to 1H24. The overall eSBC market revenue for 1H25 was down by 16.7% compared to the same period in 2024.

eSBC Revenue Market Share (1H25):

• Q1 2025 Share: 30.2%.
• Q2 2025 Share: 29.5%.

Sales and marketing of UCaaS/CCaaS connectivity and services

Sales and marketing efforts drive revenue across both connectivity and services, with services becoming the majority revenue contributor. Service revenues accounted for 53.3% of total revenues in the second quarter of 2025. The Microsoft-related business, which includes eSBCs for Microsoft Teams Phone deployments, saw a year-over-year increase of 6.5% in Q2 2025. The full-year 2025 revenue guidance is set between $244 million and $246 million.

Professional services for large-scale voice network migration

Professional services support large-scale migrations and complex deployments, often tied to the UCaaS/CCaaS offering. A notable example of scale includes the University of Central Florida (UCF) deployment, which consolidated over 40 helpdesks into a single Microsoft Teams-based contact center. This deployment supported 70,000 students and 10,000 staff members. The Voca Conversational Interaction Center (CIC) solution was instrumental in this large-scale implementation.

AudioCodes Ltd. (AUDC) - Canvas Business Model: Key Resources

If you're looking at the foundation of AudioCodes Ltd.'s business right now, you're looking at a mix of deep-seated hardware expertise and rapidly evolving cloud-native software assets. These are the things that actually make the business run, so let's break down the tangible and intellectual capital they are sitting on as of late 2025.

Proprietary Session Border Controller (SBC) and VoIP Technology

The core strength here is the Mediant family of Session Border Controllers (SBCs). These devices and virtualized solutions provide the secure, scalable voice connectivity that underpins everything else. You're looking at technology that delivers seamless connectivity, security, and voice quality assurance for enterprise and service provider VoIP networks. The single software across all SBC models definitely helps simplify training and management for IT teams.

The market recognizes this foundation. AudioCodes was ranked by research firm Omdia as the leading global enterprise SBC vendor in 2024, marking the third year running they held that spot. These SBCs are fully certified by Microsoft for Teams Direct Routing, which is critical for their UCaaS strategy. They offer flexible deployment options, available on proprietary hardware, COTS servers, or as a virtualized solution for both private and public clouds.

Here's a quick look at the deployment flexibility:

AudioCodes Live Platform (cloud-native, multi-UCaaS)

This platform is where the service delivery happens for modern communications. It's a multi-tenant UCaaS and CCaaS service delivery solution built securely on Microsoft Azure. It provides seamless PSTN connectivity for the big three platforms: Microsoft Teams (supporting Direct Routing and Operator Connect), Webex Calling, and Zoom Phone. Honestly, this multi-UCaaS support is key to capturing a broader market.

The platform is designed for speed and scale, using service automation to streamline deployment and onboarding. This is a big deal for partners looking to reduce operational overhead. The platform's capabilities include:

• Streamlined Customer and Tenant Onboarding
• Multi-tier, self-service customer management
• Lifecycle automation tools
• Centralized monitoring, analytics, and reporting

Intellectual Property in Voice AI (Voca CIC, Meeting Insights)

The intellectual property around Voice AI is where AudioCodes is pushing for significant growth, targeting 40%-50% annual conversational AI growth in 2025. This IP is embedded in their key applications.

Voca CIC (Conversational Interaction Center) is their AI-first omnichannel contact center, which is part of the Live Platform and certified for Teams. It offers intelligent routing and advanced analytics. For example, their deployment at the University of Central Florida consolidated 40+ contact center desks and 400 agents into a single Microsoft Teams-based contact center supporting 70,000 students and 10,000 staff. To be fair, achieving enterprise-grade reliability with a target of 99.999% uptime tied to Teams Phone is a major IP asset.

Meeting Insights is their generative AI-powered meeting productivity tool. This solution centralizes all meeting data from Teams into one secure, searchable location. The company announced it included major capabilities into this acclaimed solution in March 2025, showing active development.

