What it is: A capital-intensive business, run on heavy physical assets that must be kept working and earn a return above what they cost to maintain.
What moves the needle: Gross margin has run about 65% and operating margin about 6.2% through the cycle, a wide spread between price and the cost of what it sells — whether that advantage is durable pricing power or a margin that can erode is the question the record is for. The operating margin has swung widely — from −4.8% to 17% over the years — so the through-cycle figure carries more than any single year, and the worst year more than the best. Inventory runs near 13% of sales, so how fast it turns back into cash — and the risk of writing it down when demand softens — sits alongside the margin. On its own account, the filing leans hardest on customer concentration, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has sat near the cost of capital (median 11%). By owner earnings: roughly 11% of revenue reaches owners as cash, consistently. This is price-taker territory, where the balance sheet and the cycle matter more than any multiple; the rest is in the 10-K.

Every line is arithmetic on the company's filings, shown in full in the sections below.

Where the money comes from

read the 20-F →

Revenue spreads across 3 lines, the largest Services at 53%.

Revenue by product line, FY2025

Services53%$131M
Products47%$115M
Grant0%$0

By geographyAmericas52%Europe32%Eastern Asia14%Israel2%

From the segment footnote of the company's own 20-F. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2016–2025

realized figures from each filing · older years to the left

2016’16	2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMDec 2025
											Income statement
$146M	$157M	$176M	$200M	$221M	$249M	$275M	$244M	$242M	$246M	$246M	RevenueRevenue
61%	62%	63%	47%	68%	69%	65%	65%	65%	65%	65%	Gross marginGross mgn
$8M	$10M	$16M	($10M)	$38M	$40M	$31M	$14M	$17M	$14M	$14M	Operating incomeOp. inc.
5.3%	6.2%	9.3%	−4.8%	17.4%	15.9%	11.4%	5.9%	7.1%	5.7%	5.7%	Operating marginOp. mgn
$16M	$4M	$13M	$4M	$27M	$34M	$28M	$9M	$15M	$9M	$4M	Net incomeNet inc.
—	58%	19%	—	26%	15%	17%	39%	-1%	34%	52%	Effective tax rateTax rate
											Cash flow & returns
$18M	$18M	$26M	$23M	$38M	$47M	$8M	$15M	$35M	$29M	$29M	Operating cash flowOp. cash
$2M	$2M	$2M	$2M	$2M	$2M	$2M	$2M	$3M	$4M	$4M	DepreciationDeprec.
$404K	$12M	$11M	$18M	$9M	$12M	($22M)	$4M	$17M	$17M	$21M	Working capital & otherWC & other
$1M	$2M	$1M	$2M	$2M	$1M	$1M	$6M	$24M	$6M	$6M	CapexCapex
1.0%	1.0%	0.8%	1.0%	0.7%	0.5%	0.5%	2.4%	10.0%	2.6%	2.6%	Capex / revenueCapex/rev
$17M	$16M	$24M	$21M	$37M	$46M	$7M	$13M	$32M	$26M	$26M	Owner earningsOwner earn.
11.6%	10.3%	13.8%	10.6%	16.7%	18.5%	2.5%	5.3%	13.2%	10.4%	10.4%	Owner earnings marginOE mgn
$17M	$16M	$24M	$21M	$37M	$46M	$7M	$9M	$11M	$23M	$23M	Free cash flowFCF
11.6%	10.3%	13.8%	10.6%	16.7%	18.5%	2.5%	3.7%	4.5%	9.3%	9.3%	Free cash flow marginFCF mgn
$0	$0	$6M	$7M	$8M	$11M	$12M	$11M	$11M	$11M	$11M	Dividends paidDiv. paid
