Greetings. Welcome to the AudioCodes Q1 2013 Earnings Conference Call. (Operator instructions.) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Erik Knettel. Thank you, Mr. Knettel, you may begin.

Thank you, Rob. I would like to welcome everyone to the AudioCodes’ Q1 2013 earnings conference call. Let me begin the call with a brief Safe Harbor statement. Statements concerning AudioCodes’ business outlook, future economic performance, product introductions and plans related thereto, and statements concerning assumptions made or expectations as to any future events, conditions, performance, or other matters are forward-looking statements as that term is defined under US 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 effect of current global economic conditions and conditions in general and in AudioCodes’ industry and target markets in particular; shifts in supply and demand; market acceptance of new products and the demand for existing products; the impact of competitive products and pricing on AudioCodes’ and its customers’ products and markets; timely product and technology development, upgrades, and the ability to manage changes in the market conditions as needed; possible need for additional financing; the ability to satisfy covenants in the company’s loan agreements; possible disruptions from acquisitions; the ability of AudioCodes to successfully integrate the products and operations of acquired companies into AudioCodes’ business; and other factors detailed in AudioCodes’ filings with the US Securities and Exchange Commission. AudioCodes assumes no obligation to update that information. In addition, during the call AudioCodes will refer to non-GAAP net income and net income per share. AudioCodes has provided a reconciliation of non-GAAP net income and net income per share to both net income and net income per share according to GAAP in its press release and on its website. Joining us today from AudioCodes we have Shabtai Adlersberg, President and Chief Executive Officer; and Guy Avidan, Vice President Finance and Chief Financial Officer. I would now like to turn the call over to Shabtai Adlersberg. Mr. Adlersberg, please go ahead.

Thank you, Erik. Good morning and good afternoon, everybody. I would like to welcome all to our Q1 2013 conference call. With me this morning is Guy Avidan, Chief Financial Officer and Vice President of Finance. Guy will start off by presenting a financial overview of the quarter. I will then review the business highlights and summary for the quarter and discuss developments in our business and industry. We will then turn it into the Q&A session. Guy?

Thank you, Shabtai, and good morning everyone. Before beginning the financial overview of the quarter I would like to note that the following discussion will include GAAP numbers as well as non-GAAP pro forma numbers. Our Q1 non-GAAP pro forma results reflect adjustments for the following two non-cash items: stock-based compensation expenses which totaled $344,000 and amortization expenses relating to the acquisitions of [Nuera], Netrake, CTI which totaled $276,000. A full reconciliation of the non-GAAP results discussed on this call to GAAP results is currently available for review on our website and in the press release issued earlier today. Turning to the numbers, Q1 revenue was $32.3 million which represents a 1.6% decrease from the sequential Q4 2012. We saw solid demand for our core leverage in the equipment group business with a sequential increase of 2.3% gear revenues, especially in unified communications and enterprise SBC following the growing demand for linked unified communications and (inaudible) which were vastly offset by some anticipated headwinds we experienced during the quarter in our technology group. As a percentage of revenues, sales in Americas accounted for 54%; Europe, the Middle East and Africa, 32%; and Asia-Pacific, 14%. Revenues associated with our growing management and technical services business line were 19% of total revenues, or $6.1 million in Q1 2013 compared to 17% or $5.5 million in Q1 2012. Managed services and professional services helped further by AudioCodes’ high-value relationship with these customers. Service revenues are [also efficient] in that they are typically characterized by high gross margin and are based on the extensive experience and know-how accumulated in the company. Our top 15 customers accounted for 50% of revenues compared to 58% of revenues in the previous quarter. In Q1 we had a single distributor in North America that accounted for 17% of…

Thank you, Guy. We’re very pleased to report financial results which are in line with our original plan for the year. As stated in our release earlier today the improvement is underlined by operational efficiency and progress in our strategic initiatives made in the quarter. Growth in our networking business has been driven primarily by higher product sales and services in the areas of unified communications, enterprise session border controllers, and enterprise voice over IP networking – all representing strategic directions for us. As highlighted by market studies and indicated previously, all three market segments do represent fast-developing sectors and applications in the networking world and our expected to extend growth over coming years. This provides for us a very sound basis for continued growth. Further supporting these growth factors is the fact that there’s a continued shift in the codec-centered markets to become IP switch based as the [constant] growing shift in enterprise voice services from pure on-prem solution to cloud-based voice services and hybrid models. Guy’s already covered much of the details pertaining to our financial performance in Q1 and I’d like to focus on the most important ones achieved during the quarter. First, let’s touch sales. This has been a typical Q1. It was on track with the original plan and budget that we had planned for the year. We had a very slow entry into the year mainly in January and beginning of February. The quarter has been very much backend loaded, but this is a typical Q1 and we should accept it as it is. The good news – April has been fully strong and better than previous months in terms of new final [efficiencies] being created, and that obviously signifies lots of encouragement for us. Going back into Q1, although we ended lower in…

Thank you. We will now be conducting the question-and-answer session. (Operator instructions.) Thank you. Our first question is from the line of Andrew Uerkwitz of Oppenheimer. Please proceed with your question. Andrew Uerkwitz – Oppenheimer : Thanks, guys, just two quick ones here. The first one is, Shabtai, you mentioned several large projects. Can you talk more about the logistics and dynamics of how that gets billed, how that gets expensed? Should we expect some upfront expenses and revenue coming later?