Cash, Cash Equivalents, and Investments

You always need to look at the balance sheet to gauge operational flexibility. As of the end of September 2025 (Q3 2025), AudioCodes Ltd. held $79.7 million in cash, cash equivalents, bank deposits, marketable securities, and financial investments. This liquidity position supports ongoing R&D and capital allocation activities, like the share repurchase program.

Here's a snapshot of key Q3 2025 financial metrics that relate to this resource base:

Global Network of Certified Channel Partners and Distributors

AudioCodes leverages a worldwide community to get its solutions to market. This network includes resellers, integrators, and service providers. Their global reach extends across 120+ countries. This partner-first approach is supported by co-selling opportunities and specific programs for different partner types.

The commitment to the channel is reinforced through structured enablement. They maintain a network of global or regional Training Partners certified by AudioCodes to deliver branded training sessions. These partners must maintain certifications in key areas like AudioCodes SBC and Microsoft Teams environments. This ensures that the people selling and supporting the technology have the right knowledge base.

The partner ecosystem is structured to support various go-to-market motions:

• Distributors
• Resellers
• Service Providers
• Solution Partners

AudioCodes Ltd. (AUDC) - Canvas Business Model: Value Propositions

You're looking at the core reasons customers choose AudioCodes Ltd. (AUDC) right now, late in 2025. It's a story about pivoting hard into AI services while maintaining a strong foundation in enterprise voice connectivity.

Seamless voice interoperability with all major UC/CC platforms

AudioCodes Ltd. maintains its value proposition by being deeply integrated where the enterprise communication platforms live. The company is the number one partner with Microsoft for enabling Microsoft Teams Phone deployments. This deep integration is critical for customers migrating or standardizing on Microsoft Teams. For context on their hardware foundation, AudioCodes Ltd. was the global enterprise Session Border Controller (SBC) revenue market leader in 2023, capturing 23.1% of worldwide revenue share, and remained a close second in 2024 with 25.8% share.

• Microsoft Teams Phone enablement: number one partner status.
• Enterprise SBC revenue share 2023: 23.1%.
• Enterprise SBC revenue share 2024: 25.8%.

AI-powered business applications (e.g., Meeting Insights, Voca CIC)

The growth engine here is clearly the AI segment. Management projected the Conversational AI business to achieve 40%-50% annual growth for the full year 2025. This isn't just projection; the Conversational AI revenue actually grew 50% year-over-year in the third quarter of 2025. This momentum is driving the Annual Recurring Revenue (ARR) target for 2025 to be between $78 million to $82 million. By the end of the third quarter of 2025, ARR had already reached $75 million, a 25% year-over-year increase. The Voca Conversational Interaction Center (CIC) solution was recognized with the 2025 CX Today Award for Best CX Deployment for its work with the University of Central Florida (UCF), where it consolidated over 40+ contact center desks and 400 agents to support 70,000 students and 10,000 staff. This shift is evident when comparing revenue streams:

The company's overall revenue for the third quarter of 2025 was $61.5 million, up 2.2% year-over-year.

Managed services for simplified UC/CX deployment (AudioCodes Live)

AudioCodes Live is positioned as a portfolio of managed voice-based solutions, shifting costs from capital expenditures to predictable operating expenses. This offering was first introduced as the SBC as a service solution in 2020. In the second quarter of 2025, the Live managed services showed a year-over-year growth of 25%. The services revenue stream is significant, making up 50.3% of total revenues in Q3 2025.

• AudioCodes Live launch year: 2020.
• Live managed services growth (Q2 2025 YoY): 25%.
• Services revenue share (Q3 2025): 50.3%.

Secure, on-premise voice AI solutions for regulated industries

For regulated sectors, the value is in keeping sensitive data local. The Meeting Insights On-Prem solution, released in 2025, uses Small Language Model (SLM) technology and can run on a basic enterprise-grade server. In its base configuration, this on-premise solution can handle approximately 30 concurrent sessions. This addresses the caution many organizations have regarding cloud processing of sensitive data.

• Meeting Insights On-Prem base concurrent sessions: 30.
• Project Nimbus traction mentioned in regulated markets.