$29M	$26M	$14M	$8M	$0	$42M	$38M	$18M	$14M	$31M	—	BuybacksBuybacks
9%	7%	21%	-27%	17%	27%	16%	6%	13%	7%	6%	ROICROIC
15%	4%	14%	4%	13%	16%	15%	5%	8%	5%	2%	Return on equityROE
15%	4%	8%	−3%	9%	11%	9%	−1%	2%	−1%	−4%	Retained to equityRetained/eq
											Balance sheet
$24M	$24M	$32M	$65M	$41M	$80M	$27M	$38M	$59M	$45M	$53M	Cash & investmentsCash+inv
$25M	$22M	$22M	$28M	$35M	$49M	$56M	$51M	$56M	$67M	$67M	ReceivablesReceiv.
$16M	$17M	$23M	$28M	$29M	$24M	$36M	$44M	$31M	$22M	$22M	InventoryInvent.
$42M	$39M	$45M	$56M	$64M	$73M	$93M	$95M	$87M	$89M	$89M	Operating working capitalOper. WC
$80M	$77M	$114M	$133M	$204M	$168M	$150M	$143M	$163M	$181M	$181M	Current assetsCur. assets
$45M	$45M	$55M	$87M	$95M	$96M	$94M	$84M	$78M	$82M	$82M	Current liabilitiesCur. liab.
1.8×	1.7×	2.1×	1.5×	2.1×	1.7×	1.6×	1.7×	2.1×	2.2×	2.2×	Current ratioCurr. ratio
$36M	$36M	$36M	$36M	$36M	$38M	$38M	$38M	$38M	$38M	$38M	GoodwillGoodwill
$187M	$171M	$179M	$244M	$358M	$349M	$324M	$338M	$336M	$323M	$323M	Total assetsAssets
($24M)	($24M)	($32M)	($65M)	($41M)	($80M)	($27M)	($38M)	($59M)	($45M)	($53M)	Net debt / (cash)Net debt
29.6×	32.8×	61.5×	-48.3×	58.4×	63.6×	96.4×	9.2×	—	—	9.0×	Interest coverageInt. cov.
$109M	$92M	$95M	$92M	$210M	$205M	$190M	$188M	$192M	$171M	$171M	Shareholders’ equityEquity
											Per share
35.8M	32.2M	30.2M	30.8M	32.9M	33.8M	32.5M	31.6M	30.6M	29.0M	27.1M	Shares out (diluted)Shares
$4.07	$4.87	$5.83	$6.50	$6.71	$7.35	$8.46	$7.74	$7.90	$8.47	$9.07	Revenue / shareRev/sh
$0.45	$0.13	$0.45	$0.13	$0.83	$1.00	$0.88	$0.28	$0.50	$0.31	$0.16	EPS (diluted)EPS
$0.47	$0.50	$0.80	$0.69	$1.12	$1.36	$0.21	$0.41	$1.04	$0.88	$0.94	Owner earnings / shareOE/sh
$0.47	$0.50	$0.80	$0.69	$1.12	$1.36	$0.21	$0.28	$0.36	$0.79	$0.84	Free cash flow / shareFCF/sh
$0.00	$0.00	$0.19	$0.22	$0.26	$0.32	$0.36	$0.36	$0.36	$0.38	$0.40	Dividends / shareDiv/sh
$0.04	$0.05	$0.04	$0.06	$0.05	$0.03	$0.05	$0.19	$0.79	$0.22	$0.24	Cap. spending / shareCapex/sh
$3.04	$2.87	$3.13	$3.00	$6.38	$6.07	$5.84	$5.96	$6.26	$5.91	$6.32	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+8.5%/yr	+4.8%/yr
Owner earnings / share	+7.2%/yr	−4.7%/yr
EPS	−4.2%/yr	−17.9%/yr
Dividends / share	—	+8.0%/yr
Capital spending / share	+20.6%/yr	+36.9%/yr
Book value / share	+7.7%/yr	−1.5%/yr

The record, charted

FY2016–2025

Each measure over its full record; the current point and the worst year marked.

Share count

29Mpeak FY2016

ROIC

7%low FY2019

Gross margin

65%low FY2019

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$26Mowner earningsvs.$9Mnet incomelow FY2022

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetained

Each year's operating cash, by what management did with it: the mix, and how it drifts.

FY2016FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business earned $26M of owner earnings, the operating cash left after the $4M it takes just to hold its position. It put $3M more into growth; free cash flow, after that spending, was $23M.