So we do see a growing number of new enterprises, large enterprises, starting to do proof of concept and plan their Lync deployments. We’re involved with a large number of them, about ten at this stage. We believe that in coming quarters that will translate to a relatively low number of sales but definitely will create for us the infrastructure for substantially larger sales of volume in 2014. However, our ability to take on so many large new opportunities does signify that we are being perceived as a leader in that space. No upfront investment as to that or beyond our current operations, so we don’t see any implications to expenses but we do see definitely revenues starting to climb slowly more into 2014. Andrew Uerkwitz – Oppenheimer : Great. And then last question here: on the OPEX side, OPEX I think if I remember right was up $1.5 million quarter-over-quarter. Should I expect relatively similar trends going forward or was this just a one-off because you had the Lync Conference and a couple other things?

Andrew, regarding the OPEX as you can recall we had a one-time event in Q4 so OPEX was a little bit lower. On a run rate basis we already guided OPEX will be a bit above $18 million per quarter. We will guide again when we will close the acquisition of assets with MailVision that will increase a little bit the OPEX, but on the other hand it will increase the gross margin as well. So as mentioned, it will not change dramatically the bottom line. Andrew Uerkwitz – Oppenheimer : Great. Thanks for the reminder, I appreciate it guys. Good job, thank you.

(Operator instructions.) Thank you. Our next question is from the line of Rich Valera with Needham. Please proceed with your question. Rich Valera – Needham & Company: Thank you, good morning gentlemen. I was wondering if you could give a little more color, Shabtai, on the pipeline which you mentioned I think was strengthening nicely through April and what kind of conviction that gives you that you’ll see a sequential increase in your networking revenue? And relatedly, just wondering about your technology business – how comfortable you are of that remaining at roughly its current level? Right now it looks like on a trajectory to be down about 10% this year. Is that roughly where you think that’s going to fall out? Thank you.

Sure. Let me relate first to your second question – yes, the answer is yes. We have seen a very mild [clear] decline in Q1. At this stage it looks like we’ll lose between 10% and 15% of our technology revenues this year. Just to remind us all we had been at $24 million last year – that will translate to about $2.4 million to $3.6 million in 2013 as a whole. As to the Microsoft space, actually we do see a change in the uptick rate. I mean we have not seen that change in previous quarters. We are just relying on Microsoft’s word that Lync is being adopted or looked at more favorably with a larger number of enterprises. It does start to seem like it’s taking success in the market, and my take is that once we see Skype connected to Lync midyear – which means that there will be much more voice calls coming, not only IM but also voice calls coming through the enterprise into Lync from tens and hundreds of millions of users – we believe that will again be a driver for growth of voice within Lync. So combining together indications from Microsoft, Polycom, Skype-Lync connection and what we see actually coming from our sales force, we do reason to be quite optimistic about the future of our portion in that market. I’d also like to maybe say that we are lately experiencing success with some of the large system integrators, the global system integrators, mainly due to the fact that we have a global technical and sales force and our ability to support multi-site [world-based] large projects with large enterprises, which usually have hundreds of locations all around the world is becoming a winning factor. And as we have the unique applications we have developed like SmartTAP, I think we’re on a good course here. Rich Valera – Needham & Company: Great. I was just hoping to distinguish between your specific sales model which you mentioned has strengthened in April and some of the industry developments which you also mentioned, like WebRTC and Skype-Lync integration. I’m just wondering do you see your sales funnel strengthening, generating revenue, incremental revenue in Q2 or do you see that more as a second half realization?

Okay, so throughout the past few quarters we’ve been growing on sales of Lync sequentially in each single quarter, and in Q1 we added about 5% growth which we planned earlier in the year for growth of 20%. I don’t see that changing much. We will see Lync growth in coming quarters but I do see more and would cautiously use the term (inaudible) starting to come in probably nine to twelve months from today simply because then many of the proof of concepts and initial deployments will prove successful and viable. And this is where the larger orders will kick in. So I would assume linear growth in coming quarters and then a substantial increase more into 2014 and 2015. Rich Valera – Needham & Company: Okay, that’s helpful. Thank you.

Thank you. At this time I would like to turn the floor back over to management for closing comments.

Okay, thank you Operator. In summary of our call I’d like to say that we look forward to continuing to grow our business in 2013 and build a sustainable, profitable operation for coming years. I would like to thank everybody who attended our conference call today and we look forward to having you on our next conference call. Thank you very much. Bye-bye.

This concludes today’s teleconference. You may disconnect your lines at this time and thank you for your participation.