High-quality, reliable voice communication hardware and software

Reliability is supported by strong gross margins, which were 65.5% GAAP and 65.8% non-GAAP in Q3 2025. The company's hardware and software portfolio includes IP phones and session border controllers, which underpin the connectivity side of the business. The projected full-year 2025 revenue guidance is between $244 million to $246 million. The projected direct cost impact from U.S. tariffs for 2025 is estimated at $3 million.

AudioCodes Ltd. (AUDC) - Canvas Business Model: Customer Relationships

You're looking at how AudioCodes Ltd. keeps its customers engaged and spending, which is clearly shifting heavily toward recurring revenue streams as of late 2025. The relationship model is built around locking in customers with services that generate predictable income.

Managed Services model for high Annual Recurring Revenue (ARR) is the core driver here. This focus on the Live family of services is paying off in spades. For instance, by the first quarter of 2025, Annual Recurring Revenues (ARR) hit $67 million, which was a 25% year-over-year growth rate. That momentum didn't slow; by the second quarter, ARR climbed to $70 million, maintaining that strong 25% YoY increase. By the third quarter, ARR reached $75 million, still up 25% year-over-year, positioning AudioCodes Ltd. to hit its full-year target of $78 million to $82 million. To be fair, this recurring component is becoming the backbone; in Q3 2025, services revenue was $30.9 million, making up 50.3% of total revenues for that quarter.

Here's the quick math on that ARR trend:

The relationship is also evolving with the product mix. You see the success in the UCaaS space, where the Microsoft business was up 7% in Q1 2025 and then up 6.5% in Q2 2025. Still, the real excitement is in the AI offerings.

Subscription-based pricing for AI-powered value-added services is clearly a key focus for deepening customer relationships. The Conversational AI (CAI) division is growing fast, with management projecting a full-year growth of 40% to 50% for 2025. This isn't just projection; in Q3 2025, the CAI business grew by an impressive 50% for the quarter, which put them right on track for that full-year goal. This growth is fueled by new AI products like Meeting Insights On-Prem (Mia OP), which is being sold into the enterprise base.

For the largest customers, AudioCodes Ltd. employs dedicated direct sales and account management for Tier 1 service providers. This high-touch approach secured a significant win in Q3 2025: a 'live platform agreement with a global Tier 1 system integrator.' That specific deal is projected to bring in low single-digit millions in recurring revenue during the first year alone, which shows the value placed on these top-tier partnerships for market reach.

Finally, the foundation of trust is maintained through technical support and maintenance contracts for hardware and software. While specific maintenance contract dollar amounts aren't broken out separately from the overall service revenue, the fact that service revenues are now over 50% of the total revenue stream in Q3 2025 suggests these ongoing support and maintenance agreements are robustly bundled or sold alongside the managed services. You can expect these contracts to be structured to ensure high renewal rates, given the mission-critical nature of unified communications infrastructure.

• Microsoft business segment growth: 7% in Q1 2025.
• Conversational AI segment growth target for 2025: 40% to 50%.
• Q3 2025 share repurchase: 1,267,436 shares for $12.7 million.

Finance: draft 13-week cash view by Friday.

AudioCodes Ltd. (AUDC) - Canvas Business Model: Channels

You're looking at how AudioCodes Ltd. gets its products and services into the hands of customers as of late 2025. It's a mix of direct engagement and heavy reliance on a partner network.

Global network of channel partners and value-added resellers (VARs)

AudioCodes Ltd. emphasizes a partner-first approach to scale its reach. The company supports this network with enablement through programs like the AudioCodes Academy, which offers comprehensive technical training courses for partners and customers. The success of this channel is significant, as a substantial portion of the company's business flows through these intermediaries.

• The company secured a landmark, multi-year Live Platform agreement with a global Tier-1 system integrator.
• This integrator partnership instantly provides distribution to a global network of massive multinational enterprise customers.
• The agreement is expected to generate low single-digit millions in recurring revenue in its first year.

Direct sales force for large enterprise and service provider accounts

While the channel is crucial, AudioCodes Ltd. maintains a direct sales capability, especially for its largest, most strategic accounts. This direct touchpoint is key for securing major platform agreements and driving the adoption of its core UCaaS and CCaaS connectivity business, which accounts for over 90% of total revenue. The company's enterprise and service provider focus is clear in its customer concentration metrics.