Reported net income$9M

Owner earnings$26M · 10% of revenue

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	$9M	$15M	$9M	$28M	$34M
Depreciation & amortizationnon-cash charge added back	+$4M	+$3M	+$2M	+$2M	+$2M
Working capital & othertiming of cash in and out, other non-cash items	+$17M	+$17M	+$4M	−$22M	+$12M
Cash from operations	$29M	$35M	$15M	$8M	$47M
Maintenance capital expenditurethe spending needed just to hold position and volume	−$4M	−$3M	−$2M	−$1M	−$1M
Owner earnings	$26M	$32M	$13M	$7M	$46M
Growth capital expenditurediscretionary; spent to get bigger, not to stand still	−$3M	−$21M	−$4M	—	—
Free cash flow	$23M	$11M	$9M	$7M	$46M
Owner-earnings marginowner earnings ÷ revenue	10%	13%	5%	2%	19%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the maintenance capital it must spend to hold its position (here about $4M, roughly its depreciation, the rate its assets wear out). The other $3M of its capital spending is growth it chose, not upkeep it owed; charged only with the maintenance it must do, the business earns well more than the year's free cash flow shows.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 20-F · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 9.0×

Comfortable

Operating income $14M ÷ interest expense $2M

What this means
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
How heavy is the debt, net of cash? +$53M

Net cash, debt-free

Cash $45M + ST investments $7M − debt $0

What this means
Cash and short-term investments exceed every dollar of debt by $53M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? —

Not enough data

What this means
The filing data didn't include the inputs for this check.

Is it a good business?

Return on invested capital —

Not enough data

Industry peers: median -5%

What this means
The filing data didn't include the inputs for this check.
Owner-earnings margin 11%

Solid through the cycle

10-yr median margin, range 2%–19%; latest $26M = operating cash $29M − maintenance capex $4M

Industry peers: median -1%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 10% of revenue this year, a 11% median across 10 years. It chose to put $3M more into growth, so free cash flow this year was $23M — the gap is investment, not weakness.
Are earnings backed by cash? 6.96×

Cash-backed

Cash from ops $29M ÷ net income $4M

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 162%

Returned more than it generated

Dividends + buybacks $42M ÷ Owner Earnings $26M

What this means
The company returned more than it generated: against $26M of Owner Earnings, $42M (162%) went back to shareholders, $11M dividends, $31M buybacks — the excess came from the balance sheet or borrowing, not the year's operations. Sustained, that pattern draws down cash or adds debt; the net-debt line above shows where it stands.
Investing or harvesting? 1.72×

Expanding

Capex $6M ÷ depreciation $4M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 2 of 5 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Miss

Revenue ≥ $2B · $246M

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Pass

Current ratio ≥ 2× · 2.22×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Earnings stability Pass

A profit every year (10-yr record) · no losses

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Miss

Uninterrupted dividends · 8 of 10 yrs

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Miss

Earnings +33% over the record · −2%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $0.41/share (latest year $0.16), the averaged base the calculator's gate runs on, and book value is $6.32/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 10 of 10

What this means
Never lost money over the record, the earnings stability Graham insisted on.
Operating margin 7% → 6% (3-yr avg ends)

What this means
Through the cycle the operating margin held roughly steady — about 7% early, 6% lately, median 6%.
Owner earnings growth +6%/yr

What this means
Owner earnings grew about 6% a year over the record.
Worst year 2019 · −4.8% op. margin

What this means
Operations went underwater in 2019, understand why before trusting the good years.
Share count −2.3%/yr

What this means
The share count is shrinking, buybacks are quietly growing your slice of the business.
Dividend record rising

What this means
Paid and raised the dividend across the record, the continuity Graham prized.
How management talks about it Promotional

What this means
The record is compounding, but the filing leans on a promoter’s vocabulary rather than the per-share, return-on-capital terms an owner uses. The results back the talk here; the register is still worth noting.

Does AI threaten the moat?

Low contestability

The moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.

In its own filing A competitive risk, new this year

Its FY2025 10-K names artificial intelligence as a competitive threat, in language that was not in the prior year's filing.

“Our competitors in the area of VoiceAI Connect (connectivity solutions for Voice Conversational AI) include CPaaS companies, such as Twilio, open-source projects, such as Jambonz, and integrated voice gateways from Conversational AI and Contact Center vendors, such as Cognigy (acquired by NICE), Genesys and Verint.…”

AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat, and the company is using it that way.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of fiscal year-end, Dec 31, 2025

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$181M

Cash & short-term investments$53M
Receivables$67M
Inventory$22M
Other current assets$39M

Current liabilities$82M

Other current liabilities$82M

Current ratio2.22×all current assets ÷ what's due · Graham looked for 2×

Quick ratio1.95×stricter: inventory excluded

Cash ratio0.65×strictest: cash alone against what's due

Working capital$100Mthe cushion left after near-term bills

Deeper floors

Tangible book value$134Mequity stripped of goodwill & intangibles

Net current asset value$30MGraham's net-net: current assets less all liabilities

Debt incl. operating leases$7M$7M of it operating leases

Deferred revenue$38Mcustomer cash collected before delivery; operating float

From the company's latest filing.

How the cash was used, 2016–2025

Over the record, the business generated $258M of operating cash; how management split it reads as a cash returner, paying most of what it earns straight back to owners.

Reinvested$47M · 18%
Dividends$77M · 30%
Buybacks$220M · 85%

Returned to owners$297M
124% of the owner earnings the business produced over the span, $77M as dividends and $220M as buybacks.
Source of funding−$86M
Reinvestment and shareholder returns ran $86M beyond the operating cash the business generated, so the gap was financed off the balance sheet.
Average price paid for buybacks—
Buybacks ran $220M over the span, but the filings don't tag the share count needed to deduce the average price paid.
Net change in share count−24.3%
The diluted count fell from 36M to 27M, so the buybacks outran the stock issued to staff.
Dividend record$0.38/sh
Paid in 8 of the years on record. It was never cut over the span.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Inverting the record

Invert: instead of why AudioCodes Ltd. is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2016–2025.

2 of the 4 tests turned up something to look into; the other 2 came back clean.

Look hereIs it less profitable than it was?9.6% vs 11.9%
The owner-earnings margin averaged 11.9% early in the record and 9.6% across the last three years, and the latest year has not recovered. Ask the filing whether that is a structural drift or a cyclical trough — price, mix, cost, or a competitor — and whether it is permanent.
Look hereDid receivables and inventory outpace sales?29% → 36% of sales
Receivables and inventory grew from $42M to $89M while revenue grew 69%: working capital is climbing faster than sales (29% of revenue then, 36% now). That can mean customers paying slower, stock building up, or revenue pulled forward. The filing's cash-flow and receivables notes say which.

And these came back clean

Did the share count rise anyway?
Did reported profit become cash?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

Peers, Communications Equipment

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
ADTNADTRAN Holdings Inc.	$1.1B	39%	-4.9%	-5%	-1%
AIOTPowerFleet Inc.	$444M	50%	-7.1%	-8%	-2%
HLITHarmonic Inc.	$361M	50%	3.5%	3%	2%
PLPlanet Labs PBC	$308M	49%	-77.3%	-40%	-40%
AMSCAmerican Superconductor Corporation	$299M	15%	-23.0%	-31%	-15%
AUDCAudioCodes Ltd.	$246M	65%	6.6%	11%	11%
NSSCNAPCO Security Technologies Inc.	$182M	43%	13.4%	23%	9%
CLFDClearfield Inc.	$150M	40%	8.1%	9%	6%
Group median	—	46%	-0.7%	-1%	0%

The price

What a price has to assume.

What the price implies

reverse-DCF

Enter the US price, in dollars: the NYSE/Nasdaq quote you hold. AudioCodes Ltd.'s US listing is the ordinary share itself. The record tables elsewhere on this page remain as filed.

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what AudioCodes Ltd. has delivered.

Today’s price $

Through the cycle, AudioCodes Ltd. earns about $27M on its 11.1% median owner-earnings margin. This year’s 10.4% margin runs in line with that. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($27M) Net of stock comp Steady-state · maintenance capex ($26M)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’21→’25+2%/yr

Owner-earnings growth · ’16→’25+0%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Free cash flow $23M on 27M shares outstanding, per the 20-F cover, as of 2025-12-31; net cash $53M. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. Capex ($6M) runs well above depreciation ($4M), so this is a build-out; Steady-state swaps total capex for maintenance (≈ depreciation), lifting the base to about $26M, the cash it would throw off if it stopped expanding. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh AUDC against another business →

Cite: Owner Scorecard, "AudioCodes Ltd. (AUDC), the owner's record," https://ownerscorecard.com/c/AUDC, data as of 2026-07-09.

Manual order: ← AU its page in the Manual AUNA →

Industry order: ← ATEN the Communications Equipment chapter BOSC →