Cloud marketplaces and vendor ecosystems (e.g., Microsoft Teams)

A major channel for AudioCodes Ltd. is integration into leading cloud ecosystems, particularly Microsoft Teams. The company has worked to ensure its platform is deeply embedded across the major Unified Communications as a Service (UCaaS) and Customer Experience (CX) platforms. The Voca CIC solution is noted as an award-winning, AI-first contact center built in Azure, showing deep ecosystem commitment.

• Microsoft-related business grew 6.5% year-over-year in Q2 2025.
• AudioCodes Ltd. enables connectivity services for all major UC platforms, including Microsoft Teams, Zoom and Webex.

Global distribution network (North America is 48% of Q3 2025 revenue)

The company's revenue generation is geographically concentrated, with the Americas segment being the primary driver. The Q3 2025 revenue split clearly illustrates where the majority of sales are realized, which dictates where channel and direct sales efforts are most heavily weighted.

Trade shows and partner events (e.g., Enterprise Connect 2026)

Partner engagement is driven through specific industry events. For instance, the 2025 AudioCodes' UK Partner Innovation Summit, held on January 30, 2025, was a channel-focused event designed to discuss growth strategies and reinforce commitment to partners in that region. These events serve as a direct channel for communicating strategy and enabling resellers.

AudioCodes Ltd. (AUDC) - Canvas Business Model: Customer Segments

You're looking at how AudioCodes Ltd. (AUDC) structures its sales efforts across different buyer groups as of late 2025. The focus has clearly shifted, moving beyond just selling hardware to securing recurring revenue from services tied to Unified Communications (UC) and Customer Experience (CX).

Large Enterprises needing Unified Communications (UC) and Customer Experience (CX)

This segment is central to the growth story, particularly through the Live family of services. These services are designed to simplify the integration of Microsoft Teams with the Public Switched Telephone Network (PSTN) via Direct Routing, which is a key enterprise requirement. The success here is reflected in the overall service revenue stream; for the third quarter of 2025, services accounted for 50.3% of total revenues, totaling $30.94 million. You saw the Microsoft-related business rise by 6.5% in the second quarter of 2025 alone. The company is targeting a full-year 2025 revenue between $246 million and $254 million, driven in part by these large deployments.

Global Telecom Service Providers and UCaaS/CCaaS vendors

Service Providers are targeted with the Live Cloud platform, a Software as a Service (SaaS) multitenant offering. This helps carriers easily onboard their customers to Microsoft Teams Voice via Operator Connect or Direct Routing. The overall shift to services is evident in the Annual Recurring Revenue (ARR), which hit $75 million by September 30, 2025, marking a 25% year-over-year increase. The company is tracking to meet its full-year 2025 ARR target of $78 million to $82 million, which is heavily reliant on these recurring service contracts from providers and major enterprise customers.

System Integrators and Managed Service Providers (MSPs)

The channel is a critical delivery mechanism, especially for the Live Express platform, which is a white-label, multi-tier SaaS solution for VARs, SIs, and MSPs. This allows them to rapidly provision business customers onto Microsoft Teams Phone System. The company secured a significant agreement with a tier-1 system integrator for managed connectivity services across major UC/CX systems during the third quarter of 2025, which opens up substantial cross-selling opportunities. The focus on value-added services is aggressive, with bookings growth targeted at over 40% for these services in 2025.

Mid-sized CX customers (primarily served via channel partners)

While the data doesn't break out mid-sized customers specifically, their needs are addressed through the channel partners mentioned above, using the scalable Live Express platform. The overall Customer Experience (CX) connectivity business is a primary growth engine, alongside Conversational AI (CAI). The CAI business itself achieved a 50% growth rate in Q3 2025, showing strong traction in this market, which often includes mid-sized firms looking to deploy advanced AI features like the new Meeting Insights On-Prem (Mia OP) service.

Regulated sectors (government, defense, finance) requiring on-premise AI

For sectors with strict data residency or security requirements, the on-premise AI capability is key. The Meeting Insights On-Prem (Mia OP) service is explicitly mentioned as making noteworthy advancements. While specific revenue from regulated sectors isn't itemized, the emphasis on on-premise AI solutions suggests a targeted approach to these customers who cannot fully commit to the cloud for sensitive workloads. The overall Voice AI business is expected to see annual growth of 30% to 50% over the coming years, which includes these specialized on-prem deployments.

Here's a quick look at the financial mix that underpins the focus across these segments as of the third quarter of 2025:

Also, you should note the customer concentration; back in Q4 2024, the top 15 customers accounted for 64% of revenues, and the top 10 distributors accounted for 48% of revenues. This shows a reliance on a relatively small number of large entities and key channel partners to drive the bulk of the top line.

• Connectivity sector growth forecast for FY2025: 20% to 26%.
• Voice AI business growth expectation for FY2025: 30% to 50% annually.
• Non-GAAP EBITDA guidance for FY2025: $34 million to $38 million.
• Total shares repurchased in Q3 2025: 1,267,436 shares for $12.7 million.

The business is clearly prioritizing the recurring revenue streams from UCaaS/CX connectivity and the high-growth Conversational AI services, which are delivered through a mix of direct enterprise sales and channel partners.

AudioCodes Ltd. (AUDC) - Canvas Business Model: Cost Structure

You're looking at the core expenditures that drive AudioCodes Ltd. (AUDC)'s operations as of late 2025. This structure is heavily influenced by hardware production, cloud service delivery, and significant investment in its VoiceAI pipeline.

The Cost of Goods Sold (COGS) directly relates to the margin performance on both hardware and cloud infrastructure components. For the third quarter of 2025, the GAAP Gross Margin stood at a solid 65.5%. Given Q3 2025 revenues were $61.5 million, this implies a GAAP COGS of approximately $21.22 million ($61.5 million (1 - 0.655)).

Operating expenses capture the necessary spending on innovation and market presence. The Non-GAAP operating margin for Q3 2025 was 9.5%, which translates to a Non-GAAP operating income of $5.8 million on $61.5 million in revenue.

Here's a quick look at the key Q3 2025 financial metrics that frame the cost base:

Research and Development (R&D) is a critical cost center, particularly for Conversational AI development. While a specific R&D dollar amount isn't detailed here, the strategic focus is clear from the growth targets.

• Conversational AI business increased 50% in the quarter.
• Management projected 40% to 50% growth for the full year 2025 in the Conversational AI segment.

Sales, General, and Administrative (SG&A) expenses, combined with R&D, form the bulk of the operating costs outside of COGS. The total Non-GAAP operating expenses for the third quarter were $34.7 million.

External cost pressures, specifically from trade policy, are also a factor in the cost structure. US import tariffs are a known headwind.

• The direct cost impact from U.S. tariffs for the full year 2025 is projected at $3 million.
• The cost impact in Q3 2025 due to new U.S. import tariffs was approximately $0.5 million additional cost.
• The company expects fourth quarter 2025 tariff costs to be in a similar range to the third quarter.

Finance: draft 13-week cash view by Friday.

AudioCodes Ltd. (AUDC) - Canvas Business Model: Revenue Streams

AudioCodes Ltd. expects full year 2025 revenue to be in the range of $244 million to $246 million.

The revenue mix is increasingly weighted toward services, reflecting the strategic shift toward an AI-driven hybrid cloud software and services company.

For the third quarter of 2025, services revenue was $30.9 million, which accounted for 50.3% of total revenues for the quarter. This is contrasted with product revenue, which was $30.61 million in the same period.

The company highlights two primary growth engines driving revenue: Live family of services for Unified Communication and Collaboration (UCC) and Customer Experience (CX) connectivity services, and the Conversational AI (CAI) business line.

The Conversational AI solutions segment is a key focus for growth, with management projecting 40% to 50% growth for this segment for the full year 2025.

Recurring revenue streams from the Live managed services are growing robustly:

• Annual Recurring Revenue (ARR) from Live managed services was $70 million at the end of the second quarter of 2025, representing a 25% year-over-year increase.
• This ARR metric increased to $75 million by the end of the third quarter of 2025.
• The full-year target for ARR is set between $78 million to $82 million.

The company also reported deferred revenues of $81.6 million as of September 30, 2